HAIKOU, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- Kun Run Biotechnology, Inc. (OTC Bulletin Board: KURU), a leading bio-pharmaceutical company in China that focuses on manufacture and sales of peptides and peptide-based drugs, today announced its financial results for the third quarter ended September 30, 2008.



    Third Quarter 2008 Highlights
    -- Revenues increased 16% from the third quarter of 2007 to a quarterly
       revenue of $2.4 million
    -- Gross profit was $1.8 million, compared to $1.3 million in the third
       quarter of 2007
    -- Operating income was $1.1 million, a increase of 41% from $793,998 in
       the third quarter of 2007
    -- Net income increased 50% year-over-year to $865,524, or $0.04 per basic
       and fully diluted share.

Third Quarter 2008 Results

Net revenue was $2.4 million for the quarter ended September 30, 2008, up 16% from $2.1 million in the third quarter of 2007. This increase was mainly attributable to the increase in sales of our products. For the three months ended September 30, 2008, the sales of TP-5 products accounted for 48% of total sales, decreased by $0.3 million, or 20% from $1.5 million, or 71% of the total sales for the three months ended September 30, 2007. This was offset by an increase in the sales volume of our other major peptide products such as Thymosin Alpha 1, Somatostatin ("SS") and Desmopressin Acetate Injection ("DDAVP"). Within this, Thymosin Alpha 1 for injection (1.6mg) became the best selling product which produced $845,013 in revenue (34% of the total sales) for the three months ended September 30, 2008, representing a 241% increase from the same period of 2007.

Gross profit for the quarter was $1.8 million, a 31% increase from $1.3 million in the third quarter of 2007. Gross margin was 72% in the 2008 quarter, up from 63% in the same period last year. This increase was attributable to the reduction in cost of goods sold as a percentage of revenues which mainly attributed to the increased sales of high-margin products including Somatostatin, DDAVP and Thymosin a1.

Operating expenses in the September 2008 quarter were $637,324, up 17% from $542,725 in the third quarter of 2007. This increase was primarily due to our heavy investment in research and development activities and higher professional fees resulting from our status as a public company in the United States.

Operating income was $1.1 million, or 46% of revenue, an increase from $793,998, or 38% of revenue, in the third quarter of 2007 due to the factors stated above.

Net income was $865,524, or $0.04 per share (basic and diluted), compared to a net income of $576,369, or $0.02 per share (basic and diluted), in the third quarter of 2007.

Nine months Ended September 30, 2008 Results

Net revenue was $7.8 million in the quarter ended September 30, 2008, up 57% from $5.0 million in the quarter ended September 30, 2007. Gross profit margin was 71%, up from 51% in the third quarter of 2007. Such a percentage increase was mainly due to the increase in sales of higher margin non TP-5 products as a percentage of total sales and effective cost controls during the nine month period of 2008. Operating income was $1.5 million, or 20% of revenue. Net income was $3.4 million or $0.14 per basic and fully diluted share, up 250% from $1.4 million, or $0.04 per fully diluted share in the nine month period of 2007.

Financial Condition

As of September 30, 2008, the Company had $307,693 in cash and cash equivalents, $0.8 million in working capital and a current ratio 1.1:1. Kun Run generated $4.3 million in cash flow from operations in the first nine months of 2008, compared to $837,829 in the first nine months of 2007. Shareholders' equity stood at $14.7 million, with a debt to equity ratio was 0.62 at the end of September 30, 2008.

Significant Subsequent Events

On September 25, 2008, the company completed a reverse merger with Aspen Racing Stables, Inc., and become a public company in United States trading under the ticker of "ASRS.OB"

On Nov. 6, 2008, pursuant to a Certificate of Amendment to the Company's Articles of Incorporation, as filed with the Nevada Secretary of State on November 1, 2008, the name of the Company has been changed from Aspen Racing Stables to Kun Run Biotechnology, Inc. (hereafter "Kun Run" or the "Company"). And effectively on Nov. 6, 2008, the ticker symbol on the Over-the-Counter Bulletin Board ("OTC BB") changed from "ASRS.OB" to "KURU.OB".

On October 1, 2008, Kun Run's newly completed manufacturing facility obtained the GMP certification and commenced production. The new manufacturing facility is located in Haikou, China, next to Kun Run's existing facility. It is equipped with 6 production lines to produce medicines in six forms, including small volume parenteral solution, prefilled injection, tablets, freeze-dried powder injection, capsules and granules. Combined with the existing 2 freeze-dried powder injection lines, Kun Run now possesses 8 production lines in total which can support our expansion plan and new product launch activities.

"We continue to be very excited about the growth opportunities presented by the peptide market in China. During the past year, Kun Run has demonstrated success in developing and commercializing peptide medicines in the China market and has built reputable brand awareness. With the extra capacity added by the newly operated facility, we have confidence to strengthen and diversify our product portfolio in China to support the market growth. We are committed to a profitable growth strategy," remarked Mr. Ye Xiaoqun, Chief Executive Officer of Kun Run Biotechnology.

About Kun Run Biotechnology, Inc.

Kun Run Biotechnology Ltd., together with its subsidiaries, engages in manufacture and sale of polypeptide medicines. It uses solid phase peptide synthesis (SPPS) and advanced purifying technology to produce various therapeutic polypeptide drugs, of which is " TP-5" most known for efficiently regulating humans' immune systems in order to defend and cure malignant diseases. The company maintains two state-of-art manufacturing plants and possesses one of the largest peptide synthesizing capacities across Asia.

Safe Harbor Statement

Certain statements set forth in this press release constitute "forward- looking statements." Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to introduce, manufacture and distribute new drugs. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers and product obsolescence. More information about the potential factors that could affect the Company's business and financial results are included in the Company's filings, available via the United States Securities and Exchange Commission.




                        -- FINANCIAL TABLES FOLLOW --


                 Kun Run Biotechnology, Inc. and Subsidiaries
                         Consolidated Balance Sheets
                   (In thousands of United States dollars)

                                          September 30,            December 31,
                                              2008                    2007
                                           (Unaudited)              (Audited)
    ASSETS
    Current assets
     Cash and cash equivalents              $307,693                $670,919
     Trade receivables (net of
      allowance of doubtful accounts of
      $994,380 in 2008 and $741,880 in
      2007)                                4,811,812               3,529,366

     Income tax recoverable                       --                 196,065
     Advances to staff                        39,488                 383,041
     Other receivables, prepayments and
      deposits                               935,898               1,035,659
     Inventories                             652,711                 527,308
     Amounts due from related parties      2,617,096                      --
     Deferred taxes                           61,057                      --

    Total current assets                   9,425,755               6,342,358

    Intangible assets                          3,539                   5,379
    Property, plant and equipment, net    10,465,100               8,851,242
    Land use rights                        3,782,532               3,593,265
    Deposit for acquisition of
     property, plant and equipment           414,257                 943,022
    Deferred taxes                                --                  34,424

    TOTAL ASSETS                         $24,091,183             $19,769,690

    LIABILITIES AND STOCKHOLDERS' EQUITY

    LIABILITIES
     Current liabilities
      Trade payables                        $901,526                $572,893
      Other payables and accrued expenses  1,612,573               1,257,918
      Dividend payable                         8,123                 138,659
      Income tax payable                     129,312                      --
      Amounts due to related parties          50,522                 149,820
      Deferred taxes                              --                   7,204
      Secured short-term borrowings        5,852,000               1,371,000

     Total current liabilities             8,554,056               3,497,494

     Secured long-term bank borrowings       658,350               5,792,475

    TOTAL LIABILITIES                      9,212,406               9,289,969

    COMMITMENTS AND CONTINGENCIES

    MINORITY INTERESTS                       134,778                 103,365

    STOCKHOLDERS' EQUITY
     Common stock : par value $0.001 per
      share; authorized
      100,000,000 shares, issued and
      outstanding 25,000,000
      shares in 2008 and 24,250,000
      shares in 2007                          25,000                  24,250
     Additional paid-in capital            7,683,804               7,541,074
     Statutory and other reserves          1,725,313               1,725,313
     Accumulated other comprehensive
      income                               1,516,603                 742,392
     Retained earnings                     3,793,279                 343,327

    TOTAL STOCKHOLDERS' EQUITY            14,743,999              10,376,356

    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                              $24,091,183             $19,769,690



                 Kun Run Biotechnology, Inc. and Subsidiaries
              Consolidated Statements of Operations (Unaudited)
     (In thousands of United States dollars except per-share information)

                             Three months ended         Nine months ended
                                September 30              September 30
                                (unaudited)                (unaudited)
                              2008         2007         2008         2007

    Sales revenue          $2,449,618   $2,114,406   $7,799,687   $4,974,279
    Cost of sales            (693,242)    (777,683)  (2,247,912)  (2,107,300)

    Gross profit            1,756,376    1,336,723    5,551,775    2,866,979

    Operating expenses
     Administrative
      expenses                257,968      252,245      742,823      703,839
     Research and
      development costs       107,896       21,567      234,136      145,090
     Selling expenses         271,460      268,913      555,540      668,392

                              637,324      542,725    1,532,499    1,517,321

    Income from operations  1,119,052      793,998    4,019,276    1,349,658
     Interest income              374          389        1,516        2,241
     Other income              63,312       19,663      165,908       38,272
     Government subsidy
      income                      104           55        9,729        7,838
     Finance costs           (140,690)    (146,885)    (415,311)    (386,109)

    Income before income
     taxes                  1,042,152      667,220    3,781,118    1,011,900
    Income taxes             (168,803)     (85,731)    (300,383)    (141,737)
    Minority interests         (7,825)      (5,120)     (30,783)      (7,660)

    Net income               $865,524     $576,369   $3,449,952     $862,503

    Other comprehensive
     income
     Foreign currency
      translation
      adjustments              27,413      191,057      774,211      529,178

    Total comprehensive
     income                  $892,937     $767,426   $4,224,163   $1,391,681

    Earnings per share :
     Basic and diluted          $0.04        $0.02        $0.14        $0.04

    Weighted average
     number of shares
     outstanding :-
     Basic and diluted     24,372,284   24,250,000   24,291,058   24,250,000



                 Kun Run Biotechnology, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows (Unaudited)
                   (In thousands of United States dollars)

                                                     Nine months ended
                                                        September 30
                                                         (Unaudited)
                                                    2008              2007
    Cash flows from operating activities
     Net income                                  $3,449,953         $862,503
     Adjustments to reconcile net income
      to net cash
      provided by operating activities:
      Depreciation                                  498,686          370,473
      Amortization of intangible assets and
       land use rights                               52,976            1,965
      Deferred taxes                                (31,370)         (45,089)
      Written off of property, plant and
       equipment                                      5,564               --
      Provision for doubtful debts                  198,657          262,283
      Minority interest                              30,783            7,660
    Changes in operating assets and
     liabilities :-
      Trade receivables                          (1,223,326)      (1,197,265)
      Other receivables, prepayments and
       deposits                                     165,869          (53,319)
      Advances to staff                             361,861          (49,997)
      Inventories                                   (88,215)         621,104
      Trade payables                                284,377          (57,994)
      Other payables and accrued expenses           239,722           10,175
      Income tax payable                                 --          105,330
      Income tax recoverable                        331,753               --

     Net cash flows provided by operating
      activities                                  4,277,290          837,829

    Cash flows from investing activities
     Payments to acquire and deposit for
      acquisition of
      property, plant and equipment                (923,536)        (941,971)
     Cash acquired from RTO                         164,437               --

    Net cash flows used in investing
     activities                                    (759,099)        (941,971)

SOURCE Kun Run Biotechnology, Inc.