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Sinovac Reports Unaudited Fourth Quarter and Full Year 2013 Financial Results

March 19, 2014

- Conference call scheduled for Thursday, March 20, 2014 at 8:00 AM EDT -

BEIJING, March 19, 2014 /PRNewswire/ — Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited fourth quarter and full year financial results for the period ended December 31, 2013.

Unaudited Fourth Quarter 2013 Financial Highlights (period-over-period comparisons to fourth quarter 2012)

    --  Quarterly sales increased by 17.1% to $22.9 million from $19.6 million.
    --  Gross profit increased by 34.9% to $14.7 million from $10.9 million.
        Gross margin was 64.0%, compared to 55.6%.
    --  Net income attributable to common stockholders was $5.8 million, or
        $0.10 per basic and diluted share, compared to net loss attributable to
        common stockholders of $4.6 million, or $0.08 per basic and diluted
        share.

Unaudited Full Year 2013 Financial Highlights (Year-over-year comparisons to 2012)

    --  Sales increased by 47.4% to $72.5 million from $49.2 million. Excluding
        revenue recognition of Panflu under government stockpiling program in
        2013, regular sales increased by 25.5% to $61.8 million from $49.2
        million.
    --  Gross profit increased by 70.2% to $51.3 million from $30.1 million.
        Gross margin increased to 70.7% from 61.2%. Excluding the impact of
        Panflu sales under the government stockpiling program in 2013, gross
        margin increased to 72.6% from 61.2%.
    --  Net income attributable to common stockholders was $7.4 million, or
        $0.13 per basic and diluted share, compared to net loss attributable to
        common stockholders of $14.9 million, or $0.27 per basic and diluted
        share.
    --  Cash and cash equivalents totaled $107.2 million as of December 31,
        2013, compared to $91.2 million as of December 31, 2012. Net cash
        provided by operating activities was $5.7 million in 2013, compared to
        net cash used by operating activities of $16.3 million in 2012.

Recent Business Highlights

In January 2014, Sinovac submitted a Clinical Trial Application (CTA) with the China Food and Drug Administration (CFDA) to commence human clinical trials for its vaccine against Avian influenza A (H7N9) virus. The CTA was officially accepted by the CFDA on January 29, 2014.

In February 2014, the Phase III clinical trial results for Sinovac’s proprietary Enterovirus 71 (“EV71″) vaccine were published online in the February 27th issue of The New England Journal of Medicine (“NEJM”). The clinical results showed the efficacy of the vaccine against EV71-associated hand, foot and mouth disease (“HFMD”), or herpangina, was 94.8% among infants and young children. An anti-EV71 neutralizing antibody titer of 1:16 was associated with protection against EV71 associated HFMD or herpangina. As outlined in the NEJM article, Sinovac’s vaccine also demonstrated a 100% efficacy rate against EV71-associated hospitalization and against HFMD with neurologic complications, the main cause of fatalities.

Mr. Weidong Yin, Chairman, President and CEO, commented, “2013 was a strong year for Sinovac from a commercial vaccines sales standpoint. Total 2013 sales increased by 47.4% and regular sales, excluding the government stockpiling revenue recognition, rose by 25.5%. We generated a net income in excess of $7 million for the full year. Sinovac’s sales team continued to execute its tailored sales and marketing strategy in China within a favorable competitive environment.”

Mr. Yin concluded, “The publication of phase III clinical trial results in February 2014 further validated our scientific contribution to address this significant unmet need through the development of our proprietary EV71 vaccine against hand foot and mouth disease. Currently, the new drug application for our EV71 vaccine is under technological review by the CFDA. We look forward to supplying the urgently needed vaccine for the control and prevention of HFMD in China and neighboring countries. “

Financial Review for Unaudited Fourth Quarter Ended December 31, 2013

An analysis of sales and gross profit is as follows:


                     In USD'000  2013Q4         % of       2012Q4         %of
                     (Unaudited)
                                               Sales                     Sales

    Hepatitis A -                        7,970       34.7%        10,038       51.3%

    Healive

    Hepatitis A&B -                      2,846       12.4%         4,177       21.3%

    Bilive

    Hepatitis vaccines                  10,816       47.1%        14,215       72.6%

    Influenza vaccines                   3,409       14.9%         5,336       27.2%

    Animal vaccines                        617        2.7%            15        0.1%

    Mumps vaccines                         934        4.1%            25        0.1%

    Regular sales                       15,776       68.8%        19,591        100%

    H5N1                                 7,169       31.2%             -          -

    Total sales                         22,945        100%        19,591        100%
    -----------                         ------        ---         ------        ---

    Cost of goods sold                   8,255       36.0%         8,698       44.4%
    ------------------                   -----       ----          -----       ----

    Gross profit                        14,690       64.0%        10,893       55.6%
    ============                        ======       ====         ======       ====

Fourth quarter 2013 sales increased by 17.1% to $22.9 million from $19.6 million for the same period in 2012. The increase was mainly due to the revenue recognition of Panflu (H5N1) manufactured under the government stockpiling program. Excluding revenue of Panflu (H5N1), sales for the fourth quarter 2013 decreased by 19.5% to $15.8 million, compared to $19.6 million in the same period of 2012. The decrease in regular sales was mainly due to three reasons: 1) 2012 sales included a one-time order of Healive from Gansu province after a natural disaster, so sales of Healive decreased by 20.6% in the fourth quarter of 2013 compared with that of the same period in 2012. 2) Bilive sales decreased by 31.9% due to timing differences of vaccination campaigns. Different from Healive that is part of the regular immunization program in China for infants and young children, Bilive is mainly administered as a booster through vaccination campaigns organized by local CDCs, which results in sales fluctuation from quarter to quarter. Bilive sales for full year of 2013 were higher than 2012; and 3) sales of Anflu decreased by 36.1% as the majority of Anflu sales shifted from the fourth quarter to the third quarter due to early launch of the vaccine during the 2013-2014 flu season.

Compared to the fourth quarter of 2012, the gross profit margin for the fourth quarter of 2013 increased to 64.0% from 55.6%. Higher gross margin was mainly driven by the improved operational management, which resulted in less inventory provision charged to the cost of sales, as well as increased selling price of some of our products.

Selling, general and administrative expenses for the fourth quarter 2013 were $7.9 million, compared to $12.8 million in 2012. The decrease in SG&A expenses was mainly due to lower G&A expenses of ongoing validation of EV71 vaccine facilities and GMP certification preparation.

R&D expenses for the fourth quarter of 2013 were $2.5 million, a $1.2 million increase over the same period in 2012. The Company incurred more expenditures related to the continued advancement of pipeline vaccine candidates, such as pneumococcal polysaccharides vaccine and varicella vaccine, in the fourth quarter of 2013.

Net income attributable to stockholders for the fourth quarter of 2013 was $5.8 million, or $ 0.10 per basic and diluted share, compared to a net loss of $4.6 million, or $0.08 per basic and diluted share, in the same period of last year. Excluding the impact of the bonus revision of $0.6 million, which was paid out or to be paid out from an accrued liability account rather than charged to expenses, the net income for the fourth quarter 2013 was $5.2 million, or $0.09 per basic share and diluted share.

Financial Review for Unaudited Full Year Ended December 31, 2013


                     In USD'000    2013  % of         2012  % of

                     (Unaudited)        Sales              Sales

    Hepatitis A -                26,420       36.4% 20,141       40.9%

    Healive

    Hepatitis A&B -              20,782       28.7% 19,810       40.3%

    Bilive

    Hepatitis vaccines           47,202       65.1% 39,951       81.2%

    Influenza vaccines           12,156       16.8%  9,191       18.7%

    Animal vaccines                 750        1.0%     50        0.1%

    Mumps vaccines                1,680        2.3%     24        0.0%

    Regular sales                61,788       85.2% 49,216        100%

    H5N1                         10,736       14.8%      -          -

    Total sales                  72,524        100% 49,216        100%
    -----------                  ------        ---  ------        ---

    Cost of goods sold           21,273       29.3% 19,100       38.8%
    ------------------           ------       ----  ------       ----

    Gross profit                 51,251       70.7% 30,116       61.2%
    ============                 ======       ====  ======       ====

Total sales for 2013 increased by 47.4% to $72.5 million from $49.2 million in 2012. Excluding revenue recognition of Panflu under the government stockpiling program in 2013, regular sales of Healive, Bilive, Anflu, mumps and Rabend increased by 25.5% to $61.8 million in 2013 from $49.2 million in 2012. The increased sales mainly derived from the growth of Healive and Anflu.

Gross profit for 2013 increased by 70.2% to $51.3 million from $30.1 million in 2012. Gross margin increased to 70.7% in 2013 from 61.2% in 2012. Excluding the impact of Panflu sales under the government stockpiling program in 2013, gross margin increased to 72.6% in 2013 from 61.2% in 2012. The reasons for the increased gross profit were the same as discussed under the section of the fourth quarter result discussion.

Selling, general and administrative expenses for 2013 were $32.4 million, which was maintained at a similar level of $31.7 million for 2012.

Research and development expenses in 2013, which primarily represented amounts spent on the advancement of the pipeline vaccines, inclusive of EV71, pneumococcal vaccines, and varicella, decreased to $8.4 million from $17.0 million in 2012. The decrease was mainly due to the completion of the phase III clinical trial of EV71 vaccine candidate in the first quarter of 2013.

Depreciation of property, plant and equipment for 2013 was $2.1 million, compared to $1.6 million for 2012. Depreciation rose in 2013 as more assets at the Changping facility commenced depreciation in the last quarter of 2012.

Net income attributable to stockholders in 2013 was $7.4 million, or $0.13 per basic and diluted share, compared to a net loss of $14.9 million, or $0.27 per basic and diluted share in 2012. Excluding the impact of the bonus revision of $2.4 million, which was paid out or to be paid out from an accrued liability account rather than charged to expenses, net income of 2013 was $5.0 million, or $0.09 per basic share and diluted share.

As of December 31, 2013, cash and cash equivalents totaled $107.2 million, compared to $91.2 million as of December 31, 2012. Net cash provided by operating activities was $5.7 million in 2013. Net cash used in investing activities was $5.2 million in 2013, which was mainly for payment of property, plant and equipment for the Changping facility. Net cash provided by financing activities was $14.3 million in 2013, including loan proceeds of $16.8 million.

Conference Call Details

The Company will host a conference call on Thursday, March 20, 2014 at 8:00 a.m. EDT (March 20, 2014 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 1-877-407-0784 (USA) or 1-201-689-8560 (International). A replay of the call will be available from 11 a.m. EDT on March 20, 2014 to April 3, 2014 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 13578265.

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 March 20, 2014 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) and filed new drug application with China Food & Drug Administration. 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: +86-10-8279-9659/9696

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:

Aaron Estrada

The Ruth Group

Tel: +1-646-536-7028

Email: aestrada@theruthgroup.com


    SINOVAC BIOTECH
     LTD.

    Consolidated Statements of Balance Sheets

    (Unaudited)

    December 31, 2013
     and 2012

    (Expressed in
     thousands of U.S.
     Dollars)

    Current assets                            December 31, 2013        December 31, 2012
    --------------                            -----------------        -----------------

    Cash and cash
     equivalents                                              107,242                   91,241

    Accounts
     receivable                                                31,927                   23,440

    Inventories                                                14,399                   10,530

    Prepaid expenses
     and deposits                                               1,131                    1,072

    Due from related
     party                                                         19                        -

    Deferred tax
     assets                                                     2,602                        -

    Total current
     assets                                                   157,320                  126,283
    -------------                                             -------                  -------

    Property, plant
     and equipment                                             78,911                   80,083

    Long-term
     inventories                                                2,711                       28

    Long-term prepaid
     expenses                                                     154                      290

    Prepayments for
     acquisition of
     equipment                                                    708                      483

    Deferred tax
     assets                                                       117                      446

    Licenses                                                      772                    1,150

    Total assets                                              240,693                  208,763
    ============                                              =======                  =======

    Current
     liabilities

    Loans payable                                              16,217                    3,329

    Due to related
     party                                                      3,324                        -

    Accounts payable
     and accrued
     liabilities                                               28,037                   24,778

    Income tax payable                                            246                      239

    Deferred revenue                                              875                    1,378

    Deferred
     government grants                                            444                      431

    Total current
     liabilities                                               49,143                   30,155
    -------------                                              ------                   ------

    Deferred
     government grants                                          4,760                    4,069

    Loans payable                                              32,146                   31,181

    Due to related
     party                                                          -                    3,230

    Deferred revenue                                           11,005                   10,693

    Total long term
     liabilities                                               47,911                   49,173
    ---------------                                            ------                   ------

    Total liabilities                                          97,054                   79,328
    -----------------                                          ------                   ------

    Commitments and
     contingencies

    Stock holder's
     equity

    Preferred stock                                                 -                        -

    Common stock                                                   56                       55

    Additional paid in
     capital                                                  107,393                  106,246

    Accumulated other
     comprehensive
     income                                                    14,141                   11,771

    Statutory surplus
     reserves                                                  11,808                   11,808

    Accumulated
     deficit                                                   (4,714)                 (12,156)
    -----------                                                ------                  -------

    Total
     stockholders'
     equity                                                   128,684                  117,724

    Non-controlling
     interests                                                 14,955                   11,711
    ---------------                                            ------                   ------

    Total equity                                              143,639                  129,435
    ------------                                              -------                  -------

    Total liabilities
     and equity                                               240,693                  208,763
    =================                                         =======                  =======


     SINOVAC BIOTECH LTD.

     Consolidated Statements of Operations and Comprehensive Income (loss)

    Three and Twelve Months Ended December 31, 2013 and 2012

     (Unaudited)

    (Expressed in thousands of U.S. Dollars, expect  for per share figures)

                                                                            Three months ended                    Twelve months ended
                                                                               December 31                            December 31

                                                                                                2013        2012                            2013        2012

     Sales                                                                                    22,945      19,591                          72,524      49,216

     Cost of sales                                                                             8,255       8,698                          21,273      19,100

     Gross profit                                                                             14,690      10,893                          51,251      30,116

     Selling, general and administrative expenses                                              7,861      12,820                          32,432      31,685

     (Recovery) for doubtful accounts                                                         (1,561)       (971)                           (504)       (874)

     Research and development expenses                                                         2,461       1,251                           8,384      17,044

     Depreciation of property, plant and equipment                                                33         540                           2,106       1,595

     Loss on disposal and impairment of property, plant and                                       91       2,191                              88       2,191

    equipment

     Government grants recognized in income                                                        -         181                               -        (374)

     Total operating expenses                                                                  8,885      16,012                          42,506      51,267

     Operating income (loss)                                                                   5,805      (5,119)                          8,745     (21,151)

     Interest and financing expenses                                                            (863)       (631)                         (3,031)       (775)

     Interest income                                                                             600         809                           2,168       2,370

     Other income (expenses)                                                                     121        (163)                            263         (77)

     Income (loss) before income taxes and  non-                                               5,663      (5,104)                          8,145     (19,633)

    controlling interests

     Income tax recovery                                                                       2,287          89                           2,225         884

     Consolidated net income (loss)                                                            7,950      (5,015)                         10,370     (18,749)

    Net (income) loss attributable to the non-controlling interests                           (2,129)        405                          (2,928)      3,896

     Net income (loss? attributable to stockholders                                            5,821      (4,610)                          7,442     (14,853)

      Net Income (loss)                                                                        7,950      (5,015)                         10,370     (18,749)

     Other comprehensive income

    Foreign currency translation adjustment                                                    1,086         968                           2,687       2,024

     Total comprehensive income (loss)                                                         9,036      (4,047)                         13,057     (16,725)

      Less: comprehensive (income) loss attributable to non-                                  (2,279)        314                          (3,244)      3,665

    controlling interests

     Comprehensive income (loss) attributable to stockholders                                  6,757      (3,733)                          9,813     (13,060)

     Weighted average number of shares of common

    stock outstanding

       Basic                                                                              55,497,357  55,037,264                      55,301,276  54,926,440

      Diluted                                                                             56,057,462  55,037,264                      55,802,338  54,926,440

     Earning (loss) per share

       Basic                                                                                    0.10       (0.08)                           0.13       (0.27)

       Diluted                                                                                  0.10       (0.08)                           0.13       (0.27)


    SINOVAC BIOTECH LTD.

    Consolidated Statement of Cash Flows

    Three and Twelve Months Ended December 31, 2013 and 2012

     (Unaudited)

    (Expressed in thousands of  U.S. dollars)

                                                                          Three months ended  Twelve months ended
                                                                            December 31         December 31

                                                                                                            ---

                                                                              2013      2012      2013       2012

    Cash flows provided by?used in) operating activities:

    Net income (loss)                                                        7,950    (5,015)   10,370    (18,749)

    Adjustments to reconcile net income (loss) to net cash

    provided by (used in) operating activities:

    Deferred income tax                                                     (2,287)      (89)   (2,225)       (17)

    Stock-based compensation                                                    72       (41)      281        347

    Inventory provision                                                        629     2,114     1,399      3,479

    Recovery of doubtful accounts                                           (1,561)     (971)     (504)      (874)

    Impairment of equipment and loss on disposal                              (349)    2,185        88      2,191

    Unrealized foreign exchange gain                                             -        44         -          -

    Research and development expenditures qualified for  government grant        -       421         -       (125)

    Depreciation of property, plant and equipment                            1,706       814     6,842      4,487

    Deferred government grants recognized in income                              -      (358)        -       (358)

    Accretion expenses                                                          47        50       100        235

    Changes in:                                                                  -         0         -          -

    Accounts receivable                                                      8,197     3,017    (7,256)    (4,286)

    Inventory                                                               (1,624)    3,715    (7,547)      (426)

    Income tax payable                                                           -        (5)        -     (3,130)

    Prepaid expenses and deposits                                              415      (136)      242        913

    Deferred revenue                                                         4,037      (330)     (675)     1,026

    Accounts payables and accrued liabilities                                2,684     2,774     4,559       (967)

    Net cash provided by (used in) operating activities                     19,916     8,189     5,674    (16,254)
    ===================================================                     ======     =====     =====    =======

    Cash flows provided by financing activities:

    Loan proceeds                                                            2,942     9,489    16,800     16,787

    Loan repayments                                                         (3,927)   (4,755)   (4,089)    (4,755)

    Proceeds from issuance of common stock, net of share issuance costs         85       109       842        508

    Proceeds from shares subscribed                                              -       (27)        -          8

    Government grants received                                                 149     2,154       745      2,395

    Dividends paid to non-controlling shareholder of Sinovac Beijing             -        (3)        -       (802)

    Loan from non-controlling shareholder of Sinovac Dalian                      -        12         -      3,189

    Net cash provided by financing activities                                 (751)    6,979    14,298     17,330
    =========================================                                 ====     =====    ======     ======

    Cash flows used in investing activities:

    Proceeds from disposal of equipment                                          -         -         -          5

    Acquisition of property, plant and equipment                            (1,739)   (5,215)   (5,176)   (16,156)

    Net cash used in investing activities                                   (1,739)   (5,215)   (5,176)   (16,151)
    =====================================                                   ======    ======    ======    =======

    Exchange gain (loss) on cash and cash equivalents                          790      (674)    1,205      2,029

    Increase in cash and cash equivalents                                   18,216     9,279    16,001    (13,046)

    Cash and cash equivalents, beginning of year                            89,026    81,962    91,241    104,287

    Cash and cash equivalents, end of year                                 107,242    91,241   107,242     91,241

SOURCE Sinovac Biotech Ltd.


Source: PR Newswire



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