2007'08.10.Fri
3SBio Inc. Announces Second Quarter 2007 Results
August 09, 2007
SHENYANG, China, Aug. 9 /Xinhua-PRNewswire/ -- 3SBio
Inc. (Nasdaq: SSRX), 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, 2007.
Second Quarter 2007 Financial Highlights:
-- Total net revenues increased 49.2% over the second
quarter 2006 to
RMB43.1 million (US$5.7 million).
-- Net revenue from our flagship recombinant human
erythropoietin
products, or EPO products, marketed under our EPIAO
brand, increased
31.7% over the second quarter 2006 to RMB30.0
million (US$3.9 million).
-- Net revenue from our protein-based therapeutic
recombinant human
thrombopoietin products, or TPO products, marketed
under our TPIAO
brand, increased 263.4% over the second quarter 2006
to RMB9.6 million
(US$1.3 million).
-- Operating income increased 69.6% over the second
quarter 2006 to
RMB13.8 million (US$1.8 million).
-- Net income increased 268.9% over the second quarter
2006 to RMB23.3
million (US$3.1 million).
-- Net income per ordinary share and net income per
American Depositary
Share ("ADS") for the second quarter 2007
were RMB0.15 (US$0.02) and
RMB1.07 (US$0.14) respectively, compared to RMB0.06
and RMB0.44
respectively for the second quarter 2006. Each ADS
represents seven of
ordinary shares.
Dr. Jing Lou, chief executive officer of 3SBio,
commented, "We are pleased to report another quarter
of strong performance, driven by continued execution of our
business strategy and solid growth in our core product
portfolio. Sales in our flagship EPO product, EPIAO,
increased 31.7% over the second quarter of 2006. According
to the latest IMS Health data and our internal data, our
EPIAO products continued to be the market leader in the
first quarter of 2007 both in terms of revenues and sales
volume, with market shares of approximately 36% and 30%,
respectively. In addition, 3SBio was awarded exclusive
access for all the solution dosage forms of EPIAO in 19
hospitals in the Beijing military hospital system under
management by the Health Administration of the People's
Liberation Army, further enhancing our market position and
brand recognition. Our newest proprietary TPO product,
TPIAO, continued to grow rapidly, up 263.4% over the second
quarter of 2006, now representing 22.3% of our total revenue
for the second quarter 2007."
"We have also advanced on a number of strategic
and operational fronts, including development of our sales
and marketing staff, operational systems integration,
expansion of our manufacturing facilities, and improved
financial reporting and compliance. Together, our steady
execution and ability to deliver strong financial results
quarter after quarter underpin our belief in our vision and
strategy. I am confident that our continued focus on growth,
margins and profitability will lead to positive returns for
our shareholders."
Second Quarter 2007 Unaudited Financial Results
Net Revenues. Our net revenues amounted to RMB43.1
million (US$5.7 million) in the second quarter 2007
compared to RMB28.9 million net revenues for the second
quarter 2006, representing an increase of 49.2%, primarily
attributable to the continued growth of our flagship EPO
product, EPIAO, as well as rapid sales growth in our TPO
product, TPIAO. Net revenues from EPIAO increased by 31.7%
from RMB22.8 million in the second quarter 2006 to RMB30.0
million (US$3.9 million) in the second quarter 2007. Net
revenues from TPIAO increased 263.4% over the second
quarter 2006 to RMB9.6 million (US$1.3 million). Our TPIAO
products remained our second largest revenue contributor,
accounting for 22.3% of total net revenues for the second
quarter 2007 as compared to 9.2% in the second quarter
2006. Sales from our in-licensed Iron Sucrose supplement,
Tietai, also continued to grow steadily, accounting for
1.3% of our overall sales in the second quarter 2007.
Gross Profit. Gross profit increased 51.5% to RMB39.1
million (US$5.1 million) for the second quarter 2007 from
RMB25.8 million in the second quarter 2006. Gross margin
was 90.8% in the second quarter 2007, up from 89.4% in the
second quarter 2006.
Income from Operations. Operating income for the second
quarter 2007 was RMB13.8 million (US$1.8 million),
representing a 69.6% increase, compared to RMB8.1 million
in the second quarter 2006, primarily due to increased
operating leverage from continued sales growth. Operating
margin for the second quarter 2007 was 31.9%, up from the
28.1% in the second quarter 2006, attributable to continued
operational improvements in our manufacturing and sales
platforms through increased product offerings and scale of
operations
Operating Expenses. Our total operating expenses
increased by 43.2% from RMB17.7 million in the second
quarter of 2006 to RMB25.3 (US$3.3 million) in the second
quarter 2007. This increase was primarily due to increased
selling and promotional expenses resulting from continued
sales growth. However, selling expenses as a percentage of
revenue improved from 49.0% in the second quarter 2006 to
46.8% in the second quarter 2007 as a result of improved
economies of scale.
Other Income (Expense), net. Net other income increased
by RMB12.0 million in the second quarter of 2007, as
compared to net other expense of RMB0.8 million in the
second quarter of 2006, primarily as a result of increased
interest income.
Income before Income Tax Expense and Minority
Interests. As a result of the foregoing, our income before
income tax expense and minority interests increased by
240.0% from RMB7.3 million in the second quarter 2006 to
RMB25.0 million (US$3.3 million) for the second quarter
2007.
Income Tax Expense. Our income tax expense increased by
58.9% from RMB1.0 million for the second quarter 2006 to
RMB1.6 million (US$0.2 million) for the second quarter 2007
mainly contributable to increased taxable income in the
second quarter 2007 as a result of our increased
profitability. The effective tax rate was 6.4% for the
second quarter 2007, lower than the 13.6% for the prior
year period, mainly attributable to more non-taxable
interest income earned from IPO proceeds.
Net Income. As a result of the foregoing, our net
income increased by 268.9% from RMB6.3 million for second
quarter 2006 to RMB23.3 million (US$3.1 million) for the
second quarter 2007.
Six months ended June 30, 2007 Unaudited Financial
Results
Net revenues. Our net revenues increased by RMB21.5
million, or 37.8%, from RMB56.9 million for the six months
ended June 30, 2006 to RMB78.4 million (US$10.3 million)
for the six months ended June 30, 2007. This increase was
primarily attributable to net revenues of RMB17.2 million
(US$2.3 million) from TPIAO in the second half of 2007, our
new product launched in January 2006, which has now become
our second largest revenue contributor, accounting for
21.9% of total revenues for the six months ended June 30,
2007. We also experienced significant growth in our
flagship EPIAO. Net revenues from EPIAO increased by
RMB10.1 million, or 22.3%, to RMB55.1 million (US$7.2
million) for the first six months of 2007. The increase was
primarily attributable to increased sales of our EPIAO in
the second quarter. The resumption in sales growth of our
EPIAO also demonstrated the contribution from our
specialized oncology sales force newly set up in the first
quarter of 2007, bolstering our efforts to focus on the
growing oncology market in China.
Net Income. Net income for the first half of 2007
increased RMB25.7 million to RMB39.5 million (US$5.2
million) compared with RMB13.8 million for the same period
in 2006. Net income per ordinary share and net income per
ADS for the first half of 2007 increased to RMB0.28
(US$0.04) and RMB1.96 (US$0.26) respectively from RMB0.14
and RMB0.97 respectively in the comparable period in 2006.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is
preliminary and subject to adjustments. Adjustments to the
financial statements may be identified when audit work is
performed for the year-end audit, 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
RMB7.6120 to US$1.00, the noon buying rate for US dollars
in effect on June 29, 2007 for cable transfers of RMB per
US dollar as certified for customs purposes by the Federal
Reserve Bank of New York.
Business Highlights
Pre-filled Syringe EPO - Plans to launch pre-filled
syringe EPIAO products within 2007 are progressing in line
with management expectations. In addition, in July 2007,
3SBio Inc. was awarded exclusive access for all the
solution dosage forms of EPIAO in 19 hospitals in Beijing
military hospital system under management by the Health
Administration of the People's Liberation Army, further
boosting market penetration and brand name recognition.
TPIAO Performance - TPIAO remains a key growth driver
for 3SBio, as it continues to grow rapidly, reaching RMB9.6
million (US$1.3 million) in sales, accounting for 22.3% of
total sales revenues for the second quarter of 2007.
Sales and Marketing - 3SBio has made good progress with
the training of its specialized oncology and nephrology
sales teams, with 80% of the sales force having completed
training by the end of the second quarter, and the
remaining 20% expected to complete training by the end of
the third quarter 2007. 3SBio has also extended its
marketing strategy with a detailed plan to expand its
hospital penetration, targeting a total of 121 additional
hospitals in 14 provinces. Furthermore, the company has
built a specialized business development team to work with
its strategic partners to enhance the company's marketing
initiatives in overseas markets.
New Plant and Upgrade of Current Facilities -
Construction of 3SBio's new manufacturing facility in
Shenyang is on schedule, with ground breaking and the first
phase of the development plan on track to be completed by
the end of 2007. The hiring of European consultants to
assist with EMEA compliance is currently under way, and the
foundation of the new facility is expected to be completed
by the end of 2007. Upgrades to our other facilities to
meet EMEA requirements are also on target, and will be near
completion in 2008.
Conference Call
3SBio senior management will host a conference call at
5:00 am (Pacific) / 8:00 am (Eastern) / 8:00 pm
(Beijing/Hong Kong) on Thursday, August 9, 2007 to discuss
its 2007 second quarter financial results and recent
business activity. The conference call may be accessed by
calling (US) +1 480 629 9564 / (UK) +44 (0)20 8515 2301 /
(HK) +852 3009 5027. A telephone replay will be available
shortly after the call until August 23, 2007 at (US) +1 303
590 3030/ (UK) +44 (0)20 7154 2833, Passcode: 3765910; and
(HK) +852 2287 4304, Passcode: 107 110#.
A live webcast of the conference call and replay will
be available on the investor relations page of 3SBio's
website at www.3sbio.com/en/News/ShowInfo_nnn5.aspx?ID=64 .
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 www.3sbio.com
Safe Harbor Statement
Statements in this release may contain
"forward-looking" statements within the meaning
of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the Private Securities
Litigation Reform Act of 1995. 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; 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 these
and other factors that may affect the 3SBio's financial
results, please refer to the company's filings with the
Securities and Exchange Commission at www.sec.gov. 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.
Contact:
Investor Contact:
Clara Mak, CFO
3SBio Inc.
No.3 A1, Road 10,
Shenyang Development Zone
Shenyang, China 110027
+86 (24) 2581 1820
IR@3sbio.com
www.3SBio.com
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
205 Lexington Avenue
8th Floor
New York, NY 10016
+1 (212) 889-4350
3sbio@taylor-rafferty.com
www.taylor-rafferty.com
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
3213 Cosco Tower
183 Queen's Road Central
Hong Kong, China
+852 3196 3712
3sbio@taylor-rafferty.com
www.taylor-rafferty.com
Media Contact:
John Dooley
Taylor Rafferty
205 Lexington Avenue
8th Floor
New York, NY 10016
+1 (212) 889-4350
3sbio@taylor-rafferty.com
www.taylor-rafferty.com
3SBio Inc. and subsidiaries
Consolidated balance sheets
(expressed in thousands)
December 31 June
30 June 30
2006
2007 2007
Audited
Unaudited Unaudited
RMB
RMB US$
Assets
Current assets
Cash and cash equivalents 25,372
870,375 114,342
Accounts receivable, less
allowance for doubtful accounts:
December 31, 2006 - RMB4,871;
June 30, 2007 - RMB4,946
(US$650) 37,402
48,510 6,373
Inventories 8,682
6,929 910
Prepaid expenses and other
receivables 14,872
8,021 1,054
Deferred tax assets 2,154
1,660 218
Total current assets 88,482
935,495 122,897
Long term investment -
10,012 1,315
Property, plant and equipment, net 43,142
42,876 5,633
Lease prepayments 9,600
9,423 1,238
Deferred tax assets 1,251
938 123
Total assets 142,475
998,744 131,206
Liabilities
Current liabilities
Short-term bank loans 15,000
25,000 3,284
Accounts payable 1,769
1,935 254
Deferred grant income 611
374 49
Accrued expenses and other payables 16,318
30,700 4,033
Income tax payable 1,167
2,884 379
Amounts due to related parties 4,225
1,023 134
Other current liabilities 92
56 7
Total current liabilities 39,182
61,972 8,140
Long-term bank loans 25,000
- -
Deferred grant income 3,900
3,712 488
Other liabilities 585
557 73
Total liabilities 68,667
66,241 8,701
Commitments and contingencies
Minority interests 474
559 73
Shareholders' equity
Share capital - ordinary shares
US$0.0001 par value, 500,000,000
shares authorized, 152,084,155
shares issued and outstanding
as of June 30, 2007 80
122 16
Additional paid-in capital 80,286
915,264 120,240
Accumulated other
comprehensive loss -
(15,903) (2,089)
(Accumulated deficit)/
Retained earnings (7,032)
32,461 4,265
Total shareholders' equity 73,334
931,944 122,432
Total liabilities and
shareholders' equity 142,475
998,744 131,206
3SBio Inc. and subsidiaries
Unaudited quarterly consolidated statements of income
(expressed in thousands, except per share , per ADS and
other share and
ADS data)
For the Three
Months Ended June 30,
2006
2007 2007
RMB
RMB US$
Net Revenues:
EPIAO 22,791
30,008 3,942
TPIAO 2,647
9,618 1,264
Intefen 817
811 107
Inleusin 300
272 36
Export 2,199
1,645 216
Iron 33
581 76
Others 66
118 15
Total 28,853
43,053 5,656
Cost of revenues (3,061)
(3,972) (522)
Gross profit 25,792
39,081 5,134
Operating expenses
Research and development
expense (1,156)
(1,876) (246)
Sales, marketing and
distribution expense (14,142)
(20,141) (2,646)
General and administrative expense (2,388)
(3,314) (435)
Total operating expenses (17,686)
(25,331) (3,327)
Operating income 8,106
13,750 1,807
Other (expense)/income, net
Interest income 69
11,242 1,477
Interest expense (1,178)
(263) (35)
Grant income 535
269 35
Others (189)
(31) (4)
Total other (expense)/income, net (763)
11,217 1,473
Income before income tax expense
and minority interests 7,343
24,967 3,280
Income tax expense (1,001)
(1,591) (209)
Income before minority interests 6,342
23,376 3,071
Minority interests, net of tax (15)
(35) (5)
Net income 6,327
23,341 3,066
Net income per share:
Basic and diluted 0.06
0.15 0.02
Basic weighted average number
of shares outstanding 100,000,998
152,084,155 152,084,155
Effect of dilutive
potential shares -
13,071 13,071
Diluted weighted average
number of shares outstanding 100,000,998
152,097,226 152,097,226
Net income per ADS:
Basic and diluted 0.44
1.07 0.14
Basic weighted average number
of ADSs outstanding 14,285,857
21,726,308 21,726,308
Effect of dilutive
potential ADSs -
1,827 1,827
Diluted weighted average
number of ADSs outstanding 14,285,857
21,728,135 21,728,135
3SBio Inc. and subsidiaries
Unaudited consolidated statements of income
(expressed in thousands, except per share per ADS and
other share and ADS
data)
For the Six
Months Ended June 30,
2006
2007 2007
RMB
RMB US$
Net Revenues:
EPIAO 45,075
55,126 7,242
TPIAO 4,958
17,184 2,258
Intefen 2,404
1,766 232
Inleusin 623
572 75
Export 3,593
2,295 301
Iron -
1,126 148
Others 276
357 47
Total 56,929
78,426 10,303
Cost of revenues (5,719)
(6,902) (907)
Gross profit 51,210
71,524 9,396
Operating expenses
Research and development expense (1,588)
(4,063) (534)
Sales, marketing and
distribution expense (26,731)
(35,714) (4,692)
General and administrative expense (5,645)
(6,405) (841)
Total operating expenses (33,964)
(46,182) (6,067)
Operating income 17,246
25,342 3,329
Other (expense)/ income, net
Interest income 134
17,458 2,293
Interest expense (2,512)
(672) (88)
Grant income 1,269
781 103
Others (180)
18 2
Total other (expense)/income, net (1,289)
17,585 2,310
Income before income tax expense
and minority interests 15,957
42,927 5,639
Income tax expense (2,177)
(3,349) (440)
Income before minority interests 13,780
39,578 5,199
Minority interests, net of tax 16
(85) (11)
Net income 13,796
39,493 5,188
Net income per share:
Basic and diluted 0.14
0.28 0.04
Basic weighted average number
of shares outstanding 100,000,998
141,105,129 141,105,129
Effect of dilutive
potential shares -
13,143 13,143
Diluted weighted average
number of shares outstanding 100,000,998
141,118,272 141,118,272
Net income per ADS:
Basic and diluted 0.97
1.96 0.26
Basic weighted average number
of ADSs outstanding 14,285,857
20,157,876 20,157,876
Effect of dilutive
potential ADSs -
1,877 1,877
Diluted weighted average number
of ADSs outstanding 14,285,857
20,159,753 20,159,753
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