Sinovac Reports Unaudited Third Quarter 2012 Financial Results

-- - Conference call scheduled for Thursday, November 15, 2012 at 8:00 AM EST -

  • Date: 2012-11-15
  • Pageview: 10858

BEIJING, Nov. 15, 2012 /PRNewswire/ -- Sinovac Biotech Ltd. (SVA), a leading provider of vaccines in China, announced today its unaudited financial results for the third quarter ended September 30, 2012.

Third Quarter 2012 Financial Highlights (year-over-year comparisons to third quarter 2011)

  • Hepatitis vaccines sales in private pay market rose 31.2%; total sales decreased 7.0% to $14.3 million.
  • Gross margin was 52.6%, compared to 56.8%.
  • Net loss attributable to common stockholders was $3.0 million, or $0.06 per basic and diluted share.
  • Cash and cash equivalents totaled $82.0 million as of September 30, 2012, compared to $104.3 million as of December 31, 2011.

Recent Business Highlights

-- Sales and Marketing

Both Bilive sales and Healive sales in the private pay market continued to exhibit solid year-over-year growth in the third quarter compared to the same period of 2011. In addition to the private pay market sales growth, Sinovac continues to execute its sales plan in the public market. In the past few months, the Company was awarded multiple provincial tender awards for both Healive and Anflu. Besides the tender awards in Gansu Province, Beijing, and Shanghai previously announced, in October, Sinovac was selected by Jiangsu Centers for Disease Control and Prevention (Jiangsu CDC) as one of the two vaccine manufacturers to supply inactivated hepatitis A vaccine for the EPI in Jiangsu province in 2013. In the third quarter, total sales were mainly impacted by the decrease of Healive revenue in the public market, and sales are expected to increase in the coming quarters after vaccine delivery.

-- Phase III Clinical Trial for EV71 Vaccine Candidate

The EV71 vaccine Phase III clinical trial is progressing on schedule. The hand, foot and mouth disease (HFMD) case surveillance is ongoing, and documentation collection, data input, data review, and quality control on the database are well underway and progressing on schedule.

-- Mumps Vaccine Progress

In the third quarter, Sinovac Biotech received Good Manufacturing Practices (GMP) certification from the China SFDA for the Company's dedicated mumps vaccine production plant at its Sinovac Dalian facility. 

-- 2012 Annual General Meeting

On August 22, 2012, Sinovac held its 2012 Annual General Meeting of shareholders. During the meeting, four proposals, including the 2012 Share Incentive Plan were approved, while a fifth, a proposal to amend the Company's by-laws, was not approved.

Dr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "During the third quarter 2012, our hepatitis vaccine business grew in the private pay market, while the Healive sales in the public market decreased compared to the same period of last year, impacting our total sales. In the coming quarters we expect sales of Healive in the public market will pick up, as we continue to improve our capabilities and expand our presence in that market."

Dr. Yin continued, "We expect the commercialization of our EV71 vaccine to become our key future growth catalyst. Currently, the Phase III clinical trial of our EV71 vaccine is being executed smoothly and moving forward well on schedule. We remain in close communication with the relevant authorities and experts on the expected schedule for trial conclusion and data unblinding, and we will share that information when appropriate."

Dr. Yin concluded, "Our cash position and credit line facilities with local commercial banks provide us with the resources to commercialize our EV71 vaccine being developed for HFMD.  We are in the position to drive the future growth of our business with a combination of commercialized vaccines and vaccine candidates."

Financial Review for Third Quarter Ended September 30, 2012

An analysis of sales and gross profit is as follows:     

In USD

 

2012Q3

% of Sales

2011Q3

%of Sales

Increase /
- Decrease %

             

Hepatitis A – Healive

 

4,931,790

34.5%

5,595,358

36.4%

-11.9%

             

Hepatitis A&B – Bilive

 

5,548,237

38.9%

5,205,478

33.9%

6.6%

             

Hepatitis vaccines

 

10,480,027

73.4%

10,800,836

70.3%

-3.0%

             

Influenza vaccines

 

3,806,454

26.6%

4,560,961

29.7%

-16.5%

             

Animal vaccine

 

619

0.0%

     
             

Total sales

 

14,287,100

100%

15,361,797

100%

-7.0%

             

Cost of goods sold

 

6,770,712

47.4%

6,631,672

43.2%

2.1%

             

Gross profit

 

7,516,388

52.6%

8,730,125

56.8%

-13.9%

Total sales in the third quarter of 2012 decreased 7.0%, compared to $15.4 million in the same period of 2011.

The decrease in total third quarter 2012 sales were primarily due to decreased Healive sales to the public market and reduced Anflu sales that started later this year. This was partially offset by the increase of both Healive and Bilive sales in the private pay market. The Company ended the quarter with a net total sales decrease of $1.1 million, or 7.0%, compared to the same quarter of last year.

Core vaccines sales for the nine months period ended September 30, 2012, increased 6.0% to $29.6 million, compared to $28.0 million in the same period of 2011. Despite a 29.0% increase in Bilive sales, total sales decreased 17.0% to $29.6 million, compared to $35.7 million in the same period of last year. The decrease was mainly affected by non-core government stockpiling of the pandemic flu H5N1 vaccine sales of $7.7 million in the 2011 period, as there were no government stockpiling sales in the current fiscal year to date. Please refer to note 1 below for the sales analysis for the nine months period ended September 30, 2012.

Gross margin in third quarter of 2012 was 52.6%, compared to 56.8% in the same period of last year. The lower quarterly gross margin was mainly due to the increased provision for expired H1N1 inventory costs and overhead allocated to cost of goods sold arising from seasonal excess capacity. After deducting depreciation of land use rights, amortization of licenses and permits, the gross margin was 52.4% and 56.5% for the third quarter of 2012 and 2011, respectively.

Selling, general and administrative expenses as a percentage of third quarter 2012 sales were 54.9%, compared to 49.8% for the same quarter of the prior year. The increase in the year-over-year quarterly SG&A expenses was mainly due to the ongoing preparation costs for the GMP upgrade and the Changping site validation.

Research and development expenses for the third quarter were $3.8 million, a $1.4 million increase over the same period in 2011, mainly due to the ongoing EV71 clinical trial development.

The increase in depreciation of property, plant and equipment and amortization of licenses and permits for the third quarter of 2012 was mainly due to the assets at Changping site that were in use in the quarter.

As of September 30, 2012, cash and cash equivalents totaled $82.0 million, compared to $104.3 million as of December 31, 2012. The Company utilized $1.1 million and $6.5 million of its cash resources in the third quarter and nine months period, respectively, to contribute to its ongoing clinical trial for its proprietary EV71 vaccine. The Company intends to provide the trial with approximately an additional $3.4 million during the remaining quarter of the year and $1.5 million in 2013. During the quarter and the first nine months period, $3.7 million and $8.7 million, respectively, were spent for the ongoing capital needs of the Changping site development, which were in part covered by the credit line arrangements already in place. Capital expenditure payments to complete the Changping site, which are in part covered by the credit line arrangements, are estimated up to $7.0 million in the remaining quarter of 2012 and $8.7 million in 2013. The cash position and credit line facilities with local commercial banks provide the Company with the resources to commercialize the EV71 vaccine being developed for HFMD.  The Company is in the position to drive the future growth of the business with a combination of commercialized vaccines and vaccine candidates.

Note 1

Sales Analysis for the Nine-month Period ended September 30, 2012

In USD

 

2012 1-9

% of sales

2011 1-9

%of sales

Increase /
- Decrease %

             

Hepatitis A – Healive

 

10,104,218

34.1%

11,246,591

31.5%

-10.2%

             

Hepatitis A&B – Bilive

 

15,633,272

52.8%

12,116,369

33.9%

29.0%

             

Hepatitis vaccines

 

25,737,490

86.9%

23,362,960

65.4%

10.2%

             

Influenza vaccines

 

3,852,860

13.0%

4,588,828

12.9%

-16.0%

             

Animal vaccine

 

Core vaccines

 

34,849   

 

29,625,199   

           0.1%

 

          100%

                 -

 

 

27,951,788

              -

 

        78.3%

 

 

6.0%

H5N1

 

-

-

7,746,700

21.7%

 
             

Total sales

 

29,625,199

100%

35,698,488

100%

-17.0%

             

Cost of goods sold

 

10,401,918

35.1%

13,095,652

36.7%

-20.6%

             

Gross profit

 

19,223,281

64.9%

22,602,836

63.3%

-15.0%

Conference Call Details

The Company will host a conference call on Thursday, November 15, 2012 at 8:00 a.m. EST (November 15, 2012 at 9:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International). A replay of the call will be available from 11 a.m. EST on November 15, 2012 to November 29, 2012 at midnight. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 403079.

A live audio webcast of the call will also be available from the investors section on the corporate web site at www.sinovac.com. A webcast replay can be accessed on the corporate website beginning November 15, 2012, and the replay will remain available for 30 days.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza and mumps, as well as animal rabies vaccine.  In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program.  The company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program.  Sinovac is developing a number of new pipeline vaccines including vaccines for enterovirus 71 (against hand, foot, and mouth disease), of which the EV71 vaccine is currently in Phase III clinical trials, pneumococcal conjugate, pneumococcal polysaccharides, varicella and rubella.  Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Helen Yang/Chris Lee
Sinovac Biotech Ltd.
Tel:  +86-10-8279-9871/9659
Fax:  +86-10-6296-6910
Email: ir@sinovac.com

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

Media:
Tracy Lessor
The Ruth Group
Tel:  +1-646-536-7006
Email: tlessor@theruthgroup.com

 

SINOVAC BIOTECH LTD.

       

Incorporated in Antigua and  Barbuda

       

Consolidated Balance Sheets

       

(Unaudited)

       

(Expressed in U.S. Dollars)

       
   

September 30 2012

 

December 31 2011

ASSETS

       
         

Current assets

       

Cash and cash equivalents

$

81,962,420

$

104,286,695

  Accounts receivable – net 

 

25,316,304

 

17,834,407

  Inventories

 

14,099,902

 

8,113,428

  Prepaid expenses and deposits

 

905,437

 

1,804,555

         

Total current assets

 

122,284,063

 

132,039,085

         

Property, plant and equipment 

 

82,994,261

 

75,627,881

Long-term inventories

 

2,227,196

 

5,248,237

Long-term prepaid expenses 

 

311,079

 

408,656

Prepayments for acquisition of equipment

 

525,972

 

828,902

Deferred tax assets 

 

351,627

 

419,114

Licenses and permits

 

1,261,820

 

1,336,254

Total assets

 

209,956,018

 

215,908,129

         

LIABILITIES AND EQUITY

       
         

Current liabilities

       

  Loans payable 

 

4,773,422

 

4,713,498

  Accounts payable and accrued liabilities 

 

27,529,207

 

29,522,495

Income tax payable

 

236,697

 

3,351,127

Deferred revenue

 

8,108,669

 

429,416

  Dividends payable

 

-

 

795,106

  Deferred government grants 

 

101,992

 

1,830,566

Total current liabilities

 

40,749,987

 

40,642,208

         

Deferred government grants

 

2,761,758

 

2,277,428

Loans payable 

 

24,670,318

 

17,321,327

Due to related party 

 

3,201,375

 

-

Deferred revenue

 

4,194,246

 

10,369,695

Total long term liabilities

 

34,827,697

 

29,968,450

         

Total liabilities

 

75,577,684

 

70,610,658

         

Commitments and contingencies 

       
         

EQUITY                                                                                                   

       

Preferred stock

 

-

 

-

  Authorized 50,000,000 shares at par value of $0.001 each

       

  Issued and outstanding: nil

       

Common stock 

 

55,024

 

54,774

  Authorized: 100,000,000 shares at par value of $0.001 each

       

  Issued and outstanding:  55,023,461 (2011 –54,773,961)

       

Additional paid-in capital

 

106,204,800

 

105,383,346

Accumulated other comprehensive income

 

10,899,102

 

9,978,325

Statutory surplus reserves

 

11,808,271

 

11,808,271

Retained earnings(accumulated deficit) 

 

(6,867,075)

 

2,696,227

Total stockholders' equity

 

122,100,122

 

129,920,943

         

Non-controlling interests 

 

12,278,212

 

15,376,528

         

Total equity

 

134,378,334

 

145,297,471

         

Total liabilities and equity

 

209,956,018

 

215,908,129

 

 

SINOVAC BIOTECH LTD.

   

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

   

Three and Nine Months Ended September 30, 2012 and 2011

   

(Unaudited)

               

(Expressed in U.S. Dollars)

               
   

Three months ended

 

Nine months ended

   

September 30

 

September 30

   

2012

 

2011

 

2012

 

2011

                 

Sales

$

14,287,100

$

15,361,797

$

29,625,199

$

35,698,488

                 

Cost of sales-(exclusive of depreciation of land-use rights and amortization of licenses and permits of $35,800 (2011 - $47,394) for three months and  $107,770  (2011 -$257,019) for nine months

 

6,770,712

 

6,631,672

 

10,401,918

 

13,095,652

                 

Gross profit                                                                            

 

7,516,388

 

8,730,125

 

19,223,281

 

22,602,836

                 

Selling, general and administrative expenses 

 

7,844,861

 

7,644,466

 

18,865,676

 

16,730,771

                 

Research and development expenses - net of 

 

3,773,625

 

2,366,842

 

15,792,500

 

6,744,862

$nil (2011- $nil) for three months and $78,980(2011- $(215,431)) for nine months in government research grants 

               

Depreciation of property, plant and equipment  and amortization of  licenses and permits

 

471,242

 

225,398

 

1,103,629

 

1,071,553

Provision for doubtful debts

 

97,067

 

1,226,456

 

97,067

 

1,226,456

Government grants recognized in income

 

(78,053)

 

(70,061)

 

(1,535,383)

 

(207,508)

                 

Total operating expenses

 

12,108,742

 

11,393,101

 

34,323,489

 

25,566,134

                 

Operating income (loss)

 

(4,592,354)

 

(2,662,976)

 

(15,100,208)

 

(2,963,298)

                 

Interest income

 

464,512

 

333,797

 

1,561,039

 

841,766

Interest and financing expenses

 

302,846

 

(181,298)

 

(143,552)

 

(446,316)

Loss on disposal of equipment

 

(24,574)

 

(229,015)

 

(23,712)

 

(195,509)

Other income (Expenses)

 

(22,709)

 

135,033

 

109,142

 

157,414

                 

Income (loss)  before income taxes and non-controlling interests

 

(3,872,279)

 

(2,604,459)

 

(13,597,291)

 

(2,605,943)

                 

Income tax recovery (expenses)

 

(5,958)

 

(271,230)

 

794,406

 

(2,056,723)

                 

Consolidated net income (loss)

 

(3,878,237)

 

(2,875,689)

 

(12,802,885)

 

(4,662,666)

                 

Less: income (loss) attributable to non-controlling interests

(849,619)

 

(733,453)

 

(3,239,583)

 

(1,049,116)

                 

Net income (loss) attributable to stockholders

 

(3,028,618)

 

(2,142,236)

 

(9,563,302)

 

(3,613,550)

Net income (loss)

 

(3,878,237)

 

(2,875,689)

 

(12,802,885)

 

(4,662,666)

                 

Other comprehensive income (loss)

               

Foreign currency translation adjustment

 

890,063

 

838,029

 

1,062,045

 

2,850,339

Total comprehensive income (loss)

 

(2,988,174)

 

(2,037,660)

 

(11,740,840)

 

(1,812,327)

Less: comprehensive income (loss) attributable to non-controlling interests

 

(744,732)

 

(619,032)

 

(3,098,315)

 

(622,407)

Comprehensive income(loss) attributable to stockholders

(2,243,442)

 

(1,418,628)

 

(8,642,525)

 

(1,189,920)

 Basic and diluted earnings (loss) per share  

 

-0.06

 

-0.04

 

-0.17

 

-0.07

Weighted average number of shares

               

of common stock outstanding 

               

- Basic

 

55,023,070

 

54,674,182

 

54,881,874

 

54,504,318

- Diluted

 

55,023,070

 

54,674,182

 

54,881,874

 

54,504,318

SINOVAC BIOTECH LTD.

 

Consolidated Statements of Cash Flows

Three and Nine Months Ended September 30, 2012 and 2011

(Unaudited)

               

(Expressed in U.S. Dollars)                                                   

               
   

Three Months ended September 30

 

Nine Months ended September 30

   

2012

 

2011

 

2012

 

2011

Cash flows from (used in) operating activities

               

  Net income(loss) for period

$

(3,878,237)

$

(2,875,689)

$

(12,802,885)

$

(4,662,666)

  Adjustments to reconcile net income (loss) to net cash from

 

-

 

-

 

-

 

-

    (used by) operating activities:

 

-

 

-

 

-

 

-

  - deferred income taxes

 

5,958

 

285,838

 

72,287

 

2,056,723

  -write-off of equipment and loss (gain) on disposal

 

24,574

 

229,015

 

23,712

 

195,509

FA Impairment provision

 

(21,106)

     

(17,784)

   

  - unrealized foreign exchange gain

 

-

 

-

 

(43,880)

 

-

  - stock-based compensation

 

134,138

 

63,759

 

388,104

 

164,392

- inventory provision

 

776,838

 

1,298,347

 

1,365,628

 

1,298,347

-provision for doubtful debt

 

97,067

 

1,226,456

 

97,067

 

1,226,456

  - depreciation of property, plant and equipment, and   amortization of licenses and permits

 

1,161,592

 

1,020,131

 

3,719,795

 

3,612,185

  - research and development expenditures qualifying for government grant

         

(78,980)

 

(215,431)

- deferred government grant recognized in income

 

(68,712)

 

(70,061)

 

(1,446,925)

 

(207,508)

- accretion expenses

 

48,560

 

86,221

 

185,349

 

290,630

  - accounts receivable

 

(6,631,251)

 

(4,648,768)

 

(7,302,483)

 

(271,247)

  - inventories

 

1,287,997

 

820,897

 

(4,140,923)

 

(1,806,090)

- income tax payable

 

(375)

 

(17,984)

 

(3,124,852)

 

(523,917)

  - prepaid expenses and deposits

 

560,264

 

88,351

 

1,048,642

 

(423,439)

- deferred revenue and advances from customers

 

1,456,127

 

1,812,241

 

1,356,605

 

(1,505,409)

  - accounts payable and accrued liabilities

 

(1,213,161)

 

2,315,631

 

(3,735,436)

 

(1,870,927)

Net cash provided by (used in) operating activities

 

(6,259,727)

 

1,634,385

 

(24,436,959)

 

(2,642,392)

                 

Cash flows from (used in) financing activities

               

  - Loan proceeds

 

1,288,549

 

2,111,150

 

7,298,056

 

3,992,522

  - Loan repayment

 

-

 

-

 

-

 

(1,383,338)

  - Proceeds from issuance of common stock

 

5,760

 

197,852

 

399,200

 

734,400

 - Repayment from non-controlling shareholder of  Sinovac Beijing

-

 

-

 

-

 

3,397,522

- Subscriptions received

 

32,000

 

2,880

 

34,400

 

11,360

  - Dividends paid to non-controlling shareholder of Sinovac Beijing

-

 

-

 

(799,376)

 

(5,862,676)

- Loan from non-controlling shareholder of  Sinovac Dalian

     

-

 

3,178,164

 

-

  - Government grant received

 

-

 

-

 

240,580

 

7,636

Net cash provided by (used in) financing activities

 

1,326,309

 

2,311,882

 

10,351,024

 

897,426

                 

Cash flows used in investing activities

               

- Proceeds from disposal of equipment

 

-

 

117,292

 

-

 

117,292

- Proceeds from redemption of short-term investments

 

-

 

-

 

-

 

1,547,030

- Purchase of short-term investments

 

-

 

(9,845,966)

 

-

 

(32,277,897)

- Acquisition of property, plant and equipment

 

(4,322,153)

 

(2,945,723)

 

(10,941,774)

 

(8,643,864)

Net cash used in investing activities

 

(4,322,153)

 

(12,674,397)

 

(10,941,774)

 

(39,257,439)

                 

Exchange effect on cash and cash equivalents

 

1,777,618

 

(163,169)

 

2,703,434

 

812,896

Increase (decrease) in cash and cash equivalents

 

(7,477,953)

 

(8,891,299)

 

(22,324,275)

 

(40,189,509)

                 

Cash and cash equivalents, beginning of period

 

89,440,373

 

70,287,280

 

104,286,695

 

101,585,490

                 

Cash and cash equivalents, end of period

 

81,962,420

 

61,395,981

 

81,962,420

 

61,395,981

                 

Cash paid for interest

 

493,244

 

167,883

 

1,375,203

 

809,303

Cash paid for income taxes

 

-

     

866,693

 

520,514

                 

Supplemental schedule of non-cash activities:

               

  Acquisition of property, plant and equipment included in

 

8,183,093

 

8,021,881

 

8,183,093

 

8,021,881

  accounts payable and accrued liabilities

               
                 

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