Sinovac Reports Unaudited Third Quarter 2016 Financial Results BEIJING

Reports Unaudited Third Quarter 2016 Financial Results

Nov. 28, 2016 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced

today its unaudited third quarter ended September 30, 2016.

Weidong Yin, Chairman, President and CEO of the Sinovac, commented, "Our third quarter revenue rebounded from a slower first

half of the year, increasing 71.4% to $28.7 million from $16.8 million from the same period of 2015. The sales improvement was

mainly attributable to the newly introduced EV71 vaccine product sales, which contributed approximately $16.5 million to our quarterly

revenue, partially offset by Bilive and Anflu revenue decreases."

deliveries resumed in the third quarter after the interpretation of new government regulation was issued in June, however we expect

the market for conventional vaccines to take longer to fully recover. Our Bilive sales decline was due to increased sales returns

as the delayed supply reduced the shelf life of the vaccine in the channel, while our Anflu sales decline was a result of less

vaccine produced during this challenging environment."

continued to make progress on our pipeline programs with the continuation of clinical trials of our varicella vaccine, Sabin IPV

(sIPV) and pneumococcal polysaccharide vaccine (PPV). Heading into the fourth quarter, we expect EV71 vaccine sales to remain our

leading revenue contributor," concluded Mr. Yin.

Quarter 2016 Business Highlights

in prior years, Sinovac submitted bids of its Healive in Beijing, Shanghai, and Jiangsu Province, and Anflu in Beijing. Sinovac

won the tenders to supply Beijing with Healive over the course of 2016 to 2018 and Anflu for 2016. The total value of the tenders

was RMB 32 million ($4.8 million) for Healive and RMB 6.6 million ($1.0 million) for Anflu. Sinovac was selected to be the sole

supplier of Healive to Shanghai for 2016 and the value of the contract is RMB 14.1 million ($2.1 million). Sinovac won the tender

to supply Healive to Jiangsu for 2016 and the total value of the tender was RMB 13.2 million ($2.0 million).

- The vaccine candidate was approved to commence human clinical trials in 2015. The phase I trial was completed and the results

demonstrated a positive safety profile of the vaccine candidate. The phase III trial commenced in the third quarter. A phase III

trial measures efficacy and immunogenicity with a randomized, double-blind, parallel-treatment, placebo-controlled study in addition

to safety. Over 6,000 subjects aged one to twelve years old were enrolled as volunteers for the phase III clinical trial. We expect

the phase III clinical trial to be completed in the third quarter of 2017, after which the production license application will

be filed with the CFDA.

- The Company initiated the phase I clinical trial in October 2016. The preliminary results show a positive safety profile

of the vaccine candidate. After the results were collected, Sinovac recently commenced the phase II trial, which is designed to

study the immunogenicity of vaccine candidates with different levels of dosage content for the dose selection, and to further observe

the safety of the vaccine. The phase II clinical trial is expected to be completed in the third quarter of 2017.

Results for Third Quarter 2016

sales from continuing operations were $28.7 million compared to $16.8 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 $11.2 million in the prior year period. The increase

was primarily due to the contribution of EV71 vaccine sales in the third quarter of 2016. Gross margin was 80.1%, compared to 66.9%

in the prior year period.

general and administrative expenses in the third quarter of 2016 were $12.3 million, compared to $10.0 million in the same period

of 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 $733 thousand relating to the proposed privatization of Sinovac.

expenses in the third quarter of 2016 were $4.2 million, compared to $2.2 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 third quarter of 2016.

from continuing operations was $4.3 million compared to a loss of $1.8 million in the prior year period. In addition, the third

quarter of 2015 included a loss from discontinued operations of $183 thousand whereas no such income or loss was received in the

third quarter of 2016.

income attributable to common shareholders was $3.2 million, or $0.06 per basic and diluted share, compared to net loss attributable

to common shareholders of $1.6 million, or ($0.03) per basic and diluted share in the prior year period.

EBITDA was $7.7 million in the third quarter of 2016, compared to $721 thousand in the prior year period. Non-GAAP net income from

continuing operations in the third quarter of 2016 was $4.6 million, compared to a net loss of $1.2 million in the prior

year period. Non-GAAP diluted earnings per share from continuing operations in the third quarter of 2016 was $0.06, compared to

net loss of $0.01 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.

Unaudited Financial Results for nine

months ended September 30, 2016

from continuing operations were $41.1 million for the nine months ended September 30, 2016, a decrease of 7.6% from $44.5 million

in the prior year period. Excluding H5N1 revenue, sales from continuing operations were $34.7 million for nine months ended September

30, 2016, a decrease of 22.0% from $44.5 million in the prior year period. The sales decrease was due to lower sales to customers

in the first half of 2016 and an increase in sales returns as a result of the vaccine incident in Shandong province.

profit from continuing operations was $27.0 million, a decrease of 19.0% from $33.3 million in the prior year period. Gross margin

was 65.7%, compared to 74.9% in the prior year period. Excluding H5N1, gross margin was 67.0% for the nine months ended September

30, 2016, compared to 75.5% in the prior year period. The decrease was mainly due to a higher inventory provision provided for

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

hepatitis A&B vaccine due to higher sales returns provision provided in the period.

general and administrative expenses for the nine months ended September 30, 2016 were $26.7 million, compared to $25.8 million

in the same period of 2015.

expenses for the nine months ended September 30, 2016 were $9.1 million, compared to $6.6 million in the same period of 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 $9.9 million, compared to $749 thousand in the prior year period. Net income from discontinued

operations was $2.3 million, compared to a net loss of $619 thousand in the prior year period.

loss attributable to common shareholders was $5.0 million or ($0.09) per basic and diluted share for the nine months ended September

30, 2016, compared to net loss attributable to common shareholders of $1.6 million, or ($0.03) per basic and diluted share for

the nine months ended September 30, 2015.

Non-GAAP EBITDA was negative $4.3 million

for nine months ended September 30, 2016, compared to $6.7 million in the prior year

period. Non-GAAP net loss from continuing operations for the nine months ended September

30, 2016 was $8.5 million, compared to a net income of $168 thousand in the prior year period. Non-GAAP diluted net loss

per share from continuing operations for the nine months ended September 30, 2016

was $0.11, compared to $0.00 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 September 30, 2016, cash and cash equivalents totaled $54.3 million, compared to $63.8 million as of December 31, 2015. For

the nine months ended September 30, 2016 net cash used in operating activities was $15.5 million. Net cash used in investing activities

was $7.4 million, which was for the purchase of equipment. Net cash provided by financing activities was $13.9 million, including

loan proceeds of $35.0 million and loan repayment of $21.3 million. As of September 30, 2016, the Company had $29.4 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 12 months. The Company will seek new commercial bank loans to finance the commercialization of its pipeline products

and for other operational purposes when appropriate.

on Consideration of "Going Private" Proposals

independent special committee of the Company's Board of Directors is continuing its work to consider and evaluate competing

proposals to privatize the Company. As disclosed previously, the Company's Board of Directors formed the special committee

following the receipt of a non-binding "going private" proposal, dated January 30, 2016, from Mr. Weidong Yin, chairman,

president and chief executive officer of the Company, and SAIF Partners IV L.P. and/or its affiliates. Subsequently, the special

committee received a non-binding competing "going private" proposal, dated February 3, 2016, from a consortium comprised

of PKU V-Ming (Shanghai) Investment Holdings Co., Ltd., Shandong Sinobioway Biomedicine Co., Ltd., CICC Qianhai Development (Shenzhen)

Fund Management Co., Ltd., Beijing Sinobioway Group Co., Ltd., Heng Feng Investments (International) Limited and Fuerde Global

special committee has implemented a customary process to ensure a fair assessment of both proposals. The special committee

continues to carefully consider and evaluate both proposals with the assistance of the special committee's financial and

final decisions have been made with respect to either proposal, and there can be no assurance that any definitive and binding offer

will be made, that any agreement will be executed or that either proposal or any other transaction will be approved or consummated.

The Company does not undertake any obligation to provide any updates with respect to these or any other transactions, except as