Full Press Release Details
Reports Record Second Quarter 2008 Unaudited Financial Results
Conference Call on Wednesday, August 13, 2008 at 9:00 a.m. ET -
August 13, 2008 - Sinovac Biotech Ltd. (Amex: SVA), a leading developer and
provider of vaccines in China, today announced the Company's financial results
for the six and three-month periods ended June 30, 2008.
Weidong Yin, Chairman, President and CEO, commented, "We are pleased to announce
our record performance for this quarter, which can be attributed to Healive
sales that exceeded market expectation. The devastating May 2008 earthquake in
the Sichuan province resulted in health challenges presented by the destruction
of clean water and sanitation infrastructure. In the face of this tragedy, we
are proud to have been able to meet the increased demand for the hepatitis A
vaccine after Sinovac was selected by Ministry of Health and provincial
governments as the sole supplier of hepatitis A vaccine to the
region. This illustrates government's trust in the quality of our
vaccines and our capability to provide comprehensive marketing and sales service
and support to the local CDC and demonstrates that we have the production
capacity and reliable delivery channel to fulfill urgent demand on a timely
basis. We believe the experience served as a valuable opportunity for Sinovac to
demonstrate its ability to meet the public's needs as we continue to cultivate
the public market for our hepatitis A vaccine."
Months Ended June 30, 2008
second quarter 2008, sales increased 73% to $16.5 million, compared to $9.5
million in the second quarter 2007. The growth was driven by higher sales of
Bilive following the May 12th
earthquake. Government orders after the earthquake generated about $4.6 million,
which are not expected to recur in future periods. Sales and other amounts,
which are reported here in US dollars, were also affected by the strengthening
of the Chinese RMB against the US dollar in the last year.
the second quarter of 2008, Sinovac sold 2.72 million doses of Healive , up from
1.75 million doses for the same period of 2007. Higher sales in the second
quarter 2008 resulted from Healive promotion campaign targeting the private
market and the increased demand following the May 12th
earthquake. During the second quarter of 2008, Sinovac sold 180,000 doses of
compared to sales returns of 13,000 doses in the comparative
profit for second quarter 2008 was $13.9 million, with a gross margin of 84.0%,
compared to $8.2 million and 86.5%, respectively, for the same period of
operating expenses for the second quarter 2008 increased to $6.9 million,
compared to $3.6 million in the same period 2007. Selling, general and
administrative expenses for second quarter of 2008 were $6.0 million, compared
to $3.5 million in the same period of 2007. The year-over-year increase in
SG&A expenses was in line with the increased sales. SG&A expenses as a
percentage represented 36.5% of revenues in the second quarter of 2008, compared
to 36.3% in the same period in the prior year.
expenditures on research and development expenses for the second quarter of 2008
were $794,000 compared to $322,000 in the same period of 2007. R&D expenses
net of government grants were $667,000 for the second quarter of 2008, compared
to ($53,000) in the same period of 2007. The R&D expenses recognized as a
reduction to government grants were $127,000 in the second quarter of 2008,
compared to $375,000 in the same period of 2007. The R&D expenses were
mainly incurred for the Japanese encephalitis vaccine program and pandemic
influenza immunogenic persistence research of Panflu.
income was $7.0 million for the second quarter of 2008, compared to $4.7 million
in the same period of 2007. The year-over-year increase in operating income
reflected the significant increase in vaccine sales and the moderately higher
income for the second quarter of 2008 also included $400,000 of interest and
financing expenses, $1.6 million of income taxes, $141,000 other expense and
$1.5 million of minority interest. Net income for the same period of 2007
included $93,000 of interest and financing expenses, $832,000 of income taxes,
$197,000 interest and other income and $1.3 million of minority
income for the second quarter of 2008 was $3.3 million, or $0.08 per diluted
share, compared to $2.7 million, or $0.07 per diluted share, in the same period
8, 2008, the Chinese government issued detailed implementation guidelines with
regards to the criteria and approval process for High and New Technology
Enterprises (HNTE). HNTEs will be entitled to the preferential income tax rate
of 15% compared to the unified income tax rate of 25% effective January 1, 2008.
Prior to 2008, Sinovac Beijing was subject to the preferential income tax rate
of 15% as a HNTE. Given that application process has not yet commenced and
whether Sinovac will eventually be approved for HNTE status is uncertain,
Sinovac Beijing has elected to account for its current and deferred income tax
utilizing the enacted statutory tax rate of 25% as the applicable enterprises
income tax rate for 2008.
event that Sinovac Beijing reconfirms its HNTE status in accordance with the
HNTE rules, a 15% corporate income tax rate would be retroactive to January 1,
2008. Assuming HNTE is received; the impact on the results of operations for the
six months ended June 30, 2008 would include a $1,289,776 decrease in the
provision of the current income tax with a corresponding reduction in the income
tax liability and a $868,076 increase in deferred income tax expense with an
offset to deferred income tax assets. The effect change of rate will be recorded
in the period that changes occur.
June 30, 2008, Sinovac's cash and cash equivalents totaled $18.8 million,
compared to $17.1 million as of December 31, 2007.
obtained the production license of the whole viron pandemic influenza vaccine,
Panflu, granted by SFDA, we also commenced the development of a split
formulation of pandemic influenza vaccine.
In June 2008, Sinovac
initiated volunteer enrollment in its Phase II trial of the split pandemic
influenza vaccine. The
randomized and double-blind trial is expected to enroll 210 adolescents, between
the ages of 12 to 17, who will receive doses of 10 g, 15 g or 30 g, and 140
children, between the ages of 3 to 11, who will receive doses of 10 g or 15 g.
Volunteers will be followed for two months with safety and immunogenicity data
collected for the assessment of the vaccine. We are still on track to
announce preliminary results from this study in early 2009.
Company will host a conference call on Wednesday, August 13, 2008 at 9:00 a.m.
ET (9:00 p.m. Beijing time). To access the conference call, please dial
1-877-407-4018 (USA) or 1-201-689-8471 (international). A replay of
the call will be available from 12:00 p.m. ET on August 13 until August 27,
2008, at midnight. To access the replay, please dial 1-877-660-6853 (USA) or
1-201-612-7415 (international) and reference the account number 3055 and the
access code 293426. A live audio webcast of the call will also be