Sinovac Reports Unaudited Second Quarter Financial Results

Sinovac Reports Unaudited Second Quarter Financial Results

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SOURCE Sinovac Biotech Ltd.

-- Conference call scheduled for Friday, August 15, 2014 at 8:00 AM ET --

BEIJING, Aug. 14, 2014 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter and half year financial results for the period ended June 30, 2014.

Second Quarter 2014 Financial Highlights

(compared to the second quarter 2013)

  • Quarterly sales were $12.1 million, a decrease of 30.7% from $17.5 million in the prior year period. Sales for the first six months were $25.6 million, a decrease of 6.8% YoY from $27.5 million.
  • Gross profit was $9.1 million, a decrease of 33.3% from $13.6 million in the prior year period.
  • Gross margin was 75.0%, compared to 77.9% in the prior year period.
  • Net loss attributable to common stockholders was $2.2 million, or $(0.04) per basic and diluted share, compared to net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the second quarter of 2013.

Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "While sales were impacted during the second quarter by short-term challenges from the external market environment, we are continuing to grow our sales channels and make strong progress in the development of our pipeline vaccines."

"In July, we received the first tranche of our RMB 60 million government grant to build a dedicated facility for the production of the EV71 vaccine, which is currently under review by the Center for Drug Evaluation. During the second quarter, we received our clinical trial license for the pneumococcal polysaccharide vaccine (PPV) from the CFDA and expect to begin trials later this year."

"Although we experienced decreased sales in the second quarter, we remain confident in our ability to execute our proven sales and marketing strategies, and continue to develop new vaccines that are both effective and safe. We expect these initiatives to meaningfully contribute to our performance as market conditions improve." Mr. Yin concluded.

Second Quarter 2014 Business Highlights

Sales Update

Public Tenders Sinovac has been selected by the Beijing Health Bureau as the sole supplier of inactivated hepatitis A vaccine in pre-filled syringe dosage to the Expanded Program of Immunization (EPI) for Beijing. The tender is valued at approximately RMB 16 million. The vaccines purchased by the Beijing Health Bureau will be used for the period from 2014 to 2016. The Company expects to begin delivery in the coming months.

Additionally, Sinovac has also been selected by the Beijing Centers for Disease Control and Prevention to be a supplier of the seasonal influenza vaccine to the citizens of Beijing for 2014. The Company expects to begin delivery in the third quarter of 2014.

International Sales to Mexico Sinovac obtained its commercialization license for Anflu in Mexico late last year. In early July, the Company delivered its first order of 150,000 doses of Anflu to Mexico, as it continues its efforts in international market expansions.

R&D Update

PPV The Company received clinical trial approval for its PPV in May. Sinovac has selected a site for the clinical trial and its draft proposal is currently under expert review. The Company expects clinical trials to begin by the end of 2014, following approval by an ethics committee.

Other Operation Updates

Government Grant In April, Sinovac received approval for a RMB 60 million government grant from China's Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, and National Health and Family Planning Commission for construction of the Company's dedicated EV71 vaccine production facility. Sinovac received the first RMB 20 million of the grant in July. The remainder will be provided once construction and approval criteria are met.

VAT Rate Reduction The value added tax (VAT) rate applied to the sales of Sinovac's vaccine products has been reduced to 3% from 6%, as authorized by the Ministry of Finance and State Administration of Taxation of China. The reduced VAT rate was effective July 1, 2014, and therefore did not impact second quarter results. Going forward, the reduced VAT rate will contribute to an improvement in the profitability of the Company's vaccines in Chinese market.

Unaudited Financial Results for Second Quarter 2014



2014 Q2

% of Sales

2013 Q2

%of Sales

(In USD'000 except percentage data)

Hepatitis A – Healive


5,113

42.3%

7,021

40.2%

Hepatitis A&B – Bilive


6,439

53.3%

9,586

54.9%

Hepatitis vaccines


11,552

95.6%

16,607

95.1%

Influenza vaccine


-

-

48

0.3%

Animal vaccine


18

0.1%

65

0.4%

Mumps vaccine


520

4.3%

732

4.2%

Regular sales


12,090

100.0%

17,452

100.0%

H5N1


-

-

-

-

Total sales


12,090

100.0%

17,452

100.0%

Cost of goods sold


3,025

25.0%

3,861

22.1%

Gross profit


9,065

75.0%

13,591

77.9%

In the second quarter 2014, total sales were $12.1 million, a decrease of 30.7% from $17.5 million during the same period in 2013. This decrease was primarily due to softer demand in the private vaccine market. China's CDCs have been also more conservative in their vaccination programs. Nevertheless, the Company achieved record sales in the second quarter of 2013, which resulted in a higher basis for year-over-year comparison.

Gross profit was $9.1 million in the second quarter 2014, compared to $13.6 million in the prior year period. Gross margin decreased to 75.0% from 77.9% in the prior year period. The slight decrease in gross margin is attributable to idle capacity in the Company's influenza facility during the second quarter, which was charged to cost of goods sold.

Selling, general and administrative expenses for the second quarter 2014 were $8.6 million, compared to $8.8 million in the same period of 2013.

R&D expenses for the second quarter of 2014 were $3.3 million, a $1.2 million increase over the same period in 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates, including sIPV, EV71, PPV, and varicella vaccine.

Net loss attributable to common stockholders for the second quarter of 2014 was $2.2 million, or $ (0.04) per basic and diluted share, compared to a net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the same period last year.

Unaudited Financial Results for First Half of 2014



2014 H1

% of Sales

2013 H1

% of Sales

(In USD'000 except percentage data)

Hepatitis A – Healive


11,552

45.1%

13,199

48.0%

Hepatitis A&B – Bilive


12,437

48.5%

12,581

45.7%

Hepatitis vaccines


23,989

93.6%

25,780

93.7%

Influenza vaccine


61

0.2%

330

1.2%

Animal vaccine


44

0.2%

78

0.3%

Mumps vaccine


1,440

5.6%

1,316

4.8%

Regular sales


25,534

99.6%

27,504

100.0%

H5N1


102

0.4%

-

-

Total sales


25,636

100.0%

27,504

100.0%

Cost of goods sold


6,303

24.6%

6,853

24.9%

Gross profit


19,333

75.4%

20,651

75.1%

Total sales for the first half of 2014 were $25.6 million, a decrease of 6.8% from $27.5 million in the same period of 2013. Sales for the first half of 2014 were impacted by decreased sales of the Company's hepatitis A vaccine, Healive, as a result of the challenging environment in the private-pay market.

Gross profit for the first half of 2014 was $19.3 million, a decrease of 6.4% from $20.7 million in the same period of 2013. Gross margin was 75.4% in the first half of 2014, compared to 75.1% in the same period of 2013.

Selling, general and administrative expenses for the first half of 2014 were $16.4 million, compared to $15.9 million for the same period of 2013.

R&D expenses in the first half of 2014 were $5.0 million, compared to $3.9 million in the same period of 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates.  

Net loss attributable to stockholders in the first half of 2014 was $2.2 million or $(0.04) per basic and diluted share, compared to a net loss of $0.7 million, or $(0.01) per basic and diluted share, in the same period of 2013.

As of June 30, 2014, cash and cash equivalents totaled $89.6 million, compared to $107.2 million as of December 31, 2013. Net cash used in operating activities was $11.4 million during the first half of 2014. Net cash used in investing activities was $5.7 million, which was primarily used for payment of property, plant and equipment for the Company's Changping facility. Net cash provided by financing activities was $0.9 million during the first half of 2014, including loan proceeds of $8.9 million and loan repayment of $8.5 million. As of June 30, 2014, the Company had $36.0 million of bank loans due within one year. Sinovac's cash and cash equivalents position of $89.6 million is sufficient to meet both these loan repayment obligations as well as the Company's operational requirements.

Conference Call Details

Sinovac will host a conference call on Friday, August 15, 2014 at 8:00 a.m. ET (August 15, 2014 at 8:00 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 August 15, 2014 through August 29, 2014. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13587706.

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 August 15, 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 & 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 to Mexico, 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 / 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 June 30, 2014 and December 31, 2013



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





Current assets 

December 31, 2013

June 30, 2014




(Unaudited)


Cash and cash equivalents

107,242

89,634


Accounts receivable 

31,927

34,733


Inventories

14,329

19,780


Prepaid expenses and deposits 

1,150

1,294


Deferred tax assets

2,602

1,981


Total current assets

157,250

147,422






Property, plant and equipment

67,963

64,646


Prepaid land lease payments

10,948

10,545


Long-term inventories

2,781

3,893


Long-term prepaid expenses

154

72


Prepayment for acquisition of equipment

708

3,169


Deferred tax assets

117

305


Licenses

772

553


Total   assets

240,693

230,605






Current liabilities




Bank loans and current portion of long-term
debt

16,217

35,975


Loan from a non-controlling shareholder

3,324

3,243


Accounts payable and accrued liabilities 

28,037

24,384


Income tax payable

246

240


Deferred revenue

875

306


Deferred government grants

458

449


Total current liabilities

49,157

64,597






Deferred government grants

4,746

4,588


Long-term debt

32,146

11,651


Deferred revenue

11,005

10,639


Total long term liabilities

47,897

26,878






Total liabilities

97,054

91,475






Commitments and contingencies 




Equity




Preferred stock

-

-


Common stock

56

56


Additional paid-in capital

107,393

107,868


Accumulated other comprehensive income

14,141

12,039


Statutory surplus reserves

11,808

11,808


Accumulated deficit

(4,714)

(6,958)


Total stockholders' equity

128,684

124,813






Non-controlling interests

14,955

14,317


Total equity

143,639

139,130


Total liabilities and equity

240,693

230,605


 SINOVAC BIOTECH LTD. 





 Consolidated Statements of Comprehensive Income (loss) 





For the three and six months ended June 30, 2013 and 2014





 (Unaudited) 





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









 Three months ended June 30 


 Six months ended June 30 


2013

2014


2013

2014

 Sales 

17,452

12,090


27,504

25,636

 Cost of sales 

3,861

3,025


6,853

6,303

 Gross profit 

13,591

9,065


20,651

19,333







 Selling, general and administrative expenses 

8,786

8,589


15,891

16,381

 Provision for doubtful accounts 

604

132


886

294

 Research and development expenses 

2,042

3,265


3,889

4,967

 Loss (income) on disposal and Impairment of property,
plant and equipment

-

29


(2)

29

 Total operating expenses 

11,432

12,015


20,664

21,671

 Operating income (loss) 

2,159

(2,950)


(13)

(2,338)







 Interest and financing expenses  

(770)

(832)


(1,433)

(1,582)

 Interest income

583

765


1,024

1,545

 Other income (expenses) - net

(54)

71


7

217

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

1,918

(2,946)


(415)

(2,158)

 Income tax benefit (expense) 

(4)

(76)


(37)

(423)







 Net Income (loss) 

1,914

(3,022)


(452)

(2,581)

Less: (Income) loss attributable to the non-controlling interests

(595)

774


(237)

337

 Net Income (loss) attributable to stockholders of Sinovac 

1,319

(2,248)


(689)

(2,244)







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






Foreign currency translation adjustments

1,119

(319)


1,353

(2,403)

 Total comprehensive income (loss) 

3,033

(3,341)


901

(4,984)

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

(707)

738


(378)

638

 Comprehensive income (loss) attributable to stockholders of Sinovac 

2,326

(2,603)


523

(4,346)







 Weighted average number of shares of 






   Basic 

55,056,191

55,663,566


54,995,674

55,625,509

  Diluted 

55,522,748

55,663,566


54,995,674

55,625,509







 Earning per share 






   Basic 

0.02

(0.04)


(0.01)

(0.04)

   Diluted 

0.02

(0.04)


(0.01)

(0.04)

 

SINOVAC BIOTECH LTD.







Consolidated Statements of Cash Flows







For the three and six months ended June 30, 2013 and 2014







(Unaudited)







(Expressed in thousands of U.S. Dollars)








Three months ended


Six months ended 


June 30


June 30



2013


2014



2013


2014

Cash flows provided by (used in) operating activities










Net income (loss)

$

1,914

$

(3,022)


$

(452)

$

(2,581)

  Adjustments to reconcile net income (loss) to net cash










  provided by (used in) operating activities:










 - deferred income taxes


(17)


58



(15)


369

 - stock-based compensation


62


71



138


143

 - inventory provision


768


321



768


542

 - provision for doubtful accounts


604


132



886


294

 - impairment of equipment and loss on disposal


-


29



(3)


29

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


1,718


1,903



3,348


4,534

- amortization of the prepaid land lease payments


69


65



138


132

- accretion expenses


34


28



52


55

Changes in:










 - accounts receivable


(4,511)


1,327



(8,288)


(3,654)

 - inventories


(3,582)


(4,905)



(6,657)


(7,784)

 - prepaid expenses and deposits


399


234



256


(348)

- deferred revenue 


(162)


33



(1,229)


(685)

 - accounts payable and accrued liabilities


(593)


(1,889)



1,754


(2,459)











Net cash used in operating activities


(3,297)


(5,615)



(9,304)


(11,413)











Cash flows provided by (used in) financing activities










- Loan proceeds


3,305


3,182



10,785


8,917

- Loan repayments


(162)


(6,084)



(162)


(8,542)

- Proceeds from issuance of common stock,










   net of share issuance costs


406


147



417


252

- Proceeds from shares subscribed 


8


31



8


80

- Government grants received 


220


185



524


185











Net cash provided (used in) by financing activities


3,777


(2,539)



11,572


892











Cash flows used in investing activities










 - Acquisition of property, plant and equipment


(508)


(3,479)



(2,232)


(5,683)











Net cash used in investing activities


(508)


(3,479)



(2,232)


(5,683)











Exchange gain (loss) on cash and cash equivalents


512


(385)



769


(1,404)











Increase (decrease) in cash and cash equivalents


484


(12,018)



805


(17,608)











Cash and cash equivalents, beginning of year


91,562


101,652



91,241


107,242











Cash and cash equivalents, end of year

$

92,046

$

89,634


$

92,046

$

89,634

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