Sinovac Reports Record Second Quarter 2008 Unaudited Financial Results
Sinovac Reports Record Second Quarter 2008 Unaudited Financial Results
Wednesday August 13, 8:07 am ET
-- Conference Call on Wednesday, August 13, 2008 at 9:00 a.m. ET --
Second Quarter Highlights -- Sales increased 73% year-over-year to $16.5 million -- Sold 2.72 million doses of Healive®, up 55%, and 180,000 doses of Bilive® based on increased demand following the May 12th earthquake in Sichuan Province. -- Gross profit grew 69% year-over-year to $13.9 million, with 84% gross margin -- Operating income rose 50% year-over-year to $7.0 million -- Net income increased to $3.3 million with diluted EPS of $0.08 Year to Date Highlights -- Sales increased 88% to $25.4 million -- Operating income rose 66% year-over-year to $10.2 million -- Net income increased to $4.9 million with diluted EPS of $0.12
Mr. Weidong Yin, Chairman, President and CEO, commented, "We are pleased to announce our record performance for this quarter, which can be attributed to Healive sales that exceeded market expectation. The devastating May 2008 earthquake in the Sichuan province resulted in health challenges presented by the destruction of clean water and sanitation infrastructure. In the face of this tragedy, we are proud to have been able to meet the increased demand for the hepatitis A vaccine after Sinovac was selected by Ministry of Health and provincial governments as the sole supplier of hepatitis A vaccine to the region. This illustrates the government's trust in the quality of our vaccines and our capability to provide comprehensive marketing and sales service and support to the local CDC and demonstrates that we have the production capacity and reliable delivery channel to fulfill urgent demand on a timely basis. We believe the experience served as a valuable opportunity for Sinovac to demonstrate its ability to meet the public's needs as we continue to cultivate the public market for our hepatitis A vaccine."
Three Months Ended June 30, 2008
For the second quarter 2008, sales increased 73% to $16.5 million, compared to $9.5 million in the second quarter 2007. The growth was driven by higher sales of Healive® and Bilive® following the May 12th earthquake. Government orders after the earthquake generated about $4.6 million, which are not expected to recur in future periods. Sales and other amounts, which are reported here in US dollars, were also affected by the strengthening of the Chinese RMB against the US dollar in the last year.
During the second quarter of 2008, Sinovac sold 2.72 million doses of Healive®, up from 1.75 million doses for the same period of 2007. Higher sales in the second quarter 2008 resulted from Healive promotion campaign targeting the private market and the increased demand following the May 12th earthquake. During the second quarter of 2008, Sinovac sold 180,000 doses of Bilive® compared to sales returns of 13,000 doses in the comparative period.
Gross profit for second quarter 2008 was $13.9 million, with a gross margin of 84.0%, compared to $8.2 million and 86.5%, respectively, for the same period of 2007.
Total operating expenses for the second quarter 2008 increased to $6.9 million, compared to $3.6 million in the same period 2007. Selling, general and administrative expenses for second quarter of 2008 were $6.0 million, compared to $3.5 million in the same period of 2007. The year-over-year increase in SG&A expenses was in line with the increased sales. SG&A expenses as a percentage represented 36.5% of revenues in the second quarter of 2008, compared to 36.3% in the same period in the prior year.
Gross expenditures on research and development expenses for the second quarter of 2008 were $794,000 compared to $322,000 in the same period of 2007. R&D expenses net of government grants were $667,000 for the second quarter of 2008, compared to ($53,000) in the same period of 2007. The R&D expenses recognized as a reduction to government grants were $127,000 in the second quarter of 2008, compared to $375,000 in the same period of 2007. The R&D expenses were mainly incurred for the Japanese encephalitis vaccine program and pandemic influenza immunogenic persistence research of Panflu.
Operating income was $7.0 million for the second quarter of 2008, compared to $4.7 million in the same period of 2007. The year-over-year increase in operating income reflected the significant increase in vaccine sales and the moderately higher R&D expenses.
Net income for the second quarter of 2008 also included $400,000 of interest and financing expenses, $1.6 million of income taxes, $141,000 other expense and $1.5 million of minority interest. Net income for the same period of 2007 included $93,000 of interest and financing expenses, $832,000 of income taxes, $197,000 interest and other income and $1.3 million of minority interest.
Net income for the second quarter of 2008 was $3.3 million, or $0.08 per diluted share, compared to $2.7 million, or $0.07 per diluted share, in the same period of 2007.
On July 8, 2008, the Chinese government issued detailed implementation guidelines with regards to the criteria and approval process for High and New Technology Enterprises (HNTE). HNTEs will be entitled to the preferential income tax rate of 15% compared to the unified income tax rate of 25% effective January 1, 2008. Prior to 2008, Sinovac Beijing was subject to the preferential income tax rate of 15% as a HNTE. Given that application process has not yet commenced and whether Sinovac will eventually be approved for HNTE status is uncertain, Sinovac Beijing has elected to account for its current and deferred income tax utilizing the enacted statutory tax rate of 25% as the applicable enterprises income tax rate for 2008.
In the event that Sinovac Beijing reconfirms its HNTE status in accordance with the HNTE rules, a 15% corporate income tax rate would be retroactive to January 1, 2008. Assuming HNTE is received; the impact on the results of operations for the six months ended June 30, 2008 would include a $1,289,776 decrease in the provision of the current income tax with a corresponding reduction in the income tax liability and a $868,076 increase in deferred income tax expense with an offset to deferred income tax assets. The effect change of rate will be recorded in the period that changes occur.
As of June 30, 2008, Sinovac's cash and cash equivalents totaled $18.8 million, compared to $17.1 million as of December 31, 2007.
Research and Development
Before we obtained the production license of the whole viron pandemic influenza vaccine, Panflu, granted by SFDA, we also commenced the development of a split formulation of pandemic influenza vaccine.
In June 2008, Sinovac initiated volunteer enrollment in its Phase II trial of the split pandemic influenza vaccine. The randomized and double-blind trial is expected to enroll 210 adolescents, between the ages of 12 to 17, who will receive doses of 10ug, 15ug or 30ug, and 140 children, between the ages of 3 to 11, who will receive doses of 10ug or 15ug. Volunteers will be followed for two months with safety and immunogenicity data collected for the assessment of the vaccine. We are still on track to announce preliminary results from this study in early 2009.
Conference Call Details
The Company will host a conference call on Wednesday, August 13, 2008 at 9:00 a.m. ET (9:00 p.m. Beijing time). 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 August 13 until August 27, 2008, at midnight. 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 293426. 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 August 13, 2008 and the replay will remain available for 30 days.
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 commercialized vaccines include Healive® (hepatitis A), Bilive® (combined hepatitis A and B), Anflu® (influenza) and Panflu(TM) (H5N1). Sinovac is currently developing universal pandemic influenza vaccine and Japanese encephalitis vaccine. Additional information about Sinovac is available on its website, http://www.sinovac.com . To be added to our distribution list, please email: firstname.lastname@example.org.
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. Consolidated Statements of Income and Comprehensive Income Three Months and Six Months Ended June 30, 2008 and 2007 (Unaudited) (Expressed in U.S. Dollars) Three months ended June 30 Six months ended June 30 2008 2007 2008 2007 Sales 16,521,429 9,538,169 25,383,430 $13,511,221 Cost of sales - (exclusive of depreciation of land-use rights and amortization of licenses and permits of $102,742 (2007 - $94,165) for three months and $202,575(2007-186,893) for six months 2,613,939 1,290,154 3,661,805 1,931,604 Gross profit 13,907,490 8,248,015 21,721,625 11,579,617 Selling, general and administrative expenses 6,038,650 3,454,382 9,616,536 4,722,926 Research and development expenses - net of $126,829 (2007 - $374,825) for three months and $130,848 (2007 - $367,411) for six months in government research grants 667,508 (53,345) 1,596,844 390,399 Depreciation of property, plant and equipment and amortization of licenses and permits 169,484 159,303 347,713 328,344 Total operating expense 6,875,642 3,560,340 11,561,093 5,441,669 Operating income 7,031,848 4,687,675 10,160,532 6,137,949 Interest and financing expenses (399,854) (93,012) (557,561) (179,068) Interest income and other income (expenses) (141,491) 196,626 (95,141) 260,650 Income before income taxes and minority interest 6,490,503 4,791,289 9,507,830 6,219,530 Income taxes recovery (expense) - Current (2,579,104) (765,725) (3,224,439) (1,055,944) - Deferred 970,614 (66,336) 897,433 (118,071) Income before minority interest 4,882,013 3,959,228 7,180,824 5,045,515 Minority interest share of earnings 1,545,764 1,268,621 2,284,619 1,578,536 Net income 3,336,249 2,690,607 4,896,205 3,466,979 Other comprehensive income Foreign currency translation adjustment 956,180 155,503 2,243,204 289,632 Comprehensive income $4,292,429 $2,975,174 $7,139,409 $3,931,136 Earnings per share - basic $0.08 $0.07 $0.12 $0.09 - diluted $0.08 $0.07 $0.12 $0.09 Weighted average number of shares of common stock outstanding - Basic 42,851,228 38,745,171 41,983,709 38,734,577 - Diluted 43,210,296 39,046,811 42,351,756 39,012,980 SINOVAC BIOTECH LTD. Consolidated Balance Sheets (Unaudited) (Expressed in U.S. Dollars) June 30, 2008 December 31, 2007 ASSETS Current assets Cash and cash equivalents $ 18,820,271 $ 17,071,497 Accounts receivable - net 29,931,302 16,983,892 Inventories 6,369,339 3,745,957 Prepaid expenses and deposits 969,449 800,840 Deferred tax assets 1,180,199 579,703 Total current assets 57,270,560 39,181,889 Restricted cash 448,532 846 Property, plant and equipment 18,811,886 15,879,391 Long-term prepaid expenses and deposits 282,767 298,731 Deferred tax asset 989,990 693,053 Licenses and permits 1,285,732 1,394,052 Total assets $ 79,089,467 $ 57,447,962 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Loans payable $ 7,276,114 $ 6,836,110 Accounts payable and accrued liabilities 13,929,071 9,522,818 Due to related parties 46,971 46,971 Dividends payable to minority interest shareholder of Sinovac Beijing 115,380 3,000,458 Deferred research grants 1,060,782 1,038,396 Total current liabilities 22,428,318 20,447,754 Deferred government grants 2,910,446 2,734,444 Loan payable 1,455,223 1,367,222 Long - term debt 4,365,669 4,101,666 Total liabilities 26,793,987 24,546,420 Minority interest 5,264,385 2,897,687 Commitments and contingencies STOCKHOLDERS' EQUITY Preferred stock -- -- Authorized 50,000,000 shares at par value of $0.001 each Issued and outstanding: nil Common stock 42,854 40,305 Authorized: 100,000,000 shares at par value of $0.001 each Issued and outstanding: 42,853,528 (2007 - 40,305,028 ) Subscriptions received 39,295 9,170 Additional paid in capital 41,965,154 32,109,997 Accumulated other comprehensive income 4,199,660 1,956,456 Dedicated reserves 2,999,396 2,999,396 Accumulated deficit (2,215,264) (7,111,469) Total stockholders' equity 47,031,095 30,003,855 Total liabilities and stockholders' equity $ 79,089,467 $ 57,447,962 SINOVAC BIOTECH LTD. Consolidated Statements of Cash Flows Three Months and Six Months Ended June 30, 2008 and 2007 (Unaudited) (Expressed in U.S. Dollars) Three Months Ended June 30 Six Months Ended June 30 2008 2007 2008 2007 Cash flows from (used in) operating activities Net Income for the period $3,336,249 $2,690,607 $4,896,205 $3,466,979 Adjustments to reconcile net income to net cash used by operating activities: - deferred income taxes (970,614) 66,336 (897,433) 118,071 - loss on disposal of equipment -- 3,957 -- 3,957 - stock-based compensation 16,635 69,276 33,271 138,551 - provision for doubtful debts 932,113 570,302 1,559,918 754,544 - inventory provision -- 87,869 -- 87,869 - depreciation of property, plant and equipment, and amortization of licenses 388,460 357,051 780,563 720,191 - research and development expenditures qualified for government grant (126,829) (374,825) (130,848) (367,411) - minority interests 1,545,764 1,268,621 2,284,619 1,578,536 Change in other assets and liabilities - accounts receivable (9,218,834)(3,904,173) (13,369,079)(5,717,338) - inventories (865,187)(1,539,537) (2,314,630)(2,075,824) - prepaid expenses and deposits (403,304) (374,308) (84,290) (660,379) - accounts payable and accrued liabilities 3,668,617 1,081,130 4,142,407 (93,796) Net cash provided by operating activities (1,696,930) 2,306 (3,099,297)(2,046,050) Cash flows from (used in) financing activities Loan repayment -- -- -- (517,471) Proceeds from issuance of common stock 1,966 52,975 9,815,265 165,631 Payment to release shares in escrow -- -- -- 400,000 Proceeds from shares subscribed 39,295 15,720 39,295 15,720 Dividends paid to minority interest shareholder in Sinovac Beijing -- -- (2,947,877) (827,229) Government grant received 70,695 2,962,522 70,695 2,962,522 Due to related parties -- (386,977) -- -- Net cash provided by financing activities 119,956 2,644,240 6,977,378 2,199,173 Cash flows from (used in) investing activities Restricted cash 935,765 3,386 (434,921) 22,726 Acquisition of property, plant and equipment (1,229,151) (379,392) (2,236,575) (257,280) Net cash used in investing activities (293,386) (376,006) (2,671,496) (234,554) Exchange effect on cash and equivalents 119,919 99,013 542,189 155,557 Increase (decrease) in cash and cash equivalents (1,758,441)(2,369,553) 1,748,774 33,537 Cash and cash equivalents, beginning of period 20,578,712 6,912,816 17,071,497 9,248,832 Cash and cash equivalents, end of period $18,820,271 $9,282,369 $18,820,271 $9,282,369 Cash paid for interest, net of interest capitalized $133,612 $71,816 $306,005 $159,818 Cash paid for income taxes $871,557 $416,330 $1,309,963 $517,674 Supplemental schedule of non-cash activities: Acquisition of property, plant and equipment Included in accounts payable and accrued liabilities $ -- $ -- $546,514 $74,718 For more information, please contact: Contact Information: Investors/Media: Helen G. Yang Stephanie Carrington/Janine McCargo Sinovac Biotech Ltd. The Ruth Group Tel: +86-10-8289-0088 x871 Tel: +1-646-536-7017/7033 Fax: +86-10-6296-6910 Email: email@example.com Email: firstname.lastname@example.org email@example.com
Sinovac Biotech Ltd. (SINOVAC) is a China-based biopharmaceutical company that focuses on the R&D, manufacturing, and commercialization of biomedical products that protect against human diseases.
SINOVAC's product portfolio includes vaccines against COVID-19, enterovirus 71 (EV71) infected hand-foot-mouth disease (HFMD), hepatitis A, varicella, influenza, poliomyelitis, pneumococcal disease, mumps, etc.
The COVID-19 vaccine, CoronaVac®, has been approved for use in more than 60 countries and regions worldwide. The hepatitis A vaccine, Healive®, passed WHO prequalification requirements in 2017. The EV71 vaccine, Inlive®, is an innovative vaccine under "Category 1 Preventative Biological Products" and commercialized in China in 2016. In 2022, SINOVAC's Sabin-strain inactivated polio vaccine (sIPV) and varicella vaccine were prequalified by the WHO.
SINOVAC was the first company to be granted approval for its H1N1 influenza vaccine Panflu.1®, which has supplied the Chinese government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine, Panflu®, to the Chinese government stockpiling program.
SINOVAC continually dedicates itself to pipeline development including but not limited to new technology, new vaccines as well as other biomedical products. We will constantly explore global opportunities of strategic expansion.
For more information, please visit the Company’s website at www.sinovac.com.
Sinovac Biotech Ltd.