Sinovac Reports Unaudited First Quarter 2009 Financial Results
SVA), a leading developer and provider of vaccines in
unaudited financial results for the three-month period ended
Recent Highlights
-- In April 2009, Sinovac won the bidding to be the sole provider of
approximately $12.8 million (2.41 million doses) worth of the
inactivated hepatitis A vaccine, Healive, to China's Ministry of Public
Health (MOH) for a vaccination campaign.
-- Sinovac has initiated preparatory activities for production of a
vaccine for the new influenza A (H1N1) strain. Sinovac is engaged in
ongoing correspondence with international organizations and other
governmental bodies regarding H1N1.
-- In May 2009, Sinovac filed a registration dossier for a split pandemic
influenza vaccine with the China state Food and Drug Administration
(SFDA) to ensure children and juveniles are protected during an
influenza pandemic.
Mr.
continue to leverage our R&D capabilities to fuel future growth. Our new R&D
center is operating now, which will speed up our R&D process. Our objective
for the next three to five years is to have one or two product candidates per
year entering into clinical trials beginning in 2010 and one or two products
launched into the market per year commencing in 2012. In addition to our
organic growth strategy, with
financial flexibility to selectively pursue acquisition candidates that will
help to expand our product pipeline. Although we are experiencing the effects
of the global financial crisis, we are confident that our balance sheet will
support the strategic acquisition and integration of businesses that will
strengthen our foundation for rapid development.
“We are very excited about our growth prospects for 2009 despite a sales
shortfall in the first quarter. Our sales budget for 2009 is heavily weighted
towards the second half of the year. We continue to focus our sales efforts on
driving growth in the private pay market, as we further penetrate less
developed areas of
successfully won the bid for the MOH purchase of hepatitis A vaccines,
providing Sinovac with an entrance into the public market. Being awarded this
contract is a major achievement that demonstrates the success of our strategy
to pursue public market opportunities. We believe that Sinovac will perform
well in both the public and private markets in 2009. Our 2009 sales
projections are in the range of
approximately a 20% increase over 2008 sales.
Mr. Yin continued, “In addition, the outbreak of influenza A (H1N1) has
created potential opportunities for Sinovac. Our R&D capability makes us the
only manufacturer in
vaccines. In response to the global outbreak, we have initiated preparatory
activities for the production of a vaccine for the new virus strain. We remain
focused on updates from international organizations about the spread of this
virus and for the reassortant strain needed for vaccine production; we are
also keeping in close contact with the Chinese government. We believe that our
proven technological and operational expertise, production capacity and
financial flexibility will support our ability to supply vaccines for H1N1
should the need arise. We also have a robust pipeline of other vaccines for
other infectious diseases, including enterovirus 71, conjugated pneumococcal
vaccine, and Japanese encephalitis, which we anticipate will drive longer-term
revenue growth.”
Financial Review for Three Months Ended
During the first quarter of 2009, sales were
significant resources to marketing Healive to
increase in demand for Healive in the public market is expected. The public
market operates differently from the private market, which will impact the
seasonality of the Company’s sales.
During the first quarter of 2009, Sinovac's unit dose sales were:
Three months ended March 31 2009 2008
(doses) (doses)
Healive 772,000 1,500,000
Bilive 176,000 31,000
Anflu 155,000 23,500
The hepatitis A vaccine market in
transitional period; it has previously been only private market but now
private and public markets co-exist. In response to the market transition,
Sinovac has adjusted its sales and marketing strategy for Healive in order to
enter into the public market. In April, Sinovac won the MOH bid, marking the
Company’s entry into the public market. Since Sinovac had previously focused
solely on the private market, it expects it will take some time to build up
its position in the public market. Additionally, in the first quarter of 2009,
due to a government mandate, China CDC largely devoted its resources to other
vaccination programs which has adversely impacted sales of Healive and
affected Sinovac’s first quarter sales. Sales of Bilive increased
significantly during the quarter and the Company expects it to become a
complementary product to Healive in the private market, whereas Healive is
expected to increasingly penetrate the public market.
Gross profit for the first quarter 2009 was
margin of 78%, compared to
same period of 2008. The gross margin was adversely impacted by the decreasing
percentage of Healive sales in total sales revenue, as Healive has the highest
gross margin among the three products. The gross margin for the first quarter
was relatively flat with the fourth quarter gross margin of 79%.
Total operating expenses for first quarter of 2009 were
compared to
and administrative expenses for the first quarter of 2009 were
compared to
investments in sales and marketing, consulting, travel and other expenses to
execute the Company’s growth strategy for 2009 and beyond. SG&A expenses, as a
percentage of first quarter 2009 sales, increased to 54%, compared to 40%
during the prior year. Selling expense decreased in tandem with the lower
sales revenue, but G&A increased primarily due to higher bad debt expense. In
addition, in
employees, which incurred stock based compensation in the quarter. .
Net research and development expenses for the first quarter 2009 were
first quarter of 2009 mainly related to the advancement of pre-clinical stage
vaccine candidates against enterovirus 71, human rabies, Japanese encephalitis
animal rabies and split pandemic influenza vaccines
First quarter 2009 operating income was
income of
2009 included
financing expenses and
period of 2008 included
taxes expense, and
quarter of 2009 was
income of
2008.
As of
million
cash and cash equivalents primarily reflects investment in working capital and
equipment purchases for the new R&D center in
downturn, government agencies delayed payment due to reduced government
income; Sinovac does expect to collect on these receivables later this year.
Recent Developments
In
hepatitis A vaccine worth approximately
part of the government’s large-scale efforts to improve public health, the
hepatitis A vaccination program will cover young children aged 18 months to 12
years in 32 cities or counties in nine provinces.
The government order for a total of 2.41 million doses was comprised
solely of inactivated vaccines due to their higher safety profile, comprising
1.79 million doses to be delivered in the form of pre-filled syringes (PFS)
for ease of application and 620,000 vial doses. Sinovac is the sole supplier
of the hepatitis A vaccine in this program. In 2008, Sinovac, through
MOH, supplied its hepatitis A vaccine, Healive, in the
disaster area. Sinovac’s role in the relief effort helped Healive to gain
recognition as a safe and high-quality vaccine against the hepatitis A virus.
Also in
outbreak by initiating preparatory activities for the production of a vaccine
for the new H1N1 strain. Sinovac has contacted various Chinese government
authorities and global health organizations in order to closely monitor the
disease and evaluate strategies to control and prevent its transmission. In
May, high ranking government officials visited Sinovac to gain a better
understanding of our capacity to produce the H1N1 vaccine. In 2008, following
the receipt of a Chinese government grant, Sinovac expanded its annual
manufacturing capacity for its pandemic influenza vaccine, Panflu(TM), to 20-
30 million doses; these facilities can also be leveraged in the development of
a new H1N1 flu vaccine. Sinovac expects to receive the H1N1 virus strain by
the end of May, which would enable the Company to commence manufacturing the
vaccine as needed. In addition to Chinese authorities, Sinovac has also
received inquiries from other countries and regions. Sinovac has filed its
application for a pandemic influenza (H5N1) vaccine in
an influenza vaccine dossier to its distribution partner in
In May, Sinovac filed a registration dossier for a split pandemic
influenza vaccine with the China SFDA to ensure children and juveniles are
protected during an influenza pandemic. This is a complementary product to the
Company’s whole viron pandemic influenza vaccine, Panflu, protects adults from
this virus and was approved in
approval process for the split pandemic influenza vaccine and expects to
receive the approval shortly. Once Sinovac receives approval, the Company’s
vaccines that protect larger age groups from pandemic influenza.
In addition, Sinovac is expanding beyond the human vaccine market by
entering into the animal vaccine market as there is a sizable market
opportunity for animal vaccines. Tangshan Yian, Sinovac’s wholly owned
subsidiary, is focusing on the animal vaccine business to help drive growth.
In
Agriculture to conduct field trials of internally developed inactivated animal
rabies vaccine, which are currently on schedule. In the first quarter, over
10,000 dogs were immunized with Sinovac’s vaccine candidates, demonstrating
that the vaccine has a good safety profile. Sinovac expects the vaccine to be
launched into the market in 2010.
Conference Call Details
The Company will host a conference call on
a.m. ET
financial results for the period ended
recent corporate developments. To access the conference call, please dial
1-877-407-4018 (
will be available from
access the replay, please dial 1-877-660-6853 (
(international) and reference the account number 3055 and the access code
322891. A live audio webcast of the call will also be available from the
Investors section on the corporate web site at http://www.sinovac.com . A
webcast replay can be accessed on the corporate website beginning
and the replay will remain available for 30 days.
About Sinovac
Sinovac Biotech Ltd. is a
focuses on the research, development, manufacture and commercialization of
vaccines that protect against human infectious diseases. Sinovac’s vaccine
products include Healive(R) (hepatitis A), Bilive(R) (combined hepatitis A and
B), and Anflu(R) (influenza). Panflu(TM), Sinovac’s pandemic influenza vaccine
(H5N1), has already been approved for government stockpiling. Sinovac is
developing vaccines for enterovirus 71, universal pandemic influenza, Japanese
encephalitis vaccine, and human rabies vaccine. Its wholly owned subsidiary,
Tangshan Yian, is conducting field trials for independently developed
inactivated animal rabies vaccines.
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.
SINOVAC BIOTECH LTD.
Incorporated in Antigua and Barbuda
Consolidated Balance Sheets
March 31, 2009
Unaudited
(Expressed in U.S. Dollars)
March 31, 2009 December 31, 2008
ASSETS
Current assets
Cash and cash equivalents $23,308,879 $32,894,102
Accounts receivable - net 21,105,032 19,486,596
Inventories 9,770,267 7,428,865
Income tax refundable 1,233,824 348,018
Prepaid expenses and deposits 903,454 933,297
Deferred tax assets 1,022,078 1,189,831
Total current assets 57,343,534 62,280,709
Property, plant and equipment 20,564,504 19,262,099
Deferred tax asset 580,296 569,937
Licenses and permits 992,444 1,090,477
Due to from related party 1,460,792 --
Total assets $80,941,570 $83,203,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Loans payable $8,034,358 $8,024,277
Accounts payable and accrued
liabilities 9,789,984 11,909,037
Due to related parties 46,971 46,971
Dividends payable to minority
interest shareholder of Sinovac
Beijing 115,822 115,677
Deferred research grants 1,126,236 1,182,703
Total current liabilities 19,113,371 21,278,665
Loans payable 2,191,189 2,188,439
Deferred government grants 2,788,869 2,836,994
Total long-term liabilities 4,980,058 5,025,433
Total liabilities 24,093,429 26,304,098
EQUITY
Shareholders' equity
Preferred stock -- --
Authorized 50,000,000 shares at par
value of $0.001 each, issued and
outstanding: nil
Common stock 42,725 42,894
Authorized 100,000,000 shares at par
value of $0.001 each, issued and
outstanding: 42,725,356
Additional paid-in capital 41,376,534 41,629,506
Accumulated other comprehensive
income 4,208,124 4,143,225
Dedicated reserves 5,549,684 5,549,684
Accumulated deficit (1,626,855) (1,651,534)
Total shareholders' equity 49,550,212 49,713,775
Noncontrolling interest 7,297,929 7,185,349
Total equity 56,848,141 56,899,124
Total liabilities and equity $80,941,570 $83,203,222
SINOVAC BIOTECH LTD.
Incorporated in Antigua and Barbuda
Consolidated Statements of Operations and Comprehensive Income
Three months ended March 31, 2009 and 2008
Unaudited
(Expressed in U.S. Dollars)
2009 2008
Sales $6,566,099 $8,862,001
Cost of sales
exclusive of depreciation of land use
right and amortization of licenses
and permits of $104,633 (2008 -
$99,834) 1,447,770 1,047,866
Gross Profit 5,118,329 7,814,135
Selling, general and administrative
expenses 3,547,623 3,577,886
Research and development expenses
net of $58,311(2008 - $4,019) in
government research grants 759,441 929,336
Depreciation of property, plant and
equipment and amortization of
licenses and permits 164,869 178,229
Total Operating Expenses 4,471,933 4,685,451
Operating Income 646,396 3,128,684
Interest and financing expenses (126,200) (157,707)
Interest and other income 93,131 46,350
Income before income taxes 613,327 3,017,327
Income taxes expenses 481,768 718,516
Net income for the period 131,559 2,298,811
Net income attributable to
noncontrolling interest (106,880) (738,855)
Net income attributable to
shareholders $24,679 $1,559,956
Net income for the period $131,559 $2,298,811
Other comprehensive income
Foreign currency translation
adjustment 64,899 1,282,528
Comprehensive income 196,458 3,581,339
Comprehensive income attributable to
noncontrolling Interest 123,043 1,009,418
Comprehensive income attributable to
shareholders $73,415 $2,571,921
Earnings per share - basic and
diluted $0.00 $0.04
Weighted average number of shares of
common stock outstanding
Basic 42,890,695 41,088,322
Diluted 42,890,695 41,470,579
SINOVAC BIOTECH LTD.
Incorporated in Antigua and Barbuda
Consolidated Statements of Cash Flows
Three months ended March 31, 2009 and 2008
Unaudited
(Expressed in U.S. Dollars)
2009 2008
Cash Flows From Operating Activities
Net income for the period $24,679 $1,559,956
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
- deferred income taxes 157,394 73,181
- gain on disposal of equipment (9,783) --
- stock-based compensation 66,503 16,636
- provision for doubtful accounts 868,938 627,805
- depreciation of property, plant and
equipment, and amortization of licenses
and permits 432,354 392,103
- research and development expenditures
qualified for government grant (58,311) (4,019)
- noncontrolling interests 106,880 738,855
Change in other assets and liabilities
- accounts receivable (2,462,999) (4,150,245)
- inventories (2,331,763) (1,449,443)
- prepaid expenses and deposits 30,904 319,014
- income tax refundable (885,252) --
- accounts payable and accrued
liabilities (2,771,775) 473,790
Net Cash Used in Operating Activities (6,832,231) (1,402,367)
Cash Flows From Financing Activities
Proceeds from issuance of common stock -- 9,751,309
Proceeds from shares subscribed -- 61,990
Repurchase of common stock (319,643) --
Loan to minority shareholders in Sinovac
Beijing (1,460,600) --
Dividend paid to minority shareholders in
Sinovac Beijing -- (2,947,877)
Net Cash Provided by / (Used in) Financing
Activities (1,780,243) 6,865,422
Cash Flows From Investing Activities -- --
Restricted cash -- (1,370,686)
Acquisition of property, plant and
equipment (1,011,492) (1,007,424)
Net Cash Used in Investing Activities (1,011,492) (2,378,110)
Exchange Gain on Cash and Equivalents 38,743 422,270
(Decrease) / Increase in cash and cash
equivalents (9,585,223) 3,507,215
Cash and Cash Equivalents, Beginning of
Period 32,894,102 17,071,497
Cash and Cash Equivalents, End of Period $23,308,879 $20,578,712
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $1,209,626 $438,406
Cash paid for interests $123,402 $110,841
Supplemental Schedule of Non-cash Activities:
Acquisition of property, plant and
equipment included in accounts payable
and accrued liabilities $1,092,789 $822,696
For more information, please contact:
Helen G. Yang
Sinovac Biotech Ltd.
Tel: +86-10-8289-0088 x9871
Fax: +86-10-6296-6910
Email: info@sinovac.com
Investors:
Amy Glynn/Sara Pellegrino
The Ruth Group
Tel: +1-646-536-7023/7002
Email: aglynn@theruthgroup.com
spellegrino@theruthgroup.com
Media
Janine McCargo
The Ruth Group
Tel: +1-656-536-7033
Email: jmccargo@theruthgroup.com
SOURCE Sinovac Biotech Ltd.