SINOVAC BIOTECH LTD. BEIJING, May 26, 2016 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited first quarter ended March 31, 2016.
First Quarter 2016 Financial Highlights
(compared to the first quarter of 2015)
-- Quarterly sales from continuing operations were $11.0 million, an
increase of 19.0% from $9.2 million in the prior year period.
-- Gross profit from continuing operations was $6.3 million, a decrease of
8.3% from $6.9 million in the prior year period. Gross margin was 57.8%,
compared to 74.9% in the prior year period.
-- Loss from continuing operations was $1.6 million compared to a loss of
$2.6 million in the prior year period. Income from discontinued
operations was $2.3 million, compared to a loss from discontinued
operations of $192 thousand in the prior year period.
-- Net income attributable to common shareholders was $1.3 million, or
$0.02 per basic and diluted share, compared to net loss attributable to
common shareholders of $2.3 million, or $0.04 per basic and diluted
share in the prior year period.
-- Non-GAAP EBITDA was $60 thousand in the first quarter of 2016, compared
to a loss of $212 thousand in the prior year period. Non-GAAP net loss
from continuing operations in the first quarter of 2016 was $1.4
million, a decrease of 45% compared to $2.6 million in the prior year
period.
Mr. Weidong Yin, Chairman, President and CEO of the Sinovac, commented, "Our first quarter revenue increased by 19% from the prior year period, however, the revenue increase was due to revenue recognition from sales of non-core H5N1 vaccine, which contributed 58% of total sales in the first quarter. Other vaccine sales were lower because of the challenging environment in the Chinese vaccine industry. Business conditions for vaccine manufacturers in China like Sinovac have become more difficult in recent months due to an incident involving the improper distribution and sale of vaccines in Shandong province. As a result of this incident, China's State Council newly issued the Regulation on the Administration of Circulation and Vaccination of Vaccines (the "Regulation"). The Regulation requires all the vaccine sales in the private-pay market go through provincial tendering platform, prohibits distributors from selling vaccines, sets higher standards to ensure cold-chain conditions for vaccine delivery and storage from the manufacturer to CDC customers at county/district levels and requires vaccine manufacturing companies to be fully accountable for the product quality during the distribution process. Currently, most of the provinces have yet to establish the platform, and a detailed interpretation and execution plan associated with the Regulation has yet to be released by the central government, resulting in stagnated nationwide sales of private-pay market vaccines. While Sinovac was not directly implicated in the incident, our sales performance has been negatively affected and we also expect management and administration costs of vaccine distribution to increase in the future.
Mr. Yin added, "The Shandong incident had a material effect on our revenues in the first quarter and we expect that this trend will continue into the second quarter. Sinovac is well capitalized and the underlying need for vaccines has not changed. We have taken steps to manage our cash carefully, including implementing a more stringent AR collection management scheme, ensuring commercial bank loans, and deferring non-core R&D projects to better enable Sinovac to withstand this unusual event. At the same time we will closely monitor the market conditions and the change of policy to prepare ourselves for full implementation once market conditions normalize. For long term, we are well positioned to benefit from these industry changes once the vaccine market recovers as our past success has been to primarily rely on our internal sales force instead of distributors, and we also expect to gain from the commercialization of our newly approved EV71 vaccine, positioning Sinovac to be more competitive."
Mr. Yin added, "In the first quarter, we initiated the production of our EV71 vaccine immediately after the vaccine was approved in January 2016. The EV71 vaccine produced has passed the lot release test administered by the National Institute of Food and Drug Control and is now ready for market launch. We expect to deliver the vaccine to customers once the market returns to normal. During the quarter, we have also made progress on our pipeline programs with the initiation of clinical trials of our varicella vaccine and our preparation for the trials of the sIPV vaccine. We will continue to keep our investors updated on our latest progress and achievements in the months ahead."
First Quarter 2016 Business Highlights
Research and Development
EV71 - The China Food and Drug Administration (CFDA) issued the new drug certification and production license, as well as the Good Manufacturing Practices ("GMP") certificate for Sinovac's enterovirus 71 ("EV71") vaccine respectively at the end of December 2015 and January 2016. The Company already received lot release approval for EV71 vaccine and expects to launch the EV71 vaccine once vaccine sales activity resume.
Varicella -The vaccine candidate is expected to be studied through a phase I, a phase III trials and a batch-to-batch consistency trial of three consecutive batches. The phase I clinical trial was initiated in May 2016 in Henan Province. The phase I trial is designed as a single-center, randomized, double-blinded, and placebo controlled study. We expect to enroll approximately 270 healthy volunteers between the ages of 1 to 49 years old for the trial.
Unaudited Financial Results for First Quarter 2016
(In
$000
except
percentage
data) 2016 Q1 % of Sales 2015 Q1 % of Sales
Hepatitis
A -
Healive 3,647 33.3% 2,922 31.7%
Hepatitis
A&B
-
Bilive 216 2.0% 5,055 54.9%
Hepatitis
vaccines
subtotal 3,863 35.3% 7,977 86.6%
Influenza
vaccine 463 4.2% 586 6.4%
Mumps
vaccine 236 2.1% 644 7.0%
Regular
sales 4,562 41.6% 9,207 100.0%
H5N1 6,392 58.4% - -
Total
sales 10,954 100.0% 9,207 100.0%
Cost
of
sales 4,626 42.2% 2,308 25.1%
Gross
profit 6,328 57.8% 6,899 74.9%
======= ===== ==== ===== ====
Quarterly sales from continuing operations were $11.0 million, an increase of 19.0% from $9.2 million in the prior year period. The sales increase was primarily due to the recognition of H5N1 revenue. Excluding H5N1 revenue, quarterly sales from continuing operations were $4.6 million, a decrease of 50.4% from $9.2 million in the comparative period. The decrease was primarily due to additional sales return provision provided as a result of the vaccine incident in Shandong province.
Gross profit from continuing operations was $6.3 million, a decrease of 8.3% from $6.9 million in the prior year period. Gross margin was 57.8%, compared to 74.9% in the prior year period. Excluding H5N1, the quarterly gross margin was 55.6% compared to 74.9% in the prior year period. The decrease was mainly due to a higher inventory provision for mumps vaccines and a lower gross profit for the hepatitis A&B vaccine due to higher sales returns provision provided in the first quarter of 2016.
Selling, general and administrative expenses in the first quarter of 2016 were $6.2 million, compared to $6.8 million in the same period of 2015.
R&D expenses in the first quarter of 2016 were $2.1 million, compared to $2.2 million in the same period of 2015.
Loss from continuing operations was $1.6 million compared to a loss of $2.6 million in the prior year period. Income from discontinued operations was $2.3 million, compared to a loss from discontinued operations of $192 thousand in the prior year period.
Net income attributable to common shareholders was $1.3 million, or $0.02 per basic and diluted share, compared to net loss attributable to common shareholders of $2.3 million, or $0.04 per basic and diluted share in the prior year period.
Non-GAAP EBITDA was $60 thousand in the first quarter of 2016, compared to a loss of $212 thousand in the prior year period. Non-GAAP net loss from continuing operations in the first quarter of 2016 was $1.4 million, a decrease of 45% compared to a net loss of $2.6 million in the prior year period. Non-GAAP diluted net loss per share from continuing operations in the first quarter of 2016 was $0.01, compared to net loss of $0.03 per share in the prior year period. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.
As of March 31, 2016, cash and cash equivalents totaled $62.5 million, compared to $63.8 million as of December 31, 2015. In the first quarter of 2016, net cash used in operating activities was $9.5 million. Net cash used in investing activities was $2.7 million, which was mainly for the purchase of equipment. Net cash provided by financing activities was $10.7 million, including loan proceeds of $13.2 million and loan repayment of $2.6 million. As of March 31, 2016, the Company had $30.7 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 Friday, May 27, 2016, at 8:00 a.m. EDT (Friday, May 27, 2016 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 after the earnings call through June 10, 2016. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13638158.
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's newly developed innovative vaccine against HFMD caused by EV71 is ready for market launch. 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, Tajikistan, Bangladesh, Chile and the Philippines, and was recently granted a license to commercialize its influenza vaccine in Guatemala. For more information, please visit the Company's website at www.sinovac.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward looking statements. Factors that might cause such a difference include our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects and adverse general economic conditions in the United States and internationally. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company assumes no obligation to update the forward-looking information contained in this release.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Sinovac uses the following non-GAAP financial measures: non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. For more information on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement.
Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that Sinovac includes in income from operations from continuing operations, net income from continuing operations and diluted EPS from continuing operations. Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information about its core operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure of performance or as an indicator of Sinovac's operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.
Non-GAAP EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income, net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of stock-based compensation expenses, amortization and depreciation that Sinovac does not believe are reflective of the core operating performance during the periods presented.
Non-GAAP net income from continuing operations represents net income from continuing operations before stock-based compensation expenses, and foreign exchange gain or loss.
Non-GAAP diluted EPS from continuing operations represents non-GAAP net income attributable to ordinary shareholders from continuing operations divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.
Contact
Sinovac Biotech Ltd.
Helen Yang
Tel: +86-10-8279-9871
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 March 31, 2016 and December 31, 2015
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)
Current assets March 31, 2016 December 31, 2015
(Unaudited)
----------
Cash and cash equivalents $62,513 $63,834
Restricted cash 1,634 1,626
Accounts receivable - net 40,131 39,021
Inventories 20,151 18,685
Prepaid expenses and deposits 1,055 958
Deferred tax assets 2,689 2,603
Current assets held for sale - 1,797
Total current assets 128,173 128,524
------- -------
Property, plant and equipment 64,322 63,940
Prepaid land lease payments 9,556 9,574
Long-term prepaid expenses 25 25
Prepayments for acquisition of equipment 1,860 328
Deferred tax assets 571 593
Total assets 204,507 202,984
======= =======
Current liabilities
Short-term bank loans and current portion of long-term bank 30,707 21,775
loans and other debt
Loan from a non-controlling shareholder 2,526 2,470
Accounts payable and accrued liabilities 22,720 22,524
Income tax payable 1,154 1,643
Deferred revenue 127 8,144
Deferred government grants 900 1,202
Current liabilities held for sale - 243
Total current liabilities 58,134 58,001
------ ------
Deferred government grants 4,514 4,730
Long-term bank loans 2,713 756
Other non-current liabilities 759 756
Total long-term liabilities 7,986 6,242
----- -----
Total liabilities 66,120 64,243
------ ------
Commitments and contingencies
Equity
Preferred stock - -
Common stock 57 57
Additional paid-in capital 110,291 109,944
Accumulated other comprehensive income 6,608 8,110
Statutory surplus reserves 13,450 13,450
Accumulated deficit (6,972) (8,281)
------ ------
Total shareholders' equity 123,434 123,280
Non-controlling interests 14,953 15,461
------ ------
Total equity 138,387 138,741
------- -------
Total liabilities and equity $204,507 $202,984
SINOVAC BIOTECH LTD.
Consolidated Statements of Comprehensive Income (loss)
For the three months ended March 31, 2016 and 2015
(Unaudited)
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)
Three months ended March 31
---------------------------
2016 2015
Sales $10,954 $9,207
Cost of sales 4,626 2,308
----- -----
Gross profit 6,328 6,899
----- -----
Selling, general and administrative expenses 6,200 6,807
Provision (recovery) for doubtful accounts 248 (91)
Research and development expenses 2,070 2,197
Loss on disposal and impairment of property, plant and 43 -
equipment
Government grants recognized in income (473) (3)
Total operating expenses 8,088 8,910
----- -----
Operating loss (1,760) (2,011)
Interest and financing expenses (383) (588)
Interest income 286 427
Other income 216 75
--- ---
Loss from continuing operations before income taxes (1,641) (2,097)
Income tax benefit (expense) 52 (551)
Loss from continuing operations (1,589) (2,648)
Income (loss) from discontinued operations, net of tax of 2,338 (192)
nil
Net Income (loss) 749 (2,840)
Less: Loss attributable to the non-controlling interests 560 589
--- ---
Net Income (loss) attributable to shareholders of Sinovac 1,309 (2,251)
===== ======
Loss from continuing operations (1,589) (2,648)
Other comprehensive income (loss) from continuing
operations, net of tax of nil
Foreign currency translation adjustments 406 76
--- ---
Comprehensive loss from continuing operations (1,183) (2,572)
Income (loss) from discontinued operations 2,338 (192)
Other comprehensive income (loss) from
discontinued operations, net of tax of nil
Foreign currency translation adjustments
Net unrealized gain (loss) during the period 23 (10)
Reclassification adjustment included in net income (loss) (1,880) -
from discontinued operations
Net change in unrealized gain (loss) (1,857) (10)
Comprehensive income (loss) from discontinued 481 (202)
operations
Comprehensive loss (702) (2,774)
Less: comprehensive loss attributable to non-controlling 509 582
interests
Comprehensive loss attributable to shareholders of $(193) $(2,192)
Sinovac
Earnings (loss) per share
Basic net income (loss) per share:
Continuing operations (0.02) (0.04)
Discontinued operations 0.04 0.00
Basic net income (loss) per share 0.02 (0.04)
Diluted net income (loss) per share:
Continuing operations (0.02) (0.04)
Discontinued operations 0.04 0.00
Diluted net income (loss) per share 0.02 (0.04)
Weighted average number of shares of
Basic 56,909,341 56,213,166
Diluted 56,989,779 56,213,166
SINOVAC BIOTECH LTD.
Consolidated
Statements of Cash
Flows
For the three months
ended March 31, 2016
and 2015
(Unaudited)
(Expressed in
thousands of U.S.
Dollars)
Three months ended
March 31
--------
2016 2015
Cash flows used in
operating activities
Net income (loss) $749 $(2,840)
Less: Income (loss)
from discontinued
operations-net of
tax 2,338 (192)
Loss from continuing
operations (1,589) (2,648)
Adjustments to
reconcile net income
to net cash provided
by (used
in) operating
activities:
-Deferred income
taxes (48) 534
- Stock-based
compensation 316 113
-Inventory provision 172 12
-Provision
(recovery) for
doubtful accounts 248 (91)
-Loss on disposal
and impairment of
property, plant and
equipment 43 -
-Government grants
recognized in income (473) (3)
-Depreciation of
property, plant and
equipment and
amortization of
licenses 1,441 1,620
-Amortization of
prepaid land lease
payments 63 66
- Accretion expenses - 29
Changes in:
-Accounts receivable (859) (1,843)
- Inventories (1,568) (1,544)
- Income tax payable (490) -
-Prepaid expenses
and deposits (127) 654
- Deferred revenue (7,942) -
-Accounts payable
and accrued
liabilities 1,334 (4,624)
-Deferred government
grants 31 3
Net cash used in
operating activities
from continuing
operations (9,448) (7,722)
Net cash used in
operating activities
from discontinued
operations (95) (473)
--- ----
Net cash used in
operating activities (9,543) (8,195)
------ ------
Cash flows provided
by (used in)
financing activities
-Proceeds from bank
loans 13,242 802
-Repayments of bank
loans (2,600) (19,403)
-Proceeds from
issuance of common
stock, 31 264
net of share issuance
costs
Net cash provided by
(used in) financing
activities 10,673 (18,337)
------ -------
Cash flows used in
investing activities
-Acquisition of
property, plant and
equipment (3,545) (1,781)
-Proceeds from
disposal of
subsidiary 875 -
Net cash used in
investing activities
from continuing
operations (2,670) (1,781)
Net cash used in
investing activities
from discontinued
operations (9) -
--- ---
Net cash used in
investing activities (2,679) (1,781)
------ ------
Effect of exchange
rate changes on cash
and cash
equivalents,
including cash
classified within
current assets held
for sale 85 (135)
Decrease in cash and
cash equivalents,
including cash
classified (1,464) (28,448)
within current assets
held for sale
Less: Net decrease in
cash classified
within current
assets for sale (143) (105)
Decrease in cash and
cash equivalents (1,321) (28,343)
Cash and cash
equivalents,
beginning of period 63,834 91,293
------ ------
Cash and cash
equivalents, end of
period $62,513 $62,950
======= =======
SINOVAC BIOTECH LTD.
Reconciliations of Non-GAAP measures to the nearest comparable GAAP measures
For the three months ended March 31, 2016 and 2015
(Unaudited)
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)
Three months ended March 31
---------------------------
2016 2015
Income (loss) from continuing operations (1,589) (2,648)
Adjustments:
Stock-based compensation 316 113
Depreciation and amortization 1,504 1,686
Interest and financing expenses, net of interest income 97 161
Net other (income) expense (216) (75)
Income tax (benefit) expense (52) 551
Non-GAAP EBITDA 60 (212)
=== ====
Income (loss) from continuing operations (1,589) (2,648)
Add: Foreign exchange loss (gain) (123) (17)
Add: Stock-based compensation 316 113
Non-GAAP net loss from continuing operations (1,396) (2,552)
====== ======
Net Income (loss) from continuing operations (1,029) (2,059)
attributable to shareholders of Sinovac
Add: Non-GAAP adjustments to net income from 193 96
continuing operations
Non-GAAP net income attributable to shareholders of (836) (1,963)
Sinovac from continuing operations for computing
non-GAAP diluted earnings (loss) per share
Weighted average number of shares on a diluted basis 56,989,779 56,213,166
Diluted earnings (loss) per share from continuing operations (0.02) (0.04)
Add: Non-GAAP adjustments to net income per share 0.01 0.01
from continuing operations
Non-GAAP Diluted EPS from continuing operations (0.01) (0.03)
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SOURCE Sinovac Biotech Co., Ltd.
