Sinovac Reports Semi-Annual Results
Tuesday September 12, 8:03 am ET
73% Sales Growth and Strong Margins for First Six Months of 2006
BEIJING, Sept. 12 /Xinhua-PRNewswire/ -- Sinovac Biotech Ltd. (Sinovac) (Amex: SVA
) today released its semi-annual report. Sales for the six months ended June 30, 2006 increased by 73.3% over the prior year due to stronger sales of its existing hepatitis A vaccine, augmented by the launch of the Company's Bilive (TM) combined hepatitis A and B vaccine. Gross margin increased to 76.25% from 68.03% due to manufacturing and packaging efficiencies. The loss for the period decreased to $970,000 from $3,466,000 in the comparative period, reflecting both increased revenues and decreased operating expenses. Full particulars of the Company's results of operations and financial condition are provided in the Company's Report on Form 6-K which has been filed with the United States Securities and Exchange Commission. Some of the highlights are set out below.
The Company generated revenue of $4,677,000 for the six months ended June 30, 2006, compared to $2,699,000 in the period ended June 30, 2005, which corresponds to revenue growth of 73.3%. The increase was primarily due to stronger sales of the Company's hepatitis A vaccine Healive (TM) but also to the launch of the Company's combined hepatitis A and B vaccine Bilive (TM). Sales of Healive (TM) grew due to increased marketing efforts and a regulatory change effective on January 1, 2006 that effectively eliminated a competing vaccine technology from the Chinese marketplace.
Gross profit margin increased to 79.9% for the six months ended June 30, 2006 from 73.0% for the six months ended June 30, 2005. These gross profit amounts are exclusive of depreciation and amortization of land-use rights, licenses and permits in the amount of $171,000 and $135,000 for the six months ended June 30, 2006 and 2005, respectively. If these depreciation and amortization amounts had been included in the determination of gross profit, the gross profit margin would have been 76.25% and 68.03% for the six months ended June 30, 2006 and 2005, respectively. The increase in gross profit margin was due to: 1) economies of scale resulting from increased production of Healive(TM); and 2) the Company supplemented its pre-filled syringe packages of Healive(TM) with vial packages that have a higher gross profit margin.
Selling general and administrative (SG&A) expenses were $4,003,000 and $4,952,000 for the six months ended June 30, 2006 and 2005, respectively. Our SG&A expenses decreased in 2006, primarily due to decreased stock-based compensation expense, which fell to $491,000 for the six months period ended June 30, 2006 from $2,897,000 in the corresponding period in 2005.
Total research and development expenses aggregated $648,000 and $216,000 for the six months ended June 30, 2006 and June 30, 2005, respectively. The Chinese government provided grants to us, which are recognized as reductions in research and development expenses in the period in which the research and development expenses are incurred and the conditions imposed by government authorities are fulfilled. During the first six months of 2006, we received the Chinese government pandemic influenza research grants of $373,000, compared to $48,000 during the same period of 2005. We recognized $554,000 of government research grant income for the current period, while in the six months ended June 30, 2005, we recognized a government research grant income of $99,000. Accordingly, our net research and development expenses were $94,000 for the six months ended June 30, 2006 and $116,000 for the comparative period.
The Company's net loss was $970,000 and $3,466,000 for the six months ended June 30, 2006 and June 30, 2005, respectively. The decrease of net loss is due to the increase in sales and gross profit margin and the decrease in selling, general and administrative expenses.
As of June 30, 2006, our unrestricted cash and cash equivalents totaled $7,095,000, which, we believe, is sufficient to fund the Company's business over the next 12 months. The Company is still seeking to raise additional capital through equity financing to finance expansion.
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 vaccines include Healive(TM) (hepatitis A), Bilive(TM) (combined hepatitis A and B) and Anflu(TM) (influenza). Sinovac is currently developing human vaccines against the H5N1 strain of pandemic influenza, Japanese encephalitis and SARS.
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.