Sinovac Reports Unaudited Third Quarter Financial Results

-- - Conference call scheduled for Monday, November 17, 2014 at 8:00 a.m. ET -

  • Date: 2014-11-15
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Sinovac Reports Unaudited Third Quarter Financial Results


- Conference call scheduled for Monday, November 17, 2014 at 8:00 a.m. ET -

 


Sinovac Reports Unaudited Third Quarter Financial Results


- Conference call scheduled for Monday, November 17, 2014 at 8:00 a.m. ET -
BEIJING, Nov. 14, 2014 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, today announced its unaudited financial results for the third quarter and nine months ended September 30, 2014.
Third Quarter 2014 Financial Highlights
(compared to the third quarter 2013)
  • Quarterly sales were $17.1 million, a decrease of 22.3% from $22.1 million in the prior year period, which includes recognition of a special order of pandemic influenza vaccine (H5N1) revenue of $3.6 million. Excluding the impact from this special order, third quarter sales of regular vaccine products decreased 7.4% from the prior year period.
  • Gross profit was $12.2 million, a decrease of 16.7% from $14.6 million in the prior year period. Excluding the special order of pandemic influenza vaccine (H5N1) sales impact from 3Q13, gross profit decreased 2.8% from $12.5 million in the same period of last year. Gross margin was 70.9%, compared to 66.1% in the prior year period. Excluding the impact from the special order of pandemic influenza vaccine (H5N1) in 3Q13, gross margin was 70.9%, compared to 67.6% in the same period of last year.
  • Net income attributable to common stockholders was $0.1 million, or $0.00 per basic and diluted share, compared to $2.3 million, or $0.04 per basic and diluted share, in the third quarter of 2013.
Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "In the third quarter, the vaccine market in China began to show signs of recovery after the lower demand in the first half of the year. Although our regular sales were still down from the third quarter last year, we are encouraged by the uptick in demand for our seasonal flu vaccine from the private-pay market as well as consistent hepatitis A vaccine tenders in the public market.
"We continue to expand our presence in international markets with high sales potential for our vaccines. The Mexican Ministry of Health recently renewed our GMP certificate for the seasonal influenza and hepatitis A vaccines. Also during the third quarter, we received our registration license for our seasonal influenza vaccine in Chile.
"We are continuing to make progress on our pipeline vaccines. The expert panel review for our EV71 vaccine is scheduled in November 2014, which is one step forward in the process of new drug appication of our EV71 vaccine. We have also finalized the clinical trial protocol for our pneumococcal polysaccharide vaccine (PPV) and expect to begin clinical trials by the end of 2014," Mr. Yin concluded.
Third Quarter 2014 Business Highlights
Sales Update
Public Tenders Sinovac received notification that it has been selected by the Jiangsu Centers for Disease Control and Prevention to supply the Company's inactivated hepatitis A vaccine, Healive, to the Expanded Program of Immunization (EPI) in 2015. As one of two selected suppliers for the tender, Sinovac has committed to supplying 55% of the total tender of Jiangsu Province, which represents growth over Sinovac's contribution of 50% of the total tender amount in last year. Sinovac anticipates revenue of approximately RMB 18 million (or approximately $2.9 million) from this tender.
Additionally, Sinovac has been selected by the Tianjin Centers for Disease Control and Prevention to be the sole supplier of inactivated hepatitis A vaccines to the EPI in Tianjin for 2015 through 2017. The total value of this tender is approximately RMB 28 million (or approximately $4.6 million).
The Company expects to begin delivery of vaccines for both tenders by the end of 2014, according to demand.
GMP Certificate for Mexico On August 29, 2014, Sinovac passed on-site inspections of its Shangdi and Changping facilities and obtained a renewal of its GMP certificate from the Mexico Ministry of Health for its seasonal influenza and hepatitis A vaccines. The renewed GMP certificate is valid until February 2016.
Seasonal Influenza Vaccine Registration License in Chile Sinovac obtained a registration license for its seasonal influenza vaccine from Chile's Institute of Public Health. The license is valid until October 2019.
R&D Update
sIPV On October 29, 2014, the Beijing Drug Administration officially accepted Sinovac's clinical trial application for its Sabin inactivated polio vaccine (sIPV).
Unaudited Financial Results for Third Quarter 2014
(In USD'000 except percentage data)

 
2014 Q3
% of Sales
2013 Q3
% of Sales
Hepatitis A – Healive

 
3,967
23.1%
5,252
23.8%
Hepatitis A&B – Bilive

 
3,176
18.5%
5,355
24.3%
Hepatitis vaccines

 
7,143
41.6%
10,607
48.1%
Influenza vaccine

 
9,647
56.3%
8,417
38.1%
Animal vaccine

 
102
0.6%
54
0.2%
Mumps vaccine

 
254
1.5%
(571)
(2.6)%
Regular sales

 
17,146
100.0%
18,507
83.8%
H5N1

 
-
-
3,568
16.2%
Total sales

 
17,146
100.0%
22,075
100.0%
Cost of goods sold

 
4,986
29.1%
7,474
33.9%
Gross profit

 
12,160
70.9%
14,601
66.1%
In the third quarter 2014, total sales were $17.1 million, a decrease of 22.3% from $22.1 million during the same period in 2013. However, during the third quarter 2013, the Company recognized revenue of $3.6 million from sales of its pandemic influenza vaccine (H5N1) to the government stockpiling program. Excluding the impact of this special order, quarterly sales decreased 7.4% YoY in the third quarter. According to a joint notice on reducing and unifying the value added tax (VAT) rate published by the Ministry of Finance of China and State Administration of Taxation of China, the VAT rate applied to the sales of vaccine products was reduced to 3% from 6% effective July 1, 2014. Excluding the impact of the VAT rate reduction, quarterly sales decreased 10.1% YoY in the third quarter.
Gross profit was $12.2 million in the third quarter 2014, compared to $14.6 million in the prior year period. Gross margin increased to 70.9% from 66.1% in the prior year period. Excluding the impact from the sales of pandemic influenza vaccine (H5N1) in the third quarter of last year, gross margin was 70.9%, compared to 67.6% in the same period of last year. The increase in gross margin was primarily due to increased efficiency in the Anflu manufacturing processes.
Selling, general and administrative expenses for the third quarter 2014 were $8.5 million, compared to $9.4 million in the same period of 2013.
R&D expenses for the third quarter of 2014 were $2.5 million, a $0.5 million increase over the same period in 2013. This increase is attributable to the continued advancement of sIPV and process optimization for PPV.
Net income attributable to common stockholders for the third quarter of 2014 was $0.1 million, or $0.00 per basic and diluted share, compared to $2.3 million, or $0.04 per basic and diluted share, in the same period last year.
Unaudited Financial Results for First Nine Months of 2014
(In USD'000 except percentage data)

 
2014 1-9
% of Sales
2013 1-9
% of Sales
Hepatitis A – Healive

 
15,519
36.3%
18,451
37.2%
Hepatitis A&B – Bilive

 
15,613
36.5%
17,935
36.2%
Hepatitis vaccines

 
31,132
72.8%
36,386
73.4%
Influenza vaccine

 
9,708
22.7%
8,747
17.6%
Animal vaccine

 
147
0.3%
132
0.3%
Mumps vaccine

 
1,693
4.0%
746
1.5%
Regular sales

 
42,680
99.8%
46,011
92.8%
H5N1

 
102
0.2%
3,568
7.2%
Total sales

 
42,782
100.0%
49,579
100.0%
Cost of goods sold

 
11,289
26.4%
14,327
28.9%
Gross profit

 
31,493
73.6%
35,252
71.1%
Total sales for the first nine months of 2014 were $42.8 million, a decrease of 13.7% from $49.6 million during the prior year period. Excluding the sales revenue of the special order of pandemic influenza vaccine (H5N1)  recognized in the third quarter of 2013, sales for the first nine months were $42.7 million, a decrease of 7.2% YoY from $46.0 million. Excluding the impact of the VAT rate reduction, sales for the first nine months decreased 8.3% YoY.
Gross profit for the first nine months of 2014 was $31.5 million, a decrease of 10.7% from $35.3 million in the same period of 2013. Gross margin was 73.6%, compared to 71.1% in the prior year period. Excluding the impact from the sales of pandemic influenza vaccine (H5N1) in the third quarter of 2013, gross margin was 73.6%, consistent with 73.9% in the same period of last year.
Selling, general and administrative expenses for the first nine months of 2014 were $24.9 million, compared to $25.3 million for the same period of 2013.
R&D expenses in the first nine months of 2014 were $7.5 million, compared to $5.9 million in the same period of 2013. These expenses are primarily related to the continued development and process optimization of the Company's pipeline vaccine candidates, sIPV and PPV.
Net loss attributable to stockholders in the first nine months of 2014 was $2.2 million or $(0.04) per basic and diluted share, compared to a net income of $1.6 million, or $0.03 per basic and diluted share, in the same period of 2013.
As of September 30, 2014, cash and cash equivalents totaled $94.4 million, compared to $107.2 million as of December 31, 2013. Net cash used in operating activities was $16.1 million during the first nine months of 2014. Net cash used in investing activities was $7.3 million, which was primarily used for payment of property, plant and equipment for the Company's PPV production facility and the Changping facility. Net cash provided by financing activities was $11.6 million during the first nine months of 2014, including loan proceeds of $17.8 million which were offset by loan repayment of $10.0 million.  As of September 30, 2014, the Company had $44.5 million of bank loans due within one year. Sinovac's cash and cash equivalents position of $94.4 million is sufficient to meet both these loan repayment obligations and the Company's operational requirements.
Conference Call Details
Sinovac will host a conference call on Monday, November 17, 2014 at 8:00 a.m. ET (November 17, 2014 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 1-877-407-9039 (USA) or 1-201-689-8470 (International). A replay of the call will be available from 11:00 a.m. ET on November 17, 2014 through December 1, 2014. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13595202.
A live audio webcast of the call will also be available on the Investor Relations section of the Company's website at www.sinovac.com. A webcast replay will be available on the Company's website for 30 days following the call, beginning November 17, 2014.
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. Sinovac's product portfolio includes vaccines against hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), mumps and canine rabies. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government stockpiling program. Sinovac has filed a new drug application with the China Food and Drug Administration for its proprietary enterovirus 71 vaccine, having been proven effective in preventing hand, foot and mouth disease in infants and children during its phase III clinical trial. The Company is currently developing a number of new products including a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine. Sinovac primarily sells its vaccines in China. The Company has exported select vaccines to Mexico, Mongolia, Nepal, and the Philippines. Sinovac has recently been granted a license to commercialize its hepatitis A vaccine and seasonal influenza vaccine in Chile. For more information, please visit the Company's website at www.Sinovac.com.
Contact
Sinovac Biotech Ltd. 
Helen Yang / Chris Lee 
Tel: +86-10-8279-9659 / 9696 
Fax: +86-10-6296-6910 
Email: ir@sinovac.com
ICR Inc. 
Bill Zima
U.S: 1-646-308-1707
Email: william.zima@icrinc.com
 
SINOVAC BIOTECH LTD.

 

 
Consolidated Balance sheets

 

 
As of September 30, 2014 and December 31, 2013

 
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

 

 

 
Current assets
September 30, 
2014
December 31,
2013

 
(Unaudited)

 
Cash and cash equivalents
94,354
107,242
Accounts receivable
40,852
31,927
Inventories
18,892
14,329
Prepaid expenses and deposits
1,411
1,150
Deferred tax assets
1,836
2,602
Total current assets
157,345
157,250

 

 

 
Property, plant and equipment
68,157
67,963
Prepaid land lease payments
10,588
10,948
Long-term inventories
4,061
2,781
Long-term prepaid expenses
38
154
Prepayment for acquisition of equipment
1,392
708
Deferred tax assets
298
117
Licenses
457
772
Total assets
242,336
240,693

 

 

 
Current liabilities

 

 
Bank loans and current portion of long-term debt
44,505
16,217
Loan from a non-controlling shareholder
2,625
3,324
Accounts payable and accrued liabilities
23,326
28,037
Income tax payable
460
246
Deferred revenue
345
875
Deferred government grants
454
458
Total current liabilities
71,715
49,157

 

 

 
Deferred government grants
7,782
4,746
Long-term debt
11,803
32,146
Deferred revenue
10,753
11,005
Total long term liabilities
30,338
47,897

 

 

 
Total liabilities
102,053
97,054

 

 

 
Commitments and contingencies

 

 
Equity

 

 
Preferred stock
-
-
Common stock
56
56
Additional paid-in capital
107,950
107,393
Accumulated other comprehensive income
12,875
14,141
Statutory surplus reserves
11,808
11,808
Accumulated deficit
(6,869)
(4,714)
Total stockholders' equity
125,820
128,684

 

 

 
Non-controlling interests
14,463
14,955
Total equity
140,283
143,639
Total liabilities and equity
242,336
240,693
 
SINOVAC BIOTECH LTD.

 

 

 

 

 
Consolidated Statements of Comprehensive Income (loss)

 

 

 

 
For the three and nine months ended September 30, 2014 and 2013

 

 

 
(Unaudited)

 

 

 

 

 
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

 

 

 

 

 

 

 

 
 Three months ended September 30

 
 Nine months ended September 30

 
2014
2013

 
2014
2013
 Sales
17,146
22,075

 
42,782
49,579
 Cost of sales
4,986
7,474

 
11,289
14,327
 Gross profit
12,160
14,601

 
31,493
35,252

 

 

 

 

 

 
 Selling, general and administrative expenses
8,515
9,392

 
24,896
25,335
 Provision for doubtful accounts
205
171

 
499
1,057
 Research and development expenses
2,545
2,034

 
7,512
5,923
 Loss (gain) on disposal and Impairment of property, plant and equipment
1
-

 
30
(2)
 Total operating expenses
11,266
11,597

 
32,937
32,313
 Operating income (loss)
894
3,004

 
(1,444)
2,939

 

 

 

 

 

 
 Interest and financing expenses 
(905)
(735)

 
(2,487)
(2,168)
 Interest income
575
544

 
2,120
1,568
 Other income (expenses) - net
(38)
134

 
179
141
 Income (loss) before income taxes and non-controlling interests 
526
2,947

 
(1,632)
2,480
 Income tax expense
(419)
(76)

 
(842)
(62)

 

 

 

 

 

 
 Net Income (loss)
107
2,871

 
(2,474)
2,418
Less: (Income) loss attributable to the non-controlling interests
(18)
(561)

 
319
(798)
 Net Income (loss) attributable to stockholders of Sinovac
89
2,310

 
(2,155)
1,620

 

 

 

 

 

 
 Other comprehensive income (loss), net of tax of nil

 

 

 

 

 
Foreign currency translation adjustments
964
249

 
(1,439)
1,602
 Total comprehensive income (loss)
1,071
3,120

 
(3,913)
4,020
  Less: comprehensive (income) loss attributable to non-controlling interests 
(146)
(588)

 
492
(966)
 Comprehensive income (loss) attributable to stockholders of Sinovac
925
2,532

 
(3,421)
3,054

 

 

 

 

 

 
 Weighted average number of shares of

 

 

 

 

 
   Basic
55,722,435
55,382,329

 
55,658,173
55,235,198
   Diluted
56,118,063
55,882,837

 
55,658,173
55,684,691

 

 

 

 

 

 
 Earning per share

 

 

 

 

 
   Basic
0.00
0.04

 
(0.04)
0.03
   Diluted
0.00
0.04

 
(0.04)
0.03
 
SINOVAC BIOTECH LTD.

 

 

 

 

 

 

 

 

 
Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 
For the three and nine months ended September 30, 2014 and 2013

 

 

 

 

 

 

 
(Unaudited)

 

 

 

 

 

 

 

 

 
(Expressed in thousands of U.S. Dollars)

 

 

 

 

 

 

 

 

 

 
Three months ended

 
Nine months ended

 
September 30

 
September 30

 

 
2014

 
2013

 

 
2014

 
2013
Cash flows provided by (used in) operating activities

 

 

 

 

 

 

 

 

 
Net income (loss)
$
107
$
2,871

 
$
(2,474)
$
2,419
  Adjustments to reconcile net income (loss) to net cash

 

 

 

 

 

 

 

 

 
  provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 
 - deferred income taxes

 
122

 
76

 

 
545

 
62
 - stock-based compensation

 
72

 
72

 

 
215

 
209
 - inventory provision

 
42

 
3

 

 
584

 
770
 - provision for doubtful accounts

 
205

 
171

 

 
499

 
1,057
 - impairment of equipment and loss on disposal

 
1

 
-

 

 
30

 
(2)
 - depreciation of property, plant and equipment and amortization of licenses
736

 
1,581

 

 
5,270

 
4,928
 - amortization of the prepaid land lease payments

 
66

 
69

 

 
198

 
207
 - accretion expenses

 
30

 
19

 

 
85

 
71
Changes in:

 

 

 

 

 

 

 

 

 
 - accounts receivable

 
(5,753)

 
(7,165)

 

 
(9,407)

 
(15,453)
 - inventories

 
976

 
735

 

 
(6,808)

 
(5,922)
 - income tax payable

 
297

 
-

 

 
297

 
-
 - prepaid expenses and deposits

 
(425)

 
(428)

 

 
(773)

 
(173)
 - deferred revenue

 
69

 
(3,483)

 

 
(616)

 
(4,711)
 - accounts payable and accrued liabilities

 
(1,334)

 
101

 

 
(3,793)

 
1,856

 

 

 

 

 

 

 

 

 

 
Net cash used in operating activities

 
(4,789)

 
(5,378)

 

 
(16,148)

 
(14,682)

 

 

 

 

 

 

 

 

 

 
Cash flows provided by (used in) financing activities

 

 

 

 

 

 

 

 

 
 - Loan proceeds

 
8,920

 
3,074

 

 
17,837

 
13,858
 - Loan repayments

 
(1,463)

 
-

 

 
(10,005)

 
(162)
 - Proceeds from issuance of common stock,

 

 

 

 

 

 

 

 

 
   net of share issuance costs

 
84

 
138

 

 
336

 
555
 - Proceeds from shares subscribed

 
(74)

 
31

 

 
6

 
203
 - Government grants received

 
3,244

 
71

 

 
3,429

 
595

 

 

 

 

 

 

 

 

 

 
Net cash provided by financing activities

 
10,711

 
3,314

 

 
11,603

 
15,049

 

 

 

 

 

 

 

 

 

 
Cash flows used in investing activities

 

 

 

 

 

 

 

 

 
 - Acquisition of property, plant and equipment

 
(1,624)

 
(768)

 

 
(7,307)

 
(3,437)

 

 

 

 

 

 

 

 

 

 
Net cash used in investing activities

 
(1,624)

 
(768)

 

 
(7,307)

 
(3,437)

 

 

 

 

 

 

 

 

 

 
Exchange gain (loss) on cash and cash equivalents

 
422

 
(188)

 

 
(1,036)

 
855

 

 

 

 

 

 

 

 

 

 
Increase (decrease) in cash and cash equivalents

 
4,720

 
(3,020)

 

 
(12,888)

 
(2,215)

 

 

 

 

 

 

 

 

 

 
Cash and cash equivalents, beginning of year

 
89,634

 
92,046

 

 
107,242

 
91,241

 

 

 

 

 

 

 

 

 

 
Cash and cash equivalents, end of year
$
94,354
$
89,026

 
$
94,354
$
89,026


 

 


 

 

 

       
     
   

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