Sinovac Files 2016 Annual Report on Form 20-F and Reports Unaudited Fourth Quarter 2016 Financial Results

Files 2016 Annual Report on Form 20-F and Reports Unaudited Fourth

Quarter 2016 Financial Results

China, November 22, 2017 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA) ("Sinovac" or the "Company"),

a leading provider of biopharmaceutical products in China, announced today that it has filed its 2016 annual report on Form 20-F

with the U.S. Securities and Exchange Commission for the year ended December 31, 2016. The Company also reported its unaudited

financial results for the fourth quarter ended December 31, 2016.

Fourth Quarter 2016 Financial highlights

Full Year 2016 Financial highlights

Weidong Yin, Chairman, President and CEO of Sinovac, commented, "We are pleased with the commercial launch of our EV71 vaccine

in 2016. The sales contribution from EV71 more than offset the decline of sales in our hepatitis vaccines caused by the Shandong

incident in the first half of 2016.Although the incident caused profound change in the Chinese vaccine market, we continued to

make progress on our pipeline programs, and we believe a strong vaccine product portfolio is important for our long-term success.

From 2016 to 2017, we conducted several clinical studies on our pipeline products, including Sabin IPV, varicella, and PPV, and

obtained a license to conduct clinical studies of the quadrivalent influenza vaccine."

incident involving the improper distribution and sale of vaccines in Shandong province resulted in a new government regulation

for vaccine distribution and logistics. The new regulation required each province to set up a centralized tendering platform, which

had not previously existed in many provinces. In 2016, the new policy impacted nationwide sales of private-pay market vaccines

as vaccine companies halted vaccine delivery to wait for the interpretation of the new regulation by the Chinese government. In

the fourth quarter of 2016, sales started to slowly resume, due to the interpretation issued jointly by the Ministry of Health

and Chinese FDA allowing for a transitional period with an expiration date of December 31, 2016.

-Sinovac obtained clinical research approval for its proprietary Varicella vaccine candidate from the CFDA in September2015,

and completed phase I clinical trials in 2016. In August 2016, the double-blind, randomized, placebo-controlled phase III clinical

trial was conducted at two sites across China's Henan province to assess the efficacy of the vaccine candidate. Approximately

6,000 healthy children from one to 12 years old completed the one dose vaccination schedule prior to the chickenpox epidemic season

in China followed by an active monitoring period. The phase III trial was completed in 2017 with preliminary phase III data showing

that Sinovac's varicella vaccine was 87.1% (95% CI: 69.7%, 94.5%) efficacious against chickenpox caused by Varicella-zoster Virus

(VZV).In parallel, Sinovac conducted another clinical study that consisted of 1,197 volunteers from one to three years old, which

was designed to evaluate the consistency of three consecutive lots of varicella vaccine manufactured by the Company. The results

indicated that the immunogenicity of the three vaccine lots was consistent. We expect to file the production license application

with the CFDA before the end of 2017.

-In November 2015, the Company obtained clinical trial licensing for its Sabin IPV. Phase I/II clinical trials were completed

in 2017. The phase I trial was a single center and open-label study to evaluate safety among adults, children, and infants. There

were 108 healthy volunteers. The results showed that the vaccine candidate had a good safety profile. The phase II clinical trial

was a double blind and controlled study to evaluate safety and immunogenicity by comparing commercialized IPV and Sabin IPV vaccine

to Sinovac's vaccine candidates. The phase II trial result showed no statistical difference between the safety of the Company's

vaccine candidates and the commercialized IPV and Sabin IPV vaccine products. Furthermore, the results indicated that the immunogenicity

of the vaccine candidates is equivalent to or superior to the controlled vaccine. In the third quarter of 2017, a phase III trial

was commenced, which is expected to be completed in 2018.

valent Pneumococcal Polysaccharide Vaccine-A double blind, randomized, and controlled phase III clinical trial on the

23-PPV commenced on April 1, 2015, to evaluate the immunogenicity and safety of the vaccine candidate on a healthy population over

two years of age. The trial was conducted with 1,760 volunteers, including adults, seniors, and children. Blood serum testing was

carried out throughout 2016, and the trial was completed in early 2017. The results showed that the immunogenicity and safety of

Sinovac's vaccine candidate were not inferior to the controlled vaccine, a 23-PPV already commercialized in China. Furthermore,

the vaccine candidate could be used by the target age group to control and prevent diseases caused by pneumonia. The application

for production license was submitted to CFDA in June 2017.

influenza vaccine (QIV)-We initiated the development of a QIV in May 2013. Following the completion of preclinical studies,

the Company applied for the clinical license from the CFDA. The approval to conduct a human clinical trial was issued by the CFDA

in November 2016, and the trial is expected to be initiated in the fourth quarter of 2017. In contrast to the trivalent influenza

vaccine, such as Sinovac's Anflu product, which includes an influenza A H1N1 virus, an influenza A H3N2 virus, and a B virus,

the quadrivalent flu vaccine is designed to protect against four different flu viruses: two influenza A viruses and two influenza

B viruses. Adding another B virus to the vaccine is expected to provide broader protection against circulating flu viruses because

there are two very different lineages of B viruses that both circulate during most seasons.

Financial Results for Fourth Quarter 2016

sales from continuing operations were $31.4 million compared to $23.0 million in the prior year period. Sales increased primarily

due to revenue generated by the Company's EV71 vaccine.

profit from continuing operations was $23.0 million compared to gross profit of $15.7 million in the prior year period. The increase

was primarily due to the contribution of EV71 vaccine sales in the fourth quarter of 2016. Gross margin was 73.5% compared to 68.3%

in the prior year period.

general and administrative expenses in the fourth quarter of 2016 were $15.2 million compared to $11.7 million in the same period

of 2015. The Company's selling, general and administrative expenses increased with the higher level of sales activity. The

Company also incurred a cost of $0.6 million relating to the proposed privatization of Sinovac.

expenses in the fourth quarter of 2016 were $3.6 million compared to $2.9 million in the same period of 2015. The increase was

mainly due to higher R&D expenses on the varicella and sIPV vaccine projects in the fourth quarter of 2016.

from continuing operations was $6.8 million compared to $0.5 million in the prior year period. In addition, the fourth quarter

of 2015 included a loss from discontinued operations of $0.1 million, whereas no such income or loss was incurred in the fourth

income attributable to common shareholders was $4.4 million, or $0.08 per basic and diluted share, compared to net income attributable

to common shareholders of $0.2 million, or $0.00 per basic and diluted share, in the prior year period.

EBITDA was $12.5 million in the fourth quarter of 2016 compared to $4.4 million in the prior year period. Non-GAAP net income from

continuing operations in the fourth quarter of 2016 was $8.8 million compared to $1.4 million in the prior year period.

Non-GAAP diluted earnings per share from continuing operations in the fourth quarter of 2016 were $0.11 compared to $0.02 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.

Financial Results for the Twelve Months

Ended December 31, 2016

from continuing operations in 2016 were $72.4 million, an increase of 7.4% from $67.4 million in 2015. The contribution of EV71

vaccine sales in the second half of 2016 offset the negative impact of the Shandong vaccine scandal that occurred in the first

profit from continuing operations in 2016 was $50.0 million, an increase of 2.1% from $49.0 million in 2015. Gross margin was 69.1%

compared to 72.7% in 2015. The decrease was mainly due to a higher inventory provision provided for the hepatitis A&B and mumps

vaccines, higher idle capacity costs charged to cost of sales, and negative gross profit for the hepatitis A&B vaccine due

to a higher sales returns provision.

general and administrative expenses in 2016 were $42.0 million compared to $37.5 million in 2015. The Company's selling,

general and administrative expenses increased with the higher level of sales activity, and the Company also incurred a cost of

$2.2 million relating to the proposed privatization of Sinovac.

expenses in 2016 were $12.6 million compared to $9.5 million in 2015. The increase was mainly due to higher R&D expenses on

the varicella and sIPV vaccines and the MMR vaccine project.

loss from continuing operations was $3.1 million in 2016 compared to a net loss of $0.2 million in 2015.Net income from discontinued

operations was $2.3 million in 2016 compared to a net loss of $0.7 million in 2015.

loss attributable to common shareholders was $0.6 million, or ($0.01)per basic and diluted share, in 2016 compared to net loss

attributable to common shareholders of $1.4 million, or ($0.03) per basic and diluted share in 2015.

Non-GAAP EBITDA was $8.2 million in

2016 compared to $11.2 million in 2015. Non-GAAP net income from continuing operations in

2016 was $0.3 million compared to net income of $1.6 million in 2015. Non-GAAP diluted earnings per share from continuing

operations in 2016 were $0.01 compared to diluted earnings per share of $0.01 in 2015.

Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.

of December 31, 2016, cash and cash equivalents totaled $62.4 million compared to $63.8 million as of December 31, 2015. In 2016,

net cash used in operating activities was $15.5 million. Net cash used in investing activities was $11.8 million, which was due

to purchase of equipment. Net cash provided by financing activities was $27.8 million, including loan proceeds of $45.5 million

and loan repayment of $24.9 million. As of December 31, 2016, the Company had $31.3 million of bank loans due within one year.