Sinovac Reports Unaudited Third Quarter Financial Results

Nov 17, 2015 8:15am

BEIJING, Nov. 11, 2015 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products inChina, announced today its unaudited third quarter and nine month financial results for the period ended September 30, 2015.

Third Quarter 2015 Financial Highlights
(compared to the third quarter of 2014)

Quarterly sales were $16.8 million, a decrease of 2.0% from $17.1 million in the comparative period. This decline was largely due to changes in exchange rate.
Gross profit was $11.2 million, a decrease of 8.3% from $12.2 million in the prior year period. Gross margin was 66.4%, compared to 70.9% in the prior year period.
Net loss attributable to common shareholders was $1.6 million, or $(0.03) per basic and diluted share, compared to net income attributable to common shareholders of $89,000, or $0.00 per basic and diluted share, in the third quarter of 2014.

Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "Our results this quarter reflect consistent recurring sales of our core products. We are pleased to announce that the site inspection and GMP inspection for production of our EV71 vaccine have been completed, which is a critical step in the final phase of the approval process. We expect to receive final approval for production from the CFDA by early next year. Also, we were pleased to receive clinical trial approval for our varicella vaccine candidate. This live-attenuated vaccine will be an important addition to our product portfolio and will serve as a component in our pipeline measles-mumps-rubella-varicella (MMRV) combination vaccine. We continue to focus on maximizing the distribution of our core vaccine products, as we advance our product pipeline to drive growth for years to come."

Third Quarter 2015 Business Highlights

Sales and Marketing

In October, Sinovac received a tender from the Jiangsu provincial government to be the supplier of hepatitis A vaccines for the third consecutive year. Under this agreement, Sinovac became the sole supplier of the 2015 hepatitis A vaccine tender in Jiangsu for the first time and will provide 1.1 million doses of its inactivated hepatitis A vaccines over the next 12 months to the Jiangsu provincial government.

As previously announced, Sinovac was also awarded a tender from the Beijing government to supply seasonal influenza vaccines for its 2015 vaccination campaign. The Beijing government plans to order a minimum of 1.2 million doses of the seasonal flu vaccine this year from four domestic vaccine manufacturers for its campaign.

Research and Development

EV71 The site inspection and GMP inspection of the Company's EV71 vaccine production facility have been completed. The vaccine samples have passed the required testing by the CFDA. Sinovac expects to receive final approval for its EV71 vaccine by early 2016.

Varicella Vaccine Sinovac obtained approval from the CFDA to begin human clinical trials on its varicella vaccine candidate. The Company is currently confirming the site, training staff and preparing for volunteer screening. Sinovac expects the clinical trials to be completed by 2017. Sinovac is currently renovating an existing building on its Dalian campus, which will serve as the commercial production plant for the varicella vaccine. The plant will have a designed annual capacity of 5,000,000 doses.

Unaudited Financial Results for Third Quarter 2015
	2015 Q3	% of Sales	2014 Q3	% of Sales
(In USD'000 except percentage data)	2015 Q3	% of Sales	2014 Q3	% of Sales
Hepatitis A - Healive	4,800	28.6%	3,967	23.1%
Hepatitis A&B - Bilive	3,701	22.0%	3,176	18.5%
Hepatitis vaccines subtotal	8,501	50.6%	7,143	41.6%
Influenza vaccine	8,032	47.8%	9,647	56.3%
Animal vaccine	33	0.2%	102	0.6%
Mumps vaccine	231	1.4%	254	1.5%
Regular sales	16,797	100.0%	17,146	100.0%
H5N1	-	-	-	-
Total sales	16,797	100.0%	17,146	100.0%
Cost of sales	5,643	33.6%	4,986	29.1%
Gross profit	11,154	66.4%	12,160	70.9%

Total sales in the third quarter of 2015 were $16.8 million, a decrease of 2.0% compared to $17.1 million in the same period of 2014. The slight decrease is attributable to the depreciation of the Chinese RMB against the US dollar.

Gross profit was $11.2 million in the third quarter of 2015, compared to $12.2 million in the prior year period. Gross margin decreased to 66.4% from 70.9% in the prior year period. The decrease is primarily due to a lower utilization rate of the Company's production facilities in 2015. Additionally, in the third quarter of 2015, the Company delivered more Healive to the public market, which resulted in a lower average selling price of products sold compared to the prior year period.

Selling, general and administrative expenses in the third quarter of 2015 were $10.1 million, compared to $8.5 million in the same period of 2014. The increase was mainly due to increased G&A expenses associated with the trial production of the EV71 vaccine for the site inspection.

R&D expenses in the third quarter of 2015 were $2.2 million, compared to $2.5 million in the same period of 2014.

Net loss attributable to common shareholders for the third quarter of 2015 was $1.6 million, or $ (0.03) per basic and diluted share, compared to a net income attributable to common shareholders of $89,000, or $0.00 per basic and diluted share, in the same period last year.

Unaudited Financial Results for nine months ended September 30, 2015
	2015 YTD	% of Sales	2014 YTD	% of Sales
(In USD'000 except percentage data)	2015 YTD	% of Sales	2014 YTD	% of Sales
Hepatitis A - Healive	16,185	36.3%	15,519	36.3%
Hepatitis A&B - Bilive	17,972	40.3%	15,613	36.5%
Hepatitis vaccines subtotal	34,157	76.6%	31,132	72.8%
Influenza vaccine	9,144	20.5%	9,708	22.7%
Animal vaccine	113	0.3%	147	0.3%
Mumps vaccine	1,161	2.6%	1,693	4.0%
Regular sales	44,575	100.0%	42,680	99.8%

H5N1	-	-	102	0.2%
Total sales	44,575	100.0%	42,782	100.0%
Cost of sales	11,484	25.8%	11,289	26.4%

Gross profit	33,091	74.2%	31,493	73.6%

Total sales in the first nine months of 2015 were $44.6 million, an increase of 4.2% from $42.8 million in the same period of 2014. The increase is primarily due to increased sales of Healive into the public market and increased sales of Bilive into the private-pay market.

Gross profit in the first nine months of 2015 was $33.1 million, an increase of 5.1% from $31.5 million in the same period of 2014. Gross margin was 74.2%, compared to 73.6% in the same period of 2014.

Selling, general and administrative expenses in the first nine months of 2015 were $26.2 million, compared with $24.9 million in the same period of 2014.The increase was mainly due to increased G&A expenses associated with the trial production of the EV71 vaccine for the site inspection.

R&D expenses in the first nine months of 2015 were $6.6 million, compared to $7.5 million in the same period of 2014.

Net loss attributable to common shareholders in the first nine months of 2015 was $1.6 million, or $(0.03) per basic and diluted share, compared to net loss of $2.2 million, or $(0.04) per basic and diluted share, in the same period of 2014.

As of September 30, 2015, cash and cash equivalents totaled $54.4 million, compared to $91.5 million as of December 31, 2014. In the first nine months of 2015, net cash used in operating activities was $11.0 million. Net cash used in investing activities was $3.4 million, which was for the payment of property, plant and equipment. Net cash used in financing activities was $21.9 million, including loan proceeds of $14.4 million and loan repayment of $37.2 million. As of September 30, 2015, the Company had $24.9 million of bank loans due within one year. The Company expects that its current cash position will be able to support its operations for the next 12 months. The Company will seek new commercial bank loans to finance the commercialization of its pipeline products and for other operational purposes when appropriate.

Conference Call Details

Sinovac will host a conference call on Thursday, November 12, 2015 at 8:00 a.m. ET (November 12, 2015 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 13, 2015 through November 27, 2015. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13616892.

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.

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 & 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, while also exploring growth opportunities in international markets. The Company has exported select vaccines toMexico, Mongolia, Nepal, and the Philippines, and was recently granted a license to commercialize its hepatitis A vaccine in Chile. For more information, please visit the Company's website at www.Sinovac.com.

Contact

Sinovac Biotech Ltd.
Helen Yang
Tel: +86-10-8279-9871
Fax: +86-10-6296-6910
Email: [email protected]

ICR Inc.
Bill Zima
U.S: 1-646-308-1707
Email: [email protected]

Katherine Knight
Phone: +1 (646) 277-1276
Email: [email protected]

- tables to follow -

SINOVAC BIOTECH LTD.
Consolidated Balance sheets
As of September 30, 2015 and December 31, 2014
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

Current assets		September 30, 2015 (Unaudited)		December 31, 2014

Cash and cash equivalents	$	54,360	$	91,518
Accounts receivable - net		46,277		40,757
Inventories		20,826		18,832
Prepaid expenses and deposits		1,129		1,430
Deferred tax assets		1,786		2,266
Total current assets		124,378		154,803

Property, plant and equipment		64,917		68,417
Prepaid land lease payments		9,956		10,405
Long-term inventories		2,585		2,648
Long-term prepaid expenses		-		3
Prepayments for acquisition of equipment		1,677		1,387
Deferred tax assets		731		515
Licenses		86		352
Total assets		204,330		238,530

Current liabilities
Short-term bank loans and current portion of long-term debt		24,900		47,375
Loan from a non-controlling shareholder		2,576		2,595
Accounts payable and accrued liabilities		18,443		23,237
Income tax payable		322		1,101
Deferred revenue		3,781		4,996
Deferred government grants		882		530
Total current liabilities		50,904		79,834

Deferred government grants		6,382		7,494
Long-term debt		771		1,803
Deferred revenue		7,021		7,191
Other non-current liabilities		473		482
Total long-term liabilities		14,647		16,970

Total liabilities		65,551		96,804

Commitments and contingencies
Equity
Preferred stock		-		-
Common stock		57		56
Additional paid-in capital		109,430		108,243
Accumulated other comprehensive income		9,562		12,022
Statutory surplus reserves		12,627		12,627
Accumulated deficit		(7,962)		(6,384)
Total shareholders' equity		123,714		126,564

Non-controlling interests		15,065		15,162
Total equity		138,779		141,726
Total liabilities and equity	$	204,330	$	238,530

SINOVAC BIOTECH LTD.
Consolidated Statements of Comprehensive Income (loss)
For the three and nine months ended September 30, 2015 and 2014
(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
		2015		2014		2015		2014
Sales	$	16,797	$	17,146	$	44,575	$	42,782
Cost of sales		5,643		4,986		11,484		11,289
Gross profit		11,154		12,160		33,091		31,493

Selling, general and administrative expenses		10,080		8,515		26,173		24,896
Provision for doubtful accounts		414		205		498		499
Research and development expenses		2,214		2,545		6,647		7,512
Loss (gain) on disposal and impairment of property, plant and equipment		(11)		1		(35)		30
Government grants recognized in income		(58)		-		(501)		-
Total operating expenses		12,639		11,266		32,782		32,937
Operating income (loss)		(1,485)		894		309		(1,444)

Interest and financing expenses		(493)		(905)		(1,502)		(2,487)
Interest income		234		575		949		2,120
Other income (expenses)		31		(38)		134		179
Income (loss) before income taxes and non- controlling interests		(1,713)		526		(110)		(1,632)
Income tax expense		(267)		(419)		(1,258)		(842)
Net Income (loss)		(1,980)		107		(1,368)		(2,474)
Less: (Income) loss attributable to the non-controlling interests		382		(18)		(210)		319
Net Income (loss) attributable to shareholders of Sinovac		(1,598)		89		(1,578)		(2,155)

Other comprehensive income (loss), net of tax of nil
Foreign currency translation adjustments		(2,821)		964		(2,766)		(1,439)
Total comprehensive income (loss)		(4,801)		1,071		(4,134)		(3,913)
Less: comprehensive (income) loss attributable to non-controlling interests		700		(146)		96		492
Comprehensive income (loss) attributable to shareholders of Sinovac	$	(4,101)	$	925	$	(4,038)	$	(3,421)

Weighted average number of shares of common stock outstanding
Basic		56,424,587		55,722,435		56,126,013		55,658,173
Diluted		56,424,587		56,118,063		56,126,013		55,658,173

Earning (loss) per share
Basic		(0.03)		0.00		(0.03)		(0.04)
Diluted		(0.03)		0.00		(0.03)		(0.04)

SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2015 and 2014
(Unaudited)
(Expressed in thousands of U.S. Dollars)
		Three months ended			Nine months ended
		September 30			September 30
		2015		2014		2015		2014
Cash flows used in operating activities
Net income (loss)	$	(1,980)	$	107	$	(1,368)	$	(2,474)
Adjustments to reconcile net income (loss) to net cash
Used in operating activities:
- deferred income taxes		(465)		122		234		545
- stock-based compensation		316		72		637		215
- inventory provision		(68)		42		500		584
- provision for doubtful accounts		416		205		498		499
- loss (gain) on disposal and impairment of property, plant and equipment		(11)		1		(35)		30
- government grants recognized in income		(58)		-		(501)		-
- depreciation of property, plant and equipment and amortization of licenses		1,747		736		5,198		5,270
- amortization of the prepaid land lease payments		68		66		205		198
- accretion expenses		31		30		90		85
Changes in:
- accounts receivable		(3,828)		(5,753)		(7,441)		(9,407)
- inventories		1,881		976		(3,205)		(6,808)
- income tax payable		(415)		297		(797)		297
- prepaid expenses and deposits		100		(425)		621		(773)
- deferred revenue		(12)		69		(1,116)		(616)
- accounts payable and accrued liabilities		(966)		(1,334)		(4,544)		(3,793)
- other non-current liabilities		6		-		6		-

Net cash used in operating activities		(3,238)		(4,789)		(11,018)		(16,148)

Cash flows provided by (used in) financing activities
- Proceeds from bank loans		2,433		8,920		14,389		17,837
- Repayments of bank loans		(8,673)		(1,463)		(37,214)		(10,005)
- Proceeds from issuance of common stock,
net of share issuance costs		50		84		551		336
- Proceeds from shares subscribed		(9)		(74)		-		6
- Government grants received		389		3,244		398		3,429

Net cash provided by (used in) financing activities		(5,810)		10,711		(21,876)		11,603

Cash flows used in investing activities
- Acquisition of property, plant and equipment		(528)		(1,624)		(3,373)		(7,307)

Net cash used in investing activities		(528)		(1,624)		(3,373)		(7,307)

Exchange gain (loss) on cash and cash equivalents		(820)		422		(891)		(1,036)

Increase (decrease) in cash and cash equivalents		(10,396)		4,720		(37,158)		(12,888)

Cash and cash equivalents, beginning of period		64,756		89,634		91,518		107,242

Cash and cash equivalents, end of period	$	54,360	$	94,354	$	54,360	$	94,354

SOURCE Sinovac Biotech Co., Ltd.