Sinovac Reports Unaudited First Quarter 2019 Financial Results

Sinovac Reports Unaudited First Quarter

2019 Financial Results

BEIJING, China, July 10, 2019 /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 first quarter ended March 31, 2019.

First Quarter of 2019 Financial Summary

In the first quarter of 2019, the Company

effectively executed its marketing and sales strategy in both the private market in China and in the overseas market for Healive ,

the inactivated hepatitis A vaccine, and Inlive , the enterovirus 71 (EV71) vaccine.

Healive increased in both domestic market and overseas markets. In China, the increase in demand for Healive can be

attributed to less competition in the market after a vaccine manufacturer that claimed to manufacture a similar product was closed

down for improper conduct. Additionally, after Healive passed the World Health Organization (WHO) prequalification assessment,

overseas demand from both governments and international non-governmental organizations

Sales of Inlive , the Company's

EV71 vaccine, decreased during the first quarter of 2019 because of market saturation in the Chinese demographic of children aged

six months to three years. The EV71 vaccine has been widely used in the Chinese market by that demographic during the previous

two years and the epidemic is now largely under control. Since Inlive coverage

of newborns is still limited, there is significant potential to boost sales of the vaccine by increase the inoculation rate in

this age group, which is a primary focus of the Company's marketing and sales strategy

for this vaccine in 2019.

Pipeline Development

-The new drug application for the Company's varicella vaccine was filed with

the National Medical Products Administration (NMPA, previously known as the China State Food and Drug Administration) in November

2017. The clinical site inspection was completed in 2018, and the NMPA issued a Notice of Site Inspection to the Company on May

24, 2019. We expect the site inspection to occur within the year and a production license to be issued in 2020. Assuming timely

issuance of a production license, the Company expects to begin producing and selling the varicella vaccine in 2020.

Unaudited Financial Results for First

Summary of sales and gross profit

Sales for the first quarter of 2019 were

$36.6 million, a decrease of 22.8% from $47.3 million in the prior year period. The decrease in the Company's sales in the

first quarter of 2019 was primarily attributable to suspension of sales of Bilive , the Company's hepatitis A and B

vaccine, and Anflu , a seasonal influenza vaccine. The decrease in sales was also to a lesser degree attributable to declining

sales of Inlive as the EV71 epidemic is now largely under control. The decreases were partially offset by an increase in

the sales of Healive as competition has waned and WHO prequalification has increased overseas demand.

In the first quarter of 2019, no revenue

was generated from the Company's hepatitis A&B vaccine or influenza vaccine. The Company was unable to sell or manufacture

Bilive due to a lack of supply of hepatitis B antigens used for Bilive production from the Company's external

supplier. As disclosed in the Company's annual report on Form 20-F for 2018, the Company does not have a long-term agreement

for the supply of hepatitis B antigens used for Bilive production. The Company sources hepatitis B antigens entirely from

Beijing Tiantan Biological Products Co., Ltd. ("Beijing Tiantan") and relies on the supplier to provide hepatitis

B antigen. Beijing Tiantan ceased its hepatitis B antigens production due to facilities renovation. The Company will work closely

with Beijing Tiantan to resume production of Bilive . However, at this time, the Company and Beijing Tiantan are unable to

provide an expected timetable for the resumption of production. The Company did not generate any sales revenue from Anflu

due to the previously-reported suspension of sales and production of the Company's influenza vaccines for the 2018-2019

flu season caused by the disruptive actions taken by the minority shareholder of the Company's subsidiary, Sinovac Biotech

With regard to Inlive sales, since

the commercial launch of the EV71 vaccine in 2016, there has been strong demand for the highly effective vaccine to address the

outbreak of hand, foot and mouth disease in China. As the vaccine demonstrated a good safety and immunogenicity profile, the Chinese

government mandated in 2018 the use of the EV71 vaccine to control the epidemic. This drove unusually strong vaccine sales in

2018. Since the disease epidemic has been controlled and reduced compared to previous years, sales have slowed and the vaccination

recommendation from the government has reverted to the regular practice of vaccination shortly after birth.

The increase in the sales of Healive

was driven by private market sales in China and overseas sales stimulated by the positive World Health Organization (WHO) prequalification

Gross profit in the first quarter of 2019

was $32.8 million, compared to the gross profit of $44.5 million in the prior year period. Gross margin was 89.7%, compared to

94.1% in the prior year period. Gross profit in the first quarter of 2019 decreased 4.4% year over year because the gross profit

generated by the Company's hepatitis A&B vaccine and influenza vaccine in the first quarter of 2018 was higher than

normal, and no gross profit were generated by these vaccines in the first quarter of 2019.

Selling, general and administrative expenses

in the first quarter of 2019 were $23.6 million, which remained stable, compared to $23.3 million in the prior year period.

R&D expenses in the first quarter

of 2019 were $4.5 million, compared to $4.2 million in the prior year period, as the Company continued to invest in its pipeline

of products including sIPV, PPV and varicella vaccines.

Net income in the first quarter of 2019

was $3.6 million, compared to $12.2 million in the prior year period.

Net income attributable to common shareholders

was $1.2 million, or $0.01 per basic and diluted share, compared to net income attributable to common shareholders of $8.4 million,

or $0.15 per basic and $0.14 diluted share, in the prior year period.

As the Company announced on February 22,

2019, the Company's Board of Directors determined that certain shareholders became "Acquiring Persons," as defined

in the Company's Rights Agreement ("Rights Agreement"), and a "Trigger Event" occurred under the

Rights Agreement. As a result, new common and preferred shares of the Company were issued into a trust for the benefit of the

Company's shareholders who did not trigger the Rights Plan. Without the effect of the "Trigger Event" and the

newly issued common and preferred shares, basic and diluted earnings per share for the first quarter of 2019 would be $0.02.

Non-GAAP adjusted EBITDA was $6.8 million

in the first quarter of 2019, compared to $16.7 million in the prior year period. Non-GAAP net income in the first quarter of

2019 was $4.0 million, compared to $10.9 million in the prior year period. Non-GAAP diluted earnings per share in the first quarter

of 2019 were $0.01, compared to $0.12 per share in the prior year period. Non-GAAP diluted earnings per share in the first quarter

of 2019 without the effect of the "Trigger Event" and the newly issued common and preferred shares would be $0.02.

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

As of March 31, 2019, cash and cash equivalents

totaled $149.0 million, compared to $158.2 million as of December 31, 2018. In the first quarter of 2019, net cash used in operating

activities was $8.7 million, net cash used in investing activities was $0.6 million, and net cash used in financing activities

was $1.1 million, including loan repayment of $1.3 million. As of March 31, 2019, the Company had $4.1 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 next

The Company's Interim Financial

Statements are prepared and presented in accordance with U.S. GAAP. However, the Interim Financial Statements have not been audited

or reviewed by the Company's independent registered accounting firm.

As previously disclosed by the Company,

on March 13, 2018, 1Globe Capital LLC ("1Globe") filed a complaint against the Company in the Antigua Court. The trial

of the matter took place from December 3 to 5, 2018. On December 19, 2018, the Antigua judge handed down his judgment (the "Antigua

Judgment"), finding in the Company's favor in full, dismissing 1Globe's claim and declaring that the Rights

Agreement was validly adopted as a matter of Antigua law. On January 29, 2019, 1Globe filed a Notice of Appeal against the Antigua

Judgment. On March 4, 2019, 1Globe filed an application for urgent interim relief, seeking an injunction to prevent the Company

from continuing to implement its Rights Agreement until the resolution of the appeal. This application was heard on April 4, 2019,

at which the Court of Appeal issued an order restraining the Company from operating the Rights Agreement in any way that affects

1Globe's rights or shareholding or otherwise distributing the Exchange Shares to the Company's shareholders who did

not trigger the Rights Plan until after the determination of the appeal. 1Globe's appeal against the Antigua Judgment will

be heard in the week commencing September 16, 2019.