Sinovac Reports Unaudited First Half of 2018 Financial Results

Reports Unaudited First Half of 2018 Financial Results

China, November 8, 2018 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA) ("Sinovac" or the "Company"),

a leading provider of biopharmaceutical products in China, announced today its unaudited financial results for the six months ended

Financial highlights

In the first half of 2018,

sales were mainly generated from the EV71 vaccine. The increase of EV71 vaccine sales was primarily attributable to government

advocacy regarding the benefits of this vaccine to the public. In March 2018, the National Health Commission of the People's

Republic of China ("NHFPC") issued a notice to encourage vaccination to prevent hand, foot and mouth disease due to

the expected high prevalence of this disease in 2018. In addition, since late 2017, Sinovac has been collaborating with third party

companies to improve market coverage and penetration in the private sector of the Chinese market. As a result, the number of customers

increased over 30% in the first half of 2018 compared to the same period in 2017. Also in the first half of 2018, the marketing

team of Sinovac expanded its activities, including academic promotion activities at the national, provincial, district, and county

levels, which largely improved the awareness of Sinovac's EV71 vaccine among professionals and consumers.

The Company does not expect

any sales of seasonal influenza vaccine during the 2018-2019 flu season. As was announced in April 2018, production at the Company's

hepatitis A vaccine and flu vaccine bulk production site was suspended when a minority shareholder of Sinovac Beijing forcibly

entered Sinovac Beijing's corporate offices along with dozens of unnamed individuals in an attempt to wrongfully take control

of Sinovac Beijing's operations. As it was determined that the quality and safety of the vaccines could not be sufficiently

verified to the Company's high standards following the disruption, the vaccines in production at the time of the attack were

destroyed. Since the attacks, the Company has verified the safety and quality of the vaccine production process, and is ready to

resume production in anticipation of next year's market demand. Sales of flu vaccine for the 2017-2018 flu season were $13.5

Vaccine - Sinovac filed a production license application with the CFDA in November 2017; the CFDA's Center

of Drug Evaluation completed its review and provided comments to the Company. The Company is preparing supplementary documents

as requested by the CFDA.

Inactivated Polio Vaccine (sIPV) - In April 2018, the phase III trial of the sIPV candidate developed by Sinovac

was unblinded. The preliminary results showed that it was not inferior to the control vaccine group. In June 2018, a sequential

vaccination schedule consisting of sIPV and two doses of bOPV was conducted. Dosing and blood sampling have been completed recently,

and the Company is awaiting the results.

Flu vaccine (QIV) - Sinovac is conducting a phase III clinical study of its QIV and expects to complete this study

Financial Results for the First Six Months of 2018

in the first half of 2018 were $122.5 million, compared to $66.9 million in the prior year period. Sales increased primarily due

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

profit was $109.2 million, compared to gross profit of $59.2 million in the prior year period. The increase was primarily due to

the contribution of EV71 vaccine sales in the first half of 2018. Gross margin was 89.1%, compared to 88.4% in the prior year period.

general and administrative expenses in the first half of 2018 were $67.8 million, compared to $36.7 million in the same period

of 2017. The Company's selling, general and administrative expenses increased with the higher level of sales activity. The

Company incurred $3.4 million in legal expenses related to the facility disruption and litigation regarding the Company's

annual meeting and related matters.

expenses in the first half of 2018 were $10.1 million, compared to $8.8 million in the same period of 2017.

income was $22.6 million, compared to net income of $15.8 million in the prior year period.

income attributable to shareholders was $14.1 million, or $0.24 per basic and diluted share, compared to net income attributable

to shareholders of $10.9 million, or $0.19 per basic and diluted share, in the prior year period.

EBITDA was $34.2 million in the first half of 2018, compared to $15.9 million in the prior year period. Non-GAAP net income from

continuing operations in the first half of 2018 was $24.0 million, compared to $16.2

million in the prior year period. Non-GAAP diluted earnings per share from continuing operations in the first half of 2018 were

$0.26, compared to $0.20 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.

of June 30, 2018, cash and cash equivalents totaled $88.1 million, compared to $114.4 million as of December 31, 2017. For the

six months ended June 30, 2018, net cash used in operating activities was $11.3 million. Net cash used in investing activities

was $2.9 million, which was for the purchase of equipment. Net cash used in financing activities was $8.0 million, including loan

proceeds of $13.4 million and loan repayment of $23.8 million. As of June 30, 2018, the Company had $9.8 million of bank loans

due within one year. The Company expects that its current cash position will be able to support its operations for at least the

Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization

of vaccines that protect against human infectious diseases. Sinovac's product portfolio includes vaccines against enterovirus71,

or EV71, hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), and mumps. The

EV71 vaccine, an innovative vaccine developed by Sinovac against hand foot and mouth disease caused by EV71, was commercialized

in China in 2016. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it

has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of

the H5N1 pandemic influenza vaccine to the government stockpiling program. The Company is developing a number of new products including

a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine.

Sinovac primarily sells its vaccines in China, while also exploring growth opportunities in international markets. The Company

has exported select vaccines to over 10 countries in Asia and South America. For more information, please visit the Company's

website at www.sinovacbio.com.

press release contains "forward-looking statements" within the meaning of the United States federal securities laws.

Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,

performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed

or implied by these forward-looking statements. Factors that might cause such a difference include our inability to compete successfully

in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay

of projects, disruptions to our operations, the results of any pending litigation, and adverse general economic conditions in China,

the United States and elsewhere. These risks and other factors include those listed under "Risk Factors" and elsewhere

in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking

statements by terminology such as "may," "will," "should," "expects," "intends,"

"plans," "anticipates," "believes," "estimates," "predicts," "potential,"

"continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations

reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance

or achievements. The Company assumes no obligation to update the forward-looking information contained in this release.

supplement its consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting

principles in the United States ("GAAP"), Sinovac uses the following non-GAAP financial measures: non-GAAP EBITDA,

non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. For more information

on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest

Comparable GAAP Measures" in this release.

believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations

help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that

Sinovac includes in income from operations from continuing operations, net income from continuing operations and diluted EPS from

continuing operations. Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP

diluted EPS from continuing operations provide useful information about its core operating results, enhance the overall understanding

of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management

in its financial and operational decision-making. Non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP

diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations

from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure

of performance or as an indicator of Sinovac's operating performance. These non-GAAP financial measures presented here

may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly

titled measures differently, limiting their usefulness as comparative measures to our data.

EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income,

net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation

expenses, amortization and depreciation that Sinovac does not believe are reflective of the core operating performance during the

net income from continuing operations represents

net income from continuing operations before share-based compensation expenses, and

foreign exchange gain or loss.