Sinovac Reports Unaudited Third Quarter 2012 Financial Results
BEIJING, Nov. 15, 2012 /PRNewswire/ — Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of vaccines in China, announced today its unaudited financial results for the third quarter ended September 30, 2012.
Third Quarter 2012 Financial Highlights (year-over-year comparisons to third quarter 2011)
- Hepatitis vaccines sales in private pay market rose 31.2%; total sales decreased 7.0% to $14.3 million.
- Gross margin was 52.6%, compared to 56.8%.
- Net loss attributable to common stockholders was $3.0 million, or $0.06 per basic and diluted share.
- Cash and cash equivalents totaled $82.0 million as of September 30, 2012, compared to $104.3 million as of December 31, 2011.
Recent Business Highlights
– Sales and Marketing
Both Bilive sales and Healive sales in the private pay market continued to exhibit solid year-over-year growth in the third quarter compared to the same period of 2011. In addition to the private pay market sales growth, Sinovac continues to execute its sales plan in the public market. In the past few months, the Company was awarded multiple provincial tender awards for both Healive and Anflu. Besides the tender awards in Gansu Province, Beijing, and Shanghai previously announced, in October, Sinovac was selected by Jiangsu Centers for Disease Control and Prevention (Jiangsu CDC) as one of the two vaccine manufacturers to supply inactivated hepatitis A vaccine for the EPI in Jiangsu province in 2013. In the third quarter, total sales were mainly impacted by the decrease of Healive revenue in the public market, and sales are expected to increase in the coming quarters after vaccine delivery.
– Phase III Clinical Trial for EV71 Vaccine Candidate
The EV71 vaccine Phase III clinical trial is progressing on schedule. The hand, foot and mouth disease (HFMD) case surveillance is ongoing, and documentation collection, data input, data review, and quality control on the database are well underway and progressing on schedule.
– Mumps Vaccine Progress
In the third quarter, Sinovac Biotech received Good Manufacturing Practices (GMP) certification from the China SFDA for the Company’s dedicated mumps vaccine production plant at its Sinovac Dalian facility.
– 2012 Annual General Meeting
On August 22, 2012, Sinovac held its 2012 Annual General Meeting of shareholders. During the meeting, four proposals, including the 2012 Share Incentive Plan were approved, while a fifth, a proposal to amend the Company’s by-laws, was not approved.
Dr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, “During the third quarter 2012, our hepatitis vaccine business grew in the private pay market, while the Healive sales in the public market decreased compared to the same period of last year, impacting our total sales. In the coming quarters we expect sales of Healive in the public market will pick up, as we continue to improve our capabilities and expand our presence in that market.”
Dr. Yin continued, “We expect the commercialization of our EV71 vaccine to become our key future growth catalyst. Currently, the Phase III clinical trial of our EV71 vaccine is being executed smoothly and moving forward well on schedule. We remain in close communication with the relevant authorities and experts on the expected schedule for trial conclusion and data unblinding, and we will share that information when appropriate.”
Dr. Yin concluded, “Our cash position and credit line facilities with local commercial banks provide us with the resources to commercialize our EV71 vaccine being developed for HFMD. We are in the position to drive the future growth of our business with a combination of commercialized vaccines and vaccine candidates.”
Financial Review for Third Quarter Ended September 30, 2012
An analysis of sales and gross profit is as follows:
In USD 2012Q3 % of Sales 2011Q3 %of Sales Increase /
- Decrease %
Hepatitis A -
Healive 4,931,790 34.5% 5,595,358 36.4% -11.9%
Hepatitis A&B -
Bilive 5,548,237 38.9% 5,205,478 33.9% 6.6%
Hepatitis
vaccines 10,480,027 73.4% 10,800,836 70.3% -3.0%
--------- ---------- ---- ---------- ---- ----
Influenza
vaccines 3,806,454 26.6% 4,560,961 29.7% -16.5%
Animal vaccine 619 0.0%
Total sales 14,287,100 100% 15,361,797 100% -7.0%
----------- ---------- --- ---------- --- ----
Cost of goods
sold 6,770,712 47.4% 6,631,672 43.2% 2.1%
------------- --------- ---- --------- ---- ---
Gross profit 7,516,388 52.6% 8,730,125 56.8% -13.9%
------------ --------- ---- --------- ---- -----
Total sales in the third quarter of 2012 decreased 7.0%, compared to $15.4 million in the same period of 2011.
The decrease in total third quarter 2012 sales were primarily due to decreased Healive sales to the public market and reduced Anflu sales that started later this year. This was partially offset by the increase of both Healive and Bilive sales in the private pay market. The Company ended the quarter with a net total sales decrease of $1.1 million, or 7.0%, compared to the same quarter of last year.
Core vaccines sales for the nine months period ended September 30, 2012, increased 6.0% to $29.6 million, compared to $28.0 million in the same period of 2011. Despite a 29.0% increase in Bilive sales, total sales decreased 17.0% to $29.6 million, compared to $35.7 million in the same period of last year. The decrease was mainly affected by non-core government stockpiling of the pandemic flu H5N1 vaccine sales of $7.7 million in the 2011 period, as there were no government stockpiling sales in the current fiscal year to date. Please refer to note 1 below for the sales analysis for the nine months period ended September 30, 2012.
Gross margin in third quarter of 2012 was 52.6%, compared to 56.8% in the same period of last year. The lower quarterly gross margin was mainly due to the increased provision for expired H1N1 inventory costs and overhead allocated to cost of goods sold arising from seasonal excess capacity. After deducting depreciation of land use rights, amortization of licenses and permits, the gross margin was 52.4% and 56.5% for the third quarter of 2012 and 2011, respectively.
Selling, general and administrative expenses as a percentage of third quarter 2012 sales were 54.9%, compared to 49.8% for the same quarter of the prior year. The increase in the year-over-year quarterly SG&A expenses was mainly due to the ongoing preparation costs for the GMP upgrade and the Changping site validation.
Research and development expenses for the third quarter were $3.8 million, a $1.4 million increase over the same period in 2011, mainly due to the ongoing EV71 clinical trial development.
The increase in depreciation of property, plant and equipment and amortization of licenses and permits for the third quarter of 2012 was mainly due to the assets at Changping site that were in use in the quarter.
As of September 30, 2012, cash and cash equivalents totaled $82.0 million, compared to $104.3 million as of December 31, 2012. The Company utilized $1.1 million and $6.5 million of its cash resources in the third quarter and nine months period, respectively, to contribute to its ongoing clinical trial for its proprietary EV71 vaccine. The Company intends to provide the trial with approximately an additional $3.4 million during the remaining quarter of the year and $1.5 million in 2013. During the quarter and the first nine months period, $3.7 million and $8.7 million, respectively, were spent for the ongoing capital needs of the Changping site development, which were in part covered by the credit line arrangements already in place. Capital expenditure payments to complete the Changping site, which are in part covered by the credit line arrangements, are estimated up to $7.0 million in the remaining quarter of 2012 and $8.7 million in 2013. The cash position and credit line facilities with local commercial banks provide the Company with the resources to commercialize the EV71 vaccine being developed for HFMD. The Company is in the position to drive the future growth of the business with a combination of commercialized vaccines and vaccine candidates.
Note 1
Sales Analysis for the Nine-month Period ended September 30, 2012
In USD 2012 1-9 % of sales 2011 1-9 %of sales Increase /
- Decrease %
Hepatitis A
- Healive 10,104,218 34.1% 11,246,591 31.5% -10.2%
Hepatitis
A&B -
Bilive 15,633,272 52.8% 12,116,369 33.9% 29.0%
Hepatitis
vaccines 25,737,490 86.9% 23,362,960 65.4% 10.2%
--------- ---------- ---- ---------- ---- ----
Influenza
vaccines 3,852,860 13.0% 4,588,828 12.9% -16.0%
Animal
vaccine 34,849 0.1%
Core
vaccines 29,625,199 100% 78.3% 6.0%
27,951,788
--- ----------
H5N1 - - 7,746,700 21.7%
Total sales 29,625,199 100% 35,698,488 100% -17.0%
----------- ---------- --- ---------- --- -----
Cost of
goods sold 10,401,918 35.1% 13,095,652 36.7% -20.6%
----------- ---------- ---- ---------- ---- -----
Gross
profit 19,223,281 64.9% 22,602,836 63.3% -15.0%
======= ========== ==== ========== ==== =====
Conference Call Details
The Company will host a conference call on Thursday, November 15, 2012 at 8:00 a.m. EST (November 15, 2012 at 9:00 p.m. China Standard Time) to review the Company’s financial results and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International). A replay of the call will be available from 11 a.m. EST on November 15, 2012 to November 29, 2012 at midnight. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 403079.
A live audio webcast of the call will also be available from the investors section on the corporate web site at www.sinovac.com. A webcast replay can be accessed on the corporate website beginning November 15, 2012, and the replay will remain available for 30 days.
About Sinovac
Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza and mumps, as well as animal rabies vaccine. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program. The company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program. Sinovac is developing a number of new pipeline vaccines including vaccines for enterovirus 71 (against hand, foot, and mouth disease), of which the EV71 vaccine is currently in Phase III clinical trials, pneumococcal conjugate, pneumococcal polysaccharides, varicella and rubella. Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Helen Yang/Chris Lee
Sinovac Biotech Ltd.
Tel: +86-10-8279-9871/9659
Fax: +86-10-6296-6910
Email: ir@sinovac.com
Investors:
Stephanie Carrington
The Ruth Group
Tel: +1-646-536-7017
Email: scarrington@theruthgroup.com
Media:
Tracy Lessor
The Ruth Group
Tel: +1-646-536-7006
Email: tlessor@theruthgroup.com
SINOVAC BIOTECH LTD.
Incorporated in Antigua and Barbuda
Consolidated Balance Sheets
(Unaudited)
(Expressed in U.S. Dollars)
September 30 2012 December 31 2011
----------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $81,962,420 $104,286,695
Accounts receivable - net 25,316,304 17,834,407
Inventories 14,099,902 8,113,428
Prepaid expenses and deposits 905,437 1,804,555
----------------------------- ------- ---------
Total current assets 122,284,063 132,039,085
-------------------- ----------- -----------
Property, plant and equipment 82,994,261 75,627,881
Long-term inventories 2,227,196 5,248,237
Long-term prepaid expenses 311,079 408,656
Prepayments for acquisition of equipment 525,972 828,902
Deferred tax assets 351,627 419,114
Licenses and permits 1,261,820 1,336,254
Total assets 209,956,018 215,908,129
============ =========== ===========
LIABILITIES AND EQUITY
Current liabilities
Loans payable 4,773,422 4,713,498
Accounts payable and accrued liabilities 27,529,207 29,522,495
Income tax payable 236,697 3,351,127
Deferred revenue 8,108,669 429,416
Dividends payable - 795,106
Deferred government grants 101,992 1,830,566
Total current liabilities 40,749,987 40,642,208
------------------------- ---------- ----------
Deferred government grants 2,761,758 2,277,428
Loans payable 24,670,318 17,321,327
Due to related party 3,201,375 -
Deferred revenue 4,194,246 10,369,695
---------------- --------- ----------
Total long term liabilities 34,827,697 29,968,450
--------------------------- ---------- ----------
Total liabilities 75,577,684 70,610,658
----------------- ---------- ----------
Commitments and contingencies
EQUITY
Preferred stock - -
Authorized 50,000,000 shares at par value of $0.001 each
Issued and outstanding: nil
Common stock 55,024 54,774
Authorized: 100,000,000 shares at par value of $0.001 each
Issued and outstanding: 55,023,461 (2011 -54,773,961)
Additional paid-in capital 106,204,800 105,383,346
Accumulated other comprehensive income 10,899,102 9,978,325
Statutory surplus reserves 11,808,271 11,808,271
Retained earnings(accumulated deficit) (6,867,075) 2,696,227
Total stockholders' equity 122,100,122 129,920,943
Non-controlling interests 12,278,212 15,376,528
------------------------- ---------- ----------
Total equity 134,378,334 145,297,471
------------ ----------- -----------
Total liabilities and equity 209,956,018 215,908,129
============================ =========== ===========
SINOVAC BIOTECH LTD.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(Expressed in U.S. Dollars)
--------------------------
Three months ended Nine months ended
September 30 September 30
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Sales $14,287,100 $15,361,797 $29,625,199 $35,698,488
Cost of sales-(exclusive of depreciation of land-use rights and amortization of licenses and permits of $35,800 (2011 -
$47,394) for three months and $107,770 (2011 -$257,019) for nine months 6,770,712 6,631,672 10,401,918 13,095,652
----------------------------------------------------------------------------------------------------------------------- --------- --------- ---------- ----------
Gross profit 7,516,388 8,730,125 19,223,281 22,602,836
------------ --------- --------- ---------- ----------
Selling, general and administrative expenses 7,844,861 7,644,466 18,865,676 16,730,771
Research and development expenses - net of 3,773,625 2,366,842 15,792,500 6,744,862
$nil (2011- $nil) for three months and $78,980(2011- $(215,431)) for nine months in government research grants
Depreciation of property, plant and equipment and amortization of licenses and permits 471,242 225,398 1,103,629 1,071,553
Provision for doubtful debts 97,067 1,226,456 97,067 1,226,456
Government grants recognized in income (78,053) (70,061) (1,535,383) (207,508)
-------------------------------------- ------- ------- ---------- --------
Total operating expenses 12,108,742 11,393,101 34,323,489 25,566,134
------------------------ ---------- ---------- ---------- ----------
Operating income (loss) (4,592,354) (2,662,976) (15,100,208) (2,963,298)
Interest income 464,512 333,797 1,561,039 841,766
Interest and financing expenses 302,846 (181,298) (143,552) (446,316)
Loss on disposal of equipment (24,574) (229,015) (23,712) (195,509)
Other income (Expenses) (22,709) 135,033 109,142 157,414
---------------------- ------- ------- ------- -------
Income (loss) before income taxes and non-controlling interests (3,872,279) (2,604,459) (13,597,291) (2,605,943)
Income tax recovery (expenses) (5,958) (271,230) 794,406 (2,056,723)
----------------------------- ------ -------- ------- ----------
Consolidated net income (loss) (3,878,237) (2,875,689) (12,802,885) (4,662,666)
Less: income (loss) attributable to non-controlling interests (849,619) (733,453) (3,239,583) (1,049,116)
------------------------------------------------------------- -------- -------- ---------- ----------
Net income (loss) attributable to stockholders (3,028,618) (2,142,236) (9,563,302) (3,613,550)
---------------------------------------------- ---------- ---------- ---------- ----------
Net income (loss) (3,878,237) (2,875,689) (12,802,885) (4,662,666)
Other comprehensive income (loss)
Foreign currency translation adjustment 890,063 838,029 1,062,045 2,850,339
--------------------------------------- ------- ------- --------- ---------
Total comprehensive income (loss) (2,988,174) (2,037,660) (11,740,840) (1,812,327)
Less: comprehensive income (loss) attributable to non-controlling interests (744,732) (619,032) (3,098,315) (622,407)
--------------------------------------------------------------------------- -------- -------- ---------- --------
Comprehensive income(loss) attributable to stockholders (2,243,442) (1,418,628) (8,642,525) (1,189,920)
======================================================= ========== ========== ========== ==========
Basic and diluted earnings (loss) per share -0.06 -0.04 -0.17 -0.07
------------------------------------------- ----- ----- ----- -----
Weighted average number of shares
of common stock outstanding
- Basic 55,023,070 54,674,182 54,881,874 54,504,318
- Diluted 55,023,070 54,674,182 54,881,874 54,504,318
========= ========== ========== ========== ==========
SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flows
Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(Expressed in U.S. Dollars)
--------------------------
Three Months ended September 30 Nine Months ended September 30
------------------------------- ------------------------------
2012 2011 2012 2011
---- ---- ---- ----
Cash flows from (used in) operating activities
Net income(loss) for period $(3,878,237) $(2,875,689) $(12,802,885) $(4,662,666)
Adjustments to reconcile net income (loss) to net cash from - - - -
(used by) operating activities: - - - -
- deferred income taxes 5,958 285,838 72,287 2,056,723
-write-off of equipment and loss (gain) on disposal 24,574 229,015 23,712 195,509
FA Impairment provision (21,106) (17,784)
- unrealized foreign exchange gain - - (43,880) -
- stock-based compensation 134,138 63,759 388,104 164,392
- inventory provision 776,838 1,298,347 1,365,628 1,298,347
-provision for doubtful debt 97,067 1,226,456 97,067 1,226,456
- depreciation of property, plant and equipment, and amortization of licenses and permits 1,161,592 1,020,131 3,719,795 3,612,185
- research and development expenditures qualifying for government grant (78,980) (215,431)
- deferred government grant recognized in income (68,712) (70,061) (1,446,925) (207,508)
- accretion expenses 48,560 86,221 185,349 290,630
- accounts receivable (6,631,251) (4,648,768) (7,302,483) (271,247)
- inventories 1,287,997 820,897 (4,140,923) (1,806,090)
- income tax payable (375) (17,984) (3,124,852) (523,917)
- prepaid expenses and deposits 560,264 88,351 1,048,642 (423,439)
- deferred revenue and advances from customers 1,456,127 1,812,241 1,356,605 (1,505,409)
- accounts payable and accrued liabilities (1,213,161) 2,315,631 (3,735,436) (1,870,927)
------------------------------------------ ---------- --------- ---------- ----------
Net cash provided by (used in) operating activities (6,259,727) 1,634,385 (24,436,959) (2,642,392)
--------------------------------------------------- ---------- --------- ----------- ----------
Cash flows from (used in) financing activities
- Loan proceeds 1,288,549 2,111,150 7,298,056 3,992,522
- Loan repayment - - - (1,383,338)
- Proceeds from issuance of common stock 5,760 197,852 399,200 734,400
- Repayment from non-controlling shareholder of Sinovac Beijing - - - 3,397,522
- Subscriptions received 32,000 2,880 34,400 11,360
- Dividends paid to non-controlling shareholder of Sinovac Beijing - - (799,376) (5,862,676)
- Loan from non-controlling shareholder of Sinovac Dalian - 3,178,164 -
- Government grant received - - 240,580 7,636
--------------------------- --- --- ------- -----
Net cash provided by (used in) financing activities 1,326,309 2,311,882 10,351,024 897,426
--------------------------------------------------- --------- --------- ---------- -------
Cash flows used in investing activities
- Proceeds from disposal of equipment - 117,292 - 117,292
- Proceeds from redemption of short-term investments - - - 1,547,030
- Purchase of short-term investments - (9,845,966) - (32,277,897)
- Acquisition of property, plant and equipment (4,322,153) (2,945,723) (10,941,774) (8,643,864)
---------------------------------------------- ---------- ---------- ----------- ----------
Net cash used in investing activities (4,322,153) (12,674,397) (10,941,774) (39,257,439)
------------------------------------- ---------- ----------- ----------- -----------
Exchange effect on cash and cash equivalents 1,777,618 (163,169) 2,703,434 812,896
-------------------------------------------- --------- -------- --------- -------
Increase (decrease) in cash and cash equivalents (7,477,953) (8,891,299) (22,324,275) (40,189,509)
------------------------------------------------ ---------- ---------- ----------- -----------
Cash and cash equivalents, beginning of period 89,440,373 70,287,280 104,286,695 101,585,490
---------------------------------------------- ---------- ---------- ----------- -----------
Cash and cash equivalents, end of period 81,962,420 61,395,981 81,962,420 61,395,981
======================================== ========== ========== ========== ==========
Cash paid for interest 493,244 167,883 1,375,203 809,303
Cash paid for income taxes - 866,693 520,514
========================== === ======= =======
Supplemental schedule of non-cash activities:
Acquisition of property, plant and equipment included in 8,183,093 8,021,881 8,183,093 8,021,881
accounts payable and accrued liabilities
SOURCE Sinovac Biotech Ltd.
