Full Press Release Details
SINOVAC BIOTECH 6K, PRESS RELEASE, 02.17.05
SINOVAC BIOTECH LTD.
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RELEASES FINANCIAL STATEMENTS FOR THE THIRD QUARTER AND NINE MONTHS
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ENDING 30TH SEPTEMBER 2004
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BEIJING, February 17, 2005 -Sinovac Biotech Ltd. ("Sinovac") ("the Company")
(AMEX:SVA) announced its results for the third quarter and nine months ended
September 30, 2004, as well as other positive company developments.
Sinovac's inaugural vaccine HealiveTM generated revenue $3.57 million in the
nine month period to 30 September 2004. The Company generated positive net cash
flow during this period of $698,235. Gross profit margins remain high at an
As previously announced on the 3 January 2005, Sinovac recorded full-year 2004
sales growth of more than 230% according to unaudited management-prepared sales
figures. In 2004, the Company sold more than 1 million doses of its Hepatitis A
vaccine, Healive, at a price of 55 RmB (US $6.64) per dose. These 2004 sales
thus total approximately $6.5 million, an increase of more than 230% over 2003
sales of $2.8 million. Fourth quarter sales are therefore estimated to be just
under $3 million - a very significant increase in quarter-over-quarter sales.
Sinovac President and CEO Dr. Wei Dong Yin stated, "The impressive
accomplishments through 2004 validate our business strategy, and provide an
excellent product and marketing foundation for accelerated sales and revenue
growth in 2005. Extensive marketing and sales programs for HealiveTM are meeting
with great success, and are paving the way for our BiliveTM and influenza flu
vaccines. Our highly efficacious vaccines will propel our corporate profile and
market branding to an even higher level this year."
Vaccine Approval Developments
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China's State Food and Drug Administration (SFDA) has now issued a production
license for BiliveTM. Sales of the vaccine will commence in China shortly and
will be distributed through the same channels as HealiveTM. The first combined
inactivated hepatitis A and B vaccine developed by Chinese scientists, BiliveTM,
received final approval for marketing and sales from the SFDA, in January 2005.
Dr. Yin commented, "Our influenza vaccine production line is currently under
construction and optimization. We anticipate the SFDA will approve and license
our flu vaccine in time for us to complete our initial, limited vaccine
production run of 500,000 doses for the 2005-2006 flu sales season. Our
technicians and production crews are doing a remarkable job preparing our 2
million-dose capacity production facility."
The SARS clinical trial is expected to end in March 2005, after every volunteer
has been observed for 210 days after inoculation. After all of the technical
reports have been filed and evaluated, Sinovac intends to apply to begin Phase
II clinical trials. In general, a Phase II trial includes early controlled
clinical studies conducted to obtain some preliminary data on the effectiveness
of the drug for a particular indication or indications in patients with the
disease or condition. This phase of testing also helps determine the common
short-term side effects and risks associated with the drug. Phase II studies are
typically well controlled, closely monitored, and conducted in a relatively
small number of patients, usually involving several hundred people.
Statements about Operations
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Sales for 2003 were US $2.8 million, compared to 2004 sales of about US $6.5
million (un-audited management-prepared sales figures), an increase of about
230%. During this time period Sinovac's cash burn rate remained very low.
As a result of the increased sales strategy, Sinovac's selling, general and
administrative expenses ("SG&A expenses") grew from $1,174,652 in 1st quarter to
3rd quarter expenses of $3,035,981. The administrative expenses of $218,469 of
Tangshan Yian were also included in the consolidated financial statement as the
result of the acquisition.
During the nine-month period ended September 30, 2004, Sinovac received Chinese
government SARS research grants amounting to $1,639,879. The influenza vaccine
research and development expenses totaled $35,472 and $172,630 respectively for
the three and nine months ended September 30, 2004. This figure is low due to
the advanced stage of the flu vaccine in the regulatory process as it awaits its
New Drug Application approval.
Dr. Yin noted, "We plan to spend a total of $4 million constructing the
influenza vaccine production line. A significant portion of this investment has
already been made. We also intend to commence aggressive product promotion
campaigns for all three of our vaccine lines in 2005. We anticipate increased
SG&A expenditures for some of these important growth plans."
Cash Resources and Liquidity
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As of September 30, 2004, the Company had approximately $2,118,282 in cash and a
positive working capital position of approximately $2,868,663. Subsequent to
September 30, the Company has received over $ 5 million through private
placements, warrant exercise, and debt repayment. Approximately US $3,310,000 of
these funds was used to complete the acquisition of an additional 20.56% of the
Beijing-based operating subsidiary, Sinovac Biotech Co., Ltd.
Assets and Shareholders' Equity
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As at 30 September, 2004, Sinovac had total assets of $23,130,456 including
$8,272,817 in current assets and $9,126,848 in property, plant and equipment.
Total paid-in capital was $15,428,305. Total shareholders' equity was
Seasonality of Vaccine Sales
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The traditional Chinese New Year usually occurs in the January - February
timeframe. This is a major event in China and as a result, fewer orders are
placed during that period. Sales then normally increase rapidly from the end of
March until May before slowing down again through June.
One of the largest user groups for our vaccines is school-organized student
vaccination programs. In September, students are required to receive
vaccinations during registration, consequently driving up sales in September. In
July and August, students break for summer holidays, therefore vaccination
programs do not take place during this period and sales are relatively low.
Two other large user groups are Chinese companies and China's Centers for
Disease Control ("CDCs"). These very large customers conduct their annual
budgeting planning each October and then place their vaccine orders and schedule
for the upcoming year.
In December and January, as Chinese New Year approaches, the Centers of Disease