- Conference call scheduled Friday, May 15, 2009 at 9:00 a.m. ET
BEIJING, May 15 /PRNewswire-Asia/ -- Sinovac Biotech Ltd. (NYSE
Amex: SVA), a leading developer and provider of vaccines in China
has announced its unaudited financial results for the three-month
period ended March 31, 2009. 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. Weidong Yin, Chairman, President and CEO of Sinovac, commented,
"We 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 $23 million of cash and cash
equivalents we have 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 China.
Additionally, in the beginning of the year, we 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 $55 million to
$60 million, which is 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 China with the license
to produce pandemic influenza 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 March 31, 2009 During the first
quarter of 2009, sales were $6.6 million, compared to $8.9 million
in the first quarter of 2008. Sinovac continues to devote
significant resources to marketing Healive to China's private
market and an 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 China is currently experiencing a
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 $5.1 million, with a gross margin of 78%,
compared to $7.8 million and a gross margin of 88%, for the 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 $4.5 million, compared to $4.7 million
in the comparative period in 2008. Selling, general and
administrative expenses for the first quarter of 2009 were $3.5
million, compared to $3.6 million in the same period of 2008. The
SG&A reflects 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 January 2009, Sinovac granted about
1.7 million options to its employees, which incurred stock based
compensation in the quarter. . Net research and development
expenses for the first quarter 2009 were $759,000, compared to
$929,000 in the same period of 2008. R&D expenses in the 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 $646,000, compared
to an operating income of $3.1 million in the prior year. Net
income for the first quarter of 2009 included $482,000 in income
tax expenses, $126,200 in net interest and financing expenses and
$107,000 of minority interest. Net income for the same period of
2008 included $158,000 of net interest expense, $719,000 of income
taxes expense, and $0.7 million of minority interest. The net
income for first quarter of 2009 was $25,000, or $0.00 per diluted
share, compared to net income of $1.6 million, or $0.04 per diluted
share, in the same period of 2008. As of March 31, 2009, Sinovac's
cash and cash equivalents totaled $23.3 million, compared to $32.9
million as of December 31, 2008. The decrease in cash and cash
equivalents primarily reflects investment in working capital and
equipment purchases for the new R&D center in Beijing. Due to
the economic downturn, government agencies delayed payment due to
reduced government income; Sinovac does expect to collect on these
receivables later this year. Recent Developments In April 2009,
Sinovac announced that it won the MOH's procurement bid for
hepatitis A vaccine worth approximately RMB 87 million or $12.8
million. A 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
China's MOH, supplied its hepatitis A vaccine, Healive, in the
Sichuan earthquake 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 April
2009, Sinovac responded to the global influenza A (H1N1) 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
Hong Kong and submitted an influenza vaccine dossier to its
distribution partner in India. 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 April 2008. SFDA has initiated the review
and 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 January 2009,
the Company obtained approval from China's Ministry of 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 Friday, May 15, 2009 at 9:00 a.m. ET (9 p.m. China Standard
Time) to review the Company's first quarter financial results for
the period ended March 31, 2009 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 12:00 p.m. ET on May 15, 2009 until
May 29, 2009. To access the replay, please dial 1-877-660-6853
(USA) or 1-201-612-7415 (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 May 15, 2009 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, 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: Investors:
Amy Glynn/Sara Pellegrino The Ruth Group Tel: +1-646-536-7023/7002
Email: Media Janine McCargo The Ruth Group Tel: +1-656-536-7033
Email: DATASOURCE: Sinovac Biotech Ltd. CONTACT: Helen G. Yang of
Sinovac Biotech Ltd., +86-10-8289-0088 x9871, Fax:
+86-10-6296-6910, ; or Investors: Amy Glynn, +1-646-536-7023, , or
Sara Pellegrino, +1-646-536-7002, , both of The Ruth Group; or
Media: Janine McCargo of The Ruth Group, +1-656-536-7033,
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