SHENYANG, China, Aug. 11 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. (“3SBio” or “the Company”), a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, today announced its unaudited financial results for the second quarter ended June 30, 2009.
Dr. Jing Lou, chief executive officer of 3SBio, commented: “We had a good quarter with an encouraging trend in our operating performance. Sales of our leading products, EPIAO and TPIAO both grew by over 37% due to the strong growth of the dialysis market and our continued efforts to raise awareness of 3SBio in the oncology segment of the market. Our share of the Chinese EPO market now exceeds that of our five closest competitors combined and we reiterate our 2009 revenue guidance. I am pleased to have Mr. Deyu Kong join us as Director -- Manufacture and Process. He will be based in Shenyang where we are expanding our manufacturing capacity at least four-fold. Mr Kong’s experience with international biotech manufacturing protocols will help us as we explore biosimilar opportunities in the EU and US.”
Three months ended June 30, 2009 Unaudited Financial Results
Net revenues. Net revenues increased by 36.8% to RMB81.5 million (US$11.9 million) for the second quarter of 2009 from RMB59.6 million (US$8.7 million) for the same period in 2008. This increase was largely due to continued strength from EPIAO and TPIAO products which increased by 37.6% and 38.4%, respectively, over the same period in 2008. The growth in sales from EPIAO was driven in part by an expanded oncology sales force, which continued to perform well. TPIAO remained 3SBio’s second largest revenue contributor in the quarter, accounting for 27.3% of total net revenues. Export sales grew by 25.5% to RMB3.5 million (US$0.5 million), and sales of 3SBio’s IV Iron Sucrose rose 42.7% to RMB3.0 million (US$0.4 million).
Gross profit. As a result of continued sales growth from key products, gross profit increased by 38.1% to RMB75.0 million (US$11.0 million) for the second quarter of 2009 from RMB54.3 million (US$7.9 million) for the same period in 2008. Gross margin increased by 0.9% to 92.0% for the second quarter of 2009 from 91.1% for the same period in 2008.
Operating expenses. GAAP operating expenses were RMB49.2 million (US$7.2 million) for the second quarter of 2009, an increase of 25.8% from GAAP operating expenses of RMB39.1 million (US$5.7 million) for the same period in 2008. Non-GAAP operating expenses were RMB48.0 million (US$7.0 million) for the second quarter of 2009, an increase of 28.2% from non-GAAP operating expenses of RMB37.4 million (US$ 5.5 million) for the same period in 2008. The increase in operating expenses was largely driven by higher sales and marketing expenses.
Operating income. GAAP operating income was RMB25.8 million (US$3.8 million) for the second quarter of 2009, an increase of 69.9% from operating income of RMB15.2 million (US$2.2 million) for the same period in 2008. Non-GAAP operating income for the second quarter of 2009 grew by 60.1% to RMB27.1 million (US$4.0 million), compared to RMB 17.0 million (US$2.5 million) in the second quarter of 2008.
Interest income. The Company recorded net interest income of RMB2.5 million (US$0.4 million) for the second quarter of 2009, compared to RMB5.2 million (US$0.8 million) for the same period in 2008. As experienced in the first quarter of 2009, the decrease in interest income was partially due to the decrease in the prevailing market interest rates in the second quarter of 2009, compared to the same period in 2008.
Net income. GAAP net income was RMB27.0 million (US$4.0 million) for the second quarter of 2009, 39.2% higher than net income of RMB19.4 million (US$2.8 million) for the same period in 2008. Non-GAAP net income for the second quarter of 2009 was RMB26.7 million (US$3.9 million), 26.3% higher than non-GAAP net income of RMB21.1 million (US$3.1 million) for the second quarter of 2008.
Six months ended June 30, 2009 Unaudited Financial Results
Net revenues. Our net revenues increased by RMB35.1 million, or 30.5%, from RMB115.0 million (US$16.8 million) for the six months ended June 30, 2008 to RMB150.1 million (US$22.0 million) for the six months ended June 30, 2009. The increase was primarily attributable to increased sales from our EPIAO and TPIAO products, underpinned by continued strong demand in the oncology and nephrology markets.
Net revenues from EPIAO increased by RMB21.4 million, or 29.5%, to RMB94.0 million (US$13.8 million) for the six months ended June 30, 2009. Net revenues from TPIAO increased by RMB9.5 million, or 30.0%, to RMB40.9 million (US$6.0 million) for the six months ended June 30, 2009. In addition, revenue from our export business was RMB6.9 million (US$1.0 million), representing an increase of 45.7% over the first half of 2008, while revenue from our in-licensed Iron Sucrose supplement was RMB5.0 million (US$0.7 million), representing an increase of 44.6% over the first half of 2008.
Operating income. For the six months ended June 30, 2009, GAAP operating income increased by 56.3% to RMB45.9 million (US$6.7 million), compared to RMB29.4 million (US$4.3 million) for the same period in 2008. year. Non-GAAP operating income increased by 51.1% to RMB47.7 million (US$7.0 million), compared to RMB31.6 million (US$4.6 million) for the same period in 2008.
GAAP operating margin for the six months ended June 30, 2009 was 30.6% as compared to 25.5% for the six months ended June 30, 2008. Non-GAAP operating margin was 31.8% for the six months ended June 30, 2009, as compared to 27.4% in the same period in 2008.
Net income. GAAP net income for the first half of 2009 increased by RMB3.7 million, or 9.5%, to RMB42.9 million (US$6.3million) compared with RMB39.1 million (US$5.7 million) for the same period in 2008. GAAP net margin for the six months ended June 30, 2009 was 28.6% as compared to 34.0% for the six months ended June 30, 2008. GAAP net income per ADS for the first half of 2009 increased to RMB1.99 (US$0.29) from RMB1.80 (US$0.26) for the corresponding period in 2008.
Non-GAAP net income for the first half of 2009 increased by RMB6.3 million, or 15.3%, to RMB47.7 million (US$7.0 million) compared with RMB41.3 million (US$6.0 million) for the same period in 2008. Non-GAAP net margin for the six months ended June 30, 2009 was 31.8% as compared to 35.9% for the six months ended June 30, 2008. Non-GAAP net income per ADS for the first half of 2009 increased to RMB2.21 (US$0.32) from RMB1.90 (US$0.28) for the corresponding period in 2008.
Cash and cash equivalents / Time deposits. 3SBio had positive operating cash flows of RMB 33.2 million (US$4.9 million) for the first half of 2009, and as of June 30, 2009 retained a strong balance sheet with cash, cash equivalents and time deposits of RMB756.1 million (US$110.7 million), a 3.1% increase from RMB733.0 million (US$107.4 million) as of December 31, 2008.
2009 Full Year Guidance
Based on current market conditions and visibility provided during the second quarter, the Company reiterates its total net revenue target for the full year of 2009 of between US$43 million to US$45 million, resulting in a year-over-year increase of approximately 21% to 26%.
Conference Call
3SBio’s senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 8:00 pm (Beijing/Hong Kong) on Wednesday, August 12, 2009 to discuss its 2009 second quarter financial results and recent business activity. The conference call may be accessed using the dial-in numbers below:
Replay
A telephone replay will be available two hours after the call until August 17, 2009, at:
Webcast
A live webcast of the conference will be available on the investor relations page of 3SBio’s website at http://bbs.3sbio.com/en/News/xinvestors.aspx and at http://tinyurl.com/l8hs96 . A replay of the webcast will be available within one hour after the conclusion of the call.
Non-GAAP Financial Measures: Reconciliation of GAAP to Non-GAAP
To supplement the Company’s financial information presented in accordance with general accepted accounting principles (“GAAP”), the Company has utilized some non-GAAP financial measures to provide investors and management with supplemental measures that facilitate comparisons of operating performance and trends with prior and future operating performance, and that may not otherwise be apparent on a GAAP basis. These non-GAAP financial measures include non- GAAP net income, non-GAAP net income per share, non-GAAP net income per ADS, non-GAAP operating income, non-GAAP operating expenses, non-GAAP gross profit etc. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principals, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. These measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. Please see the attached reconciliation of GAAP to non-GAAP for an explanation of the amounts excluded to arrive at non-GAAP financial measures for the three-month periods ended June 30, 2008 and June 30, 2009 and for the six month periods ended June 30, 2009 and June 30, 2008.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is preliminary and subject to adjustments and modifications. The audited financial statements and related notes are to be included in our annual report on Form 20-F for the year ending December 31, 2009. Adjustments and modifications to the financial statements may be identified during the course of the audit work, which could result in significant differences from this preliminary unaudited financial information.
Currency Convenience Translation
For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.8302 to US$1.00, the noon buying rate for US dollars in effect on June 30, 2009 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. A rate of 6.8591 was used for comparative purposes as of June 30, 2008.
About 3SBio Inc.
3SBio Inc. is a leading, fully integrated biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, primarily in China. For more information, please visit 3SBio on the web at http://www.3sbio.com .
Safe Harbor Statement
Certain statements in the disclosures of 3SBio, Inc. (the “Company” or “3SBio”) for the second quarter, 2009 (“Disclosures”) that are not purely historical in nature constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Disclosures include the press release, the conference call and any accompanying materials, and any other information issued, released or publicized by the Company with respect to the second quarter of 2009. These forward-looking statements include, but may not be limited to, discussions and statements regarding revenue guidance, product development, regulatory approval process, plant completion, production capacity, capital expense estimate, future operations, investment portfolio composition ad performance, and future strategies. These statements are based upon 3SBio management’s current expectations, and actual results could differ materially. Among the factors that could cause 3SBio’s actual results to differ from what the Company currently anticipates may include competition from other domestic and foreign pharmaceutical companies; the expected market growth for pharmaceutical products in China; market acceptance of 3SBio products; expected hospital or patient demand for our products; the completion of 3SBio’s ongoing clinical trials as planned; receipt and timing of regulatory approvals for 3SBio’s new products and uses; 3SBio’s ability to expand its production, sales and distribution network and other aspects of its operations; its ability to effectively protect its intellectual property; changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government and changes in the healthcare insurance sector in the PRC; and fluctuations in general economic and business conditions in China. For additional information on factors identified above and other risk factors, uncertainties and assumptions that may affect 3SBio’s business, financial conditions and results of operations, please refer to the Company’s filings with the Securities and Exchange Commission at http://www.sec.gov , and, in particular, “Introduction -- Cautionary Statement concerning Forward Looking Statements,” Item 3.D “Risk Factors,” Item 5. “Operating and Financial Review and Prospects,” and other applicable discussions in 3SBio’s annual report on Form 20-F for the year ended December 31, 2008. 3SBio undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.
Notes to reconciliation of our GAAP statements of income to our non-GAAP statements of income:
Notes to reconciliation of our GAAP statements of income to our adjusted statements of income:
Notes to reconciliation of our GAAP statements of income to our adjusted statements of income:
Notes to reconciliation of our GAAP statements of income to our adjusted statements of income:
SOURCE 3SBio Inc.
CONTACT: Bo Tan, Chief Financial Officer of 3SBio Inc., +86-24-2581-1820,
or Tom Folinsbee, Director of Investor Relations, of 3SBio Inc.,
+852-8191-6991, or ir@3SBio.com
Web site: http://www.3sbio.com/
http://bbs.3sbio.com/en/News/xinvestors.aspx/
http://tinyurl.com/l8hs96/
