Last updated on April 17, 2014 at 1:21 EDT

Sinovac Reports Unaudited First Quarter 2013 Financial Results

May 28, 2013

-Conference call scheduled for Tuesday, May 28, 2013 at 8:00 AM EDT -

BEIJING, May 28, 2013 /PRNewswire/ — Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited first quarter financial results for the period ended March 31, 2013.

First Quarter 2013 Financial Highlights (Year-over-year comparisons to first quarter 2012)

  • Total sales increased by 68% to $10.1 million.
  • Gross profit increased by 90% to $7.1 million and gross profit margin percentage increased to 70% from 62%.
  • Net loss attributable to common stockholders was $2.0 million, or $0.04 per basic and diluted share, compared to a net loss of $5.6 million, or $0.10 per basic and diluted share, for the first quarter 2012.
  • Cash and cash equivalents totaled $91.6 million as of March 31, 2013, compared to $91.2 million as of December 31, 2012.

Business Highlight:

  • In January 2013, Sinovac completed a pre-clinical study for its varicella vaccine candidate and submitted an application to the China Food and Drug Administration (CFDA) to commence clinical trials.
  • In April, Sinovac Biotech Co., Ltd. or Sinovac Beijing, the main operating subsidiary company of Sinovac, obtained a certificate of Good Manufacturing Practices for Pharmaceutical Products (GMP certificate) from the China Food and Drug Administration (CFDA) for its proprietary vaccines, its Haidian bulk production plants, and its Changping filing and packaging facility. The GMP certificate covers Sinovac Beijing’s vaccines commercialized in China and approved for stockpiling, inclusive of the inactivated hepatitis A vaccine (human diploid cell)? Inactivated hepatitis A and B combined vaccine; influenza vaccine (split virion), inactivated; H5N1 pandemic influenza vaccine (inactivated, adjuvanted); pandemic influenza vaccine (split virion, adjuvanted); and H1N1 influenza A vaccine (split virion, inactivated). The GMP certificate is valid for five years expiring on April 17, 2018.

Dr. Weidong Yin, Chairman, President and CEO, commented, “I am very pleased with the sales performance of our hepatitis A vaccine in the first quarter 2013, which is the primary driver to the total sales growth of 68% year-over-year. In the first quarter, the mumps vaccine manufactured by our Dalian site was commercialized, which also contributed to the sales growth in the first quarter.”

Dr. Yin continued, “As our commercialized vaccines keep growing, our near-term pipeline product, the enterovirus 71 (EV71) vaccine, realized another significant milestone. Enterovirus 71 (EV71) vaccine remains to be a significant unmet medical need across China and Asia because of the widespread outbreaks of hand, foot and mouth disease (HFMD) caused by EV71 and significant pediatric mortality rates. In 2012, over 2 million cased were reported and over 500 fatal cased published by China National Health and Family Planning Commission ( or “NHFPC”, previously named China Ministry of Health). We announced the approximately 95% efficacy rate of our proprietary EV71 vaccine from the phase III clinical trial on this vaccine. Based on the study results, our EV71 vaccine candidate has a good safety, immunogenicity and efficacy profile. The next step is to file the new drug application to Beijing Drug Administration in order to apply for the new drug certificate and the production license. And it is expected to launch in 2014.”

“We are also committed to advance our other vaccine development pipeline. We have a few pipeline products, including varicella vaccine, pneumococcal vaccines and rubella vaccine that are under the evaluation by CFDA for granting a clinical trial approval. We believe the advancement of these product development programs will maintain our sustainable growth in long term.”

Financial Review for First Quarter Ended March 31, 2013

An analysis of sales and gross profit is as follows:

    In USD'000         2013Q1        % of Sales       2012Q1       % of Sales       Change %

    Hepatitis A -
     Healive                   6,165            61.3%        1,612            27.0%    282.4%

    Hepatitis A&B -
     Bilive                    2,995            29.8%        4,015            67.2%    -25.4%

    Hepatitis vaccines         9,160            91.1%        5,627            94.2%     62.8%

    Influenza vaccines           294             3.0%          314             5.3%     -6.4%

    Core sales                 9,454            94.1%        5,941            99.5%     59.1%

    Animal vaccine                13             0.1%           32             0.5%    -59.4%

    Mumps vaccines               585             5.8%            -               -         -

    Total sales               10,052             100%        5,973             100%     68.3%
    -----------               ------             ---         -----             ---      ----

    Cost of goods sold         2,992            29.8%        2,255            37.8%     32.7%
    ------------------         -----            ----         -----            ----      ----

    Gross profit               7,060            70.2%        3,718            62.2%     89.9%
    ============               =====            ====         =====            ====      ====

Total sales for the first quarter 2013 increased by 68% to $10.1 million, from $6.0 million in first quarter of 2012. The total sales growth was primarily driven by sales increase in Healive which was due to the favorable competitive landscape. The mumps vaccine manufactured by our Dalian site was firstly commercialized in the current quarter that also contributed to the total sales growth. The total sales growth was partly offset by the decrease of Bilive sales.

Gross profit of the first quarter 2013 increased by 90% to $7.1 million from $3.7 million in the same period of 2012. Gross profit margin percentage increased to 70% from 62% in 2012 with Healive sales represented 61% of the current quarter sales compared to 27% in same period of 2012. The main reasons for the increased gross profit margin in first quarter 2013 were the lower unit cost of Healive resulted from higher production volume in response to increased sales and the higher sales mix of Healive vaccines in syringe sold at premium price.

Selling, general and administrative expenses for the first quarter 2013 were $6.4 million, compared to $4.3 million in the same period of 2012. SG&A expenses as a percentage of the sales in first quarter of 2013 were 63%, compared to 72% for the same quarter of prior year. The increase in SG&A expenses was mainly due to increased selling activities and costs that resulted in sales increases in hepatitis A and new mumps vaccines; Material and labor costs mainly for the ongoing validation activities to prepare for GMP certification for the EV71 manufacturing facilities in the Changping site; And higher operating, amortization and utilities costs in current quarter in Changping site, which was under renovation in same period of prior year.

R&D expenses in the first quarter of 2013 were $1.8 million, a significant decrease from $7.3 million in the same period of 2012 as the EV71 vaccine Phase III clinical trial was approaching to the end stage in current quarter where it just started in the same period of 2012. Also, since mumps was commercialized, no research and development expenses in current quarter while it was being developed in the same period of 2012.

Depreciation of property, plant and equipment and amortization of licenses and permits for the first quarter of 2013 was $0.8 million, compared to $0.3 million for the same period of prior year. Depreciation increased because more assets were put into service at the Changping facility since the last quarter of 2012.

Net loss attributable to stockholders in the first quarter of 2013 was $2.0 million, or $0.04 per basic and diluted share, compared to a net loss of $5.6 million, or $0.10 per basic and diluted share, for the same quarter of last year.

As of March 31, 2013, cash and cash equivalents totaled $91.6 million, compared to $91.2 million as of December 31, 2012. Net cash used in operating activities was $5.6 million in the first quarter of 2013. Net cash of $2.1 million was used in investing activities which was mainly used for payment and prepayment for acquiring property, plant and equipment for Changping facility. Net cash provided by financing activities was $8.0 million in the first quarter of 2013, including loan proceeds of $7.5 million drawn under credit facilities already in place supporting EV71 vaccine commercialization and daily operations. When appropriate, the Company will seek new sources of financing to commercialize other pipeline products.

Conference Call Details

The Company will host a conference call on Tuesday, May 28, 2013 at 8:00 a.m. EDT (May 28, 2013 at 8:00 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. EDT on May 28, 2012 to June 11, 2013 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 414862.

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 May 28, 2013 and the replay will remain available for 30 days.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu) and mumps, as well as animal rabies vaccine for canines. The Company recently concluded the phase III clinical trial for enterovirus 71 (against hand, foot and mouth disease). 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 pneumococcal polysaccharides, pneumococcal conjugate, varicella and rubella. Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines. Sinovac has also been granted a license to commercialize seasonal flu vaccine in Mexico.

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

Stephanie Carrington
The Ruth Group
Tel: +1-646-536-7017
Email: scarrington@theruthgroup.com

Aaron Estrada
The Ruth Group
Tel: +1-646-536-7028
Email: aestrada@theruthgroup.com


    Consolidated Balance Sheets


    March 31,2013

    (Expressed in U.S. Dollars)

                                    March 31,2013              December 31,2012
                                    -------------              ----------------

    Cash and cash equivalents                      91,562,252                    91,240,956

    Accounts receivable                            27,343,747                    23,440,135

    Inventories                                    12,216,885                    10,529,476

    Prepaid expenses and deposits                     934,590                     1,072,078

    Other assets                                    1,455,089                             -

    Total current assets                          133,512,563                   126,282,645
    --------------------                          -----------                   -----------

    Property, plant and equipment                  69,028,391                    69,171,601

    Land-use right                                 10,876,860                    10,911,782

    Long-term inventory                                     -                        28,692

    Long-term prepaid expenses                        245,454                       289,766

    Deposits for acquistion of
     equipment                                        623,601                       483,278

    Deferred tax asset                                444,481                       445,589

    License and permit                              1,053,253                     1,149,914

    Total assets                                  215,784,603                   208,763,267
    ============                                  ===========                   ===========

    Current liabilities

    Loans payable                                   5,753,714                     3,328,590

    Accounts payable and accrued
     liabilities                                   26,862,950                    24,777,808

    Income tax payable                                239,517                       238,775

    Deferred revenue                                  213,821                     1,378,425

    Deferred research grants                          432,437                       431,097

    Total current liabilities                      33,502,439                    30,154,695
    -------------------------                      ----------                    ----------

    Deferred research grants                        4,433,927                     4,068,602

    Loans payable                                  36,218,996                    31,181,235

    Due to related party                            3,240,162                     3,230,125

    Deferred revenue - H5N1                        10,826,303                    10,693,247

    Total long-term liabilities                    54,719,388                    49,173,209
    ---------------------------                    ----------                    ----------

    Total liabilities                              88,221,827                    79,327,904
    -----------------                              ----------                    ----------

    Commitments and contingencies

    Stockholder's equity

    Common stock                                       55,099                        55,092

    Additional paid in capital                    106,506,367                   106,245,934

    Accumulated other comprehensive
     income                                        11,975,712                    11,770,927

    Dedicated reserves                             11,808,271                    11,808,271

    Accumulated deficit                           (14,164,251)                  (12,156,414)
    -------------------                           -----------                   -----------

    Total stockholders' equity                    116,181,198                   117,723,810

    Non-controlling interest                       11,381,578                    11,711,553
    ------------------------                       ----------                    ----------

    Total equity                                  127,562,776                   129,435,363
    ------------                                  -----------                   -----------

    Total equity and liability                    215,784,603                   208,763,267
    ==========================                    ===========                   ===========


     Consolidated Statements of Operations and Comprehensive Income (loss)

    March 31,2013


     (Expressed in U.S. Dollars)

                                                                                                         Jan-Mar 2013              Jan-Mar 2012
                                                                                                        ------------              ------------

     Sales                                                                                                            10,052,215                 5,973,467

     Cost of sales(exclusive of depreciation of land use right and amortization of licenses and permits
      of $103,762 and $54,979 in the first quarter of 2013 and 2012 respectively)                                      2,991,864                 2,255,289
     --------------------------------------------------------------------------------------------------                ---------                 ---------

     Gross profit                                                                                                      7,060,351                 3,718,178

     Selling, general and administrative expenses                                                                      6,363,357                 4,320,289

     Provision for doubtful account                                                                                      282,190                         -

     Research and development expenses                                                                                 1,847,607                 7,342,172

     Depreciation of property, plant and equipment and amortization of licenses and permits                              772,146                   307,443

     Loss on disposal and Impairment of equipment                                                                         (2,401)                        -

     Government grants recognized in income                                                                                    -                   (71,204)

     Total operating expenses                                                                                          9,262,899                11,898,700
     ------------------------                                                                                          ---------                ----------

     Operating income                                                                                                 (2,202,548)               (8,180,522)

     Interest and financing expenses                                                                                    (663,087)                 (214,320)

     Interest income                                                                                                     441,318                   597,671

     Other income and expenses                                                                                            60,762                   118,078

     Loss before income taxes and  Minority interest                                                                  (2,363,555)               (7,679,093)
     -----------------------------------------------                                                                  ----------                ----------

     Income taxes -current                                                                                                     -                     2,902

     Income taxes -deferred                                                                                               (2,489)                        -

     Income tax expense - total                                                                                           (2,489)                 2,902.00

     Consolidated Net Loss                                                                                            (2,366,044)               (7,676,191)
     ---------------------                                                                                            ----------                ----------

    Net Income attributable to the noncontrolling interest                                                              (358,207)               (2,063,136)

     Net Income attributable to stockholders                                                                          (2,007,837)               (5,613,055)
     ---------------------------------------                                                                          ----------                ----------

     Net Loss                                                                                                         (2,366,044)               (7,676,191)

    Foreign currency translation adjustment                                                                              233,709                   646,783

     Total comprehensive income (loss)                                                                                (2,132,335)               (7,029,408)

      Less: comprehensive (income) loss attributable to non-controlling interests                                       (329,283)               (1,979,589)
      ---------------------------------------------------------------------------                                       --------                ----------

     Comprehensive income (loss) attributable to stockholders                                                         (1,803,052)               (5,049,819)

     Weighted average number of shares of

       Basic                                                                                                          55,097,228                54,608,919

      Diluted                                                                                                         55,097,228                54,608,919
      =======                                                                                                         ==========                ==========

     Loss per share

       Basic                                                                                                               (0.04)                    (0.10)

       Diluted                                                                                                             (0.04)                    (0.10)
       =======                                                                                                             =====                     =====


     Consolidated Statements of Cash Flow

    March 31,2013


     (Expressed in U.S. Dollars)

                                                                             Jan-Mar 2013             Jan-Mar 2012

     Cash flows from?used in) operating activities:

     Net income(loss)                                                                     (2,366,044)               (7,676,191)

     Deferred income tax                                                                       2,489                    (2,902)

     Stock-based compensation                                                                 75,839                    80,175

     Inventory provison                                                                            -                    85,864

     Provision for (recovery of) doubtful allowance                                          282,190                         -

     Disposal of Fixed assets                                                                436,739                         -

     Fixed assets impairment                                                                       -                         -

     Unrealized foreign exchange and gain                                                          -                  (210,581)

     Research and development expenditures qualified for government grant                          -                   (79,113)

     Depreciation of property, plant and equipment,                                        1,698,367                 1,252,550

     Deferred government grants recognized as income                                               -                   (71,204)

     Accreation expenses                                                                           -                    68,391

     Changes in assets and liabilities:                                                            -                         -

     Accounts receivable, trade                                                           (3,777,167)               (1,285,806)

     Inventory                                                                            (3,075,056)               (1,319,475)

     Income tax payable                                                                            -                    12,210

     Prepaid expenses and deposits                                                          (143,749)                  782,156

     Defer revenue                                                                        (1,066,999)                  (99,517)

     Accounts payables and accrued liabilities                                             2,364,764                (3,404,810)

     Net cash provided by operating activities                                            (5,568,627)              (11,868,253)
     =========================================                                            ==========               ===========

     Cash flows from financing activities

     Loan proceed                                                                          7,479,781                 2,023,939

     Loan Payments                                                                                 -                         -

     Proceeds from issuance of common stock                                                  164,000                     3,040

     Proceed from shares subscribed                                                                -                         -

     Exercise of stock options                                                                10,880                    47,360

     Government grant received                                                               303,626                         -

     Repayment from (loan to) non-controlling shareholder of Sinovac Beijing                       -                  (800,717)

     Repayment from (loan to) non-controlling shareholder of Sinovac Dalian                        -                 3,175,266

     Net cash provided by financing activities                                             7,958,287                 4,448,888
     =========================================                                             =========                 =========

     Cash flows from investing activities:

     Proceeds from disposal of equipment                                                           -                         -

     Proceeds from redemption of short-term investments                                            -                         -

     Purchase of short-term investments                                                            -                         -

     Prepayments for acquisition of equipment                                               (138,554)                        -

     Acquisition of property, plant and equipment                                         (2,021,953)               (2,960,461)

     Net cash used in investing activities                                                (2,160,507)               (2,960,461)
     =====================================                                                ==========                ==========

     Exchange gain on cash and cash equivalents                                               92,143                   582,778

     Increase in cash and cash equivalents                                                   321,296                (9,797,048)

     Cash and cash equivalents, beginning of year                                         91,240,956               104,286,695

     Cash and cash equivalents, end of year                                               91,562,252                94,489,647

SOURCE Sinovac Biotech Ltd.

Source: PR Newswire