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BMP Sunstone Reports First Quarter 2010 Financial Results
Date:5/10/2010

PLYMOUTH MEETING, Pa., May 10 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (Nasdaq: BJGP) ("BMP Sunstone" or the "Company") today announced financial results for the first quarter ended March 31, 2010.

David Gao, Chief Executive Officer of BMP Sunstone, stated, "This was a quarter of successful management transition at Sunstone. We replaced senior managers including the general manager and improved our sales organization which we expect will drive future top line growth, improve sales force effectiveness and save costs. These changes to our management team resulted in an incremental $1.2 million of salary, legal and other expenses during this quarter, which we expect to be non-recurring. We believe our first quarter 2010 performance was respectable considering the dramatic changes at Sunstone and the exceptional strength of our results in the first quarter of 2009 when revenues grew over 46% on a pro forma basis over 2008."

First Quarter 2010 Financial Results

Revenue in the first quarter of 2010 was $39.0 million, compared to $39.3 million in the first quarter of 2009. Revenue from manufacturing was $25.4 million, up 3.6% from the prior year period, reflecting continued demand for Sunstone Pharmaceutical Co., Ltd. (Sunstone) leading products offset by near-term disruption related to the Company's sales force reorganization completed in the first quarter of 2010. Revenue from licensed products increased by 29.4% year over year to $1.7 million, due to successful sales and marketing efforts for Propess, Anpo and Ferriprox. Revenue from distribution was $11.9 million, down 11.4% on a year over year basis, reflecting management's decision to proactively cease distribution of certain low margin wholesale products during the quarter. In addition, hospital bidding in Beijing has been delayed until the second quarter of 2010. Our effort of reducing low margin products impacted revenue performance but ultimately should improve gross margin in the division. Additionally, as of the first quarter of 2010, financial contributions from Sunstone Shengda Zhangjiakou Pharmaceutical Co., Ltd., were consolidated in the Company's manufacturing division.

Gross profit in the first quarter of 2010 was relatively flat at $21.0 million, compared to $20.7 million in the first quarter of 2009. Gross margin was 53.8%, compared to 52.6% in the prior year period. Gross margin performance was driven by sales of manufactured and licensed products, which carried gross margins of 74.7% and 63.1% respectively. This gross margin performance is in line with management's plan to enhance profitability through revenue mix shift over time, as higher margin revenue from manufacturing and licensed products contributed to a greater portion of total revenue in the first quarter of 2010 versus the year ago period.

The Company's operating income was $3.0 million in the first quarter of 2010, compared to $3.2 million in the first quarter of 2009. Operating expenses include approximately $1.2 million of additional general and administrative expenses compared to the prior year period, which reflect non-recurring charges related to compensation expenses, stock compensation charges and legal expenses at Sunstone. Non-GAAP operating income improved 4.1% to $4.9 million from $4.7 million in the prior year period.

Adjusted EBITDA was $4.7 million in the first quarter of 2010, compared to $4.6 million in the first quarter of 2009.

Non-GAAP net income was $2.6 million, or $0.05 per diluted share, compared to $3.0 million, or $0.07 per diluted share, in the first quarter of 2009. On a GAAP basis, the Company reported net income of $625,000, or $0.01 per diluted share, compared to net loss of $2.0 million, or ($0.05) per diluted share, in the first quarter of 2009. The earnings per share calculation is based on 51.0 million diluted shares outstanding, compared to 43.1 million diluted shares outstanding in the prior year period.

Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three month periods ended March 31, 2010 and 2009.

Balance Sheet

As of March 31, 2010, the Company had cash and cash equivalents of $23.0 million and notes receivable of $15.7 million, totalling $38.7 million. Notes receivables from customers for the settlement of trade receivable balances are guaranteed by established banks in China and have maturities of six months or less.

Full Year 2010 Financial Guidance

The Company continues to expect revenue to reach between $160 million and $170 million in fiscal 2010. Additionally, during fiscal 2010, the Company continues to expect adjusted EBITDA to reach between $16 million and $17 million and non-GAAP net income to reach between $9 million and $10 million.

Conference Call

The Company will hold a conference call at 5:00 pm ET on May 10, 2010 to discuss its results. Listeners may access the call by dialing 1-888-713-4211 or 1-617-213-4864 for international callers, access code: 66684143. Preregistration and a webcast will be available through the Company's website at http://www.bmpsunstone.com . A replay of the call will be accessible through May 24, 2010 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 82597028.

About BMP Sunstone Corporation

BMP Sunstone Corporation is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone the Company manufactures leading pediatric and women's health products, including two of China's most recognized brands, "Hao Wawa" and "Confort," sold in pharmacies throughout the country. The Company also markets a portfolio of products under exclusive multi-year licenses into China, primarily focused on women's health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone's main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit http://www.bmpsunstone.com .

Safe Harbor Statement

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts, including but not limited to statements regarding the impact of changes in the Company's management and revenue mix, the Company's expected financial performance in fiscal 2010 and the Company's expectations for its business units in fiscal year 2010. These statements are subject to uncertainties and risks including, but not limited to, operating performance, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company's products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

    For further information, please contact:

    Integrated Corporate Relations, Inc.
    (Investor Relations)
     Ashley M. Ammon
     Tel: +1-646-277-1227

     Christine Duan
     Tel: +1-203-682-8200



                    BMP Sunstone Corporation and Subsidiaries
                 Condensed Consolidated Statements of Operation
               ($ amounts, except per share amounts in thousands)


                                         For the three months ended March 31,
                                                    2010              2009

    Revenues:
    Third parties                                  $39,016           $35,521
    Related parties                                     --             3,742
    Total Revenues                                  39,016            39,263
    Cost of Goods Sold                              18,024            18,605
    Gross Profit                                    20,992            20,658
    Sales and Marketing Expenses                    12,170            13,511
    General and Administration Expenses              5,811             3,929
    Total Operating Expenses                        17,981            17,440
    Profit From Operations                           3,011             3,218
    Other Income (Expense):
    Interest Income                                     47                24
    Interest Expense                                (1,352)           (1,417)
    Debt Issuance Cost Amortization                   (126)             (128)
    Equity Method Investment Income                      0                17
    Loss on Early Extinguishment of Debt                 0            (4,573)
    Gain on Derivatives                                  0             1,651
    Total Other Income (Expense)                    (1,431)           (4,426)
    Profit (Loss) Before Provision For
     Income Taxes                                    1,580            (1,208)
    Provision For Income Taxes                         916               782
    Net Profit (Loss) Attributable to BMP
     Sunstone Corporation                             $664           $(1,990)
    Less: Net Profit Attributable to the
     Noncontrolling Interest                            39                --
    Net Profit (Loss) Attributable to BMP
     Sunstone Corporation                             $625           $(1,990)


    Basic Profit (Loss) Per Share
     Attributable to BMP Sunstone                    $0.01            $(0.05)
    Fully-Diluted Profit (Loss) Per Share
     Attributable to BMP Sunstone                    $0.01            $(0.05)

    Basic Weighted-average Shares
     Outstanding                                    41,963            40,765
    Fully Diluted Weighted-average Shares
     Outstanding                                    51,023            43,066





                    BMP Sunstone Corporation and Subsidiaries
                 Condensed Consolidated Statements of Operation
               ($ amounts, except per share amounts in thousands)
                                    Non GAAP

                                         For the three months ended March 31,
                                                    2010              2009
    Revenues:
    Third parties                                  $39,016           $35,521
    Related parties                                     --             3,742
    Total Revenues                                  39,016            39,263
    Cost of Goods Sold                              17,860            18,490
    Gross Profit                                    21,156            20,773
    Sales and Marketing Expenses                    11,360            12,785
    General and Administration Expenses              4,942             3,325
    Total Operating Expenses                        16,302            16,110
    Profit From Operations                           4,854             4,663
    Other Income (Expense):
    Interest Income                                     16                24
    Interest Expense                                (1,352)             (967)
    Equity Method Investment Income                     --                17
    Total Other Income (Expense)                    (1,336)             (926)
    Profit Before Provision For Income
     Taxes                                           3,518             3,737
    Provision For Income Taxes                         916               782
    Net Profit                                      $2,602            $2,955
    Less: Net Profit Attributable to the
     Noncontrolling Interest                            39                --
    Net Profit Attributable to BMP
     Sunstone Corporation                            2,563             2,955
    Basic Profit Per Share                           $0.06             $0.07
    Fully Diluted Profit Per Share                   $0.05             $0.07

    Basic Weighted-average Shares
     Outstanding                                    41,963            40,765
    Fully Diluted Weighted-average Shares
     Outstanding                                    51,023            43,066




                    BMP Sunstone Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets
                            ($ amounts in thousands)


                                               March 31,       December 31,
                                                    2010              2009
    Assets
    Current Assets:
    Cash and Cash Equivalents                      $22,956           $21,544
    Restricted Cash                                  1,125             1,125
    Notes Receivable                                15,738            17,541
    Accounts Receivable, net of allowance
     for doubtful accounts of $944 and
     $481                                           45,234            37,752
    Inventory, net of allowance for
     obsolescence of $122 and $98                   11,846             9,811
    Receivable from Alliance Unichem                    --             7,550
    Other Receivables                                3,892             3,648
    VAT Receivable                                     903             1,093
    Prepaid Expenses and Other Current
     Assets                                          6,660             6,322
    Total Current Assets                          $108,354           106,386
    Property and Equipment, net                     31,694            30,967
    Investment in Shengda                               --             2,950
    Investments, at Cost                               146               146
    Goodwill                                        70,044            70,033
    Other Assets                                       294               405
    Land Use Rights, net of accumulated
     amortization                                    3,047             2,860
    Intangible Assets, net of accumulated
     amortization                                   40,798            38,508
    Total Assets                                  $254,377          $252,255

    Liabilities and Equity
    Current Liabilities:
    Notes Payable and Bank Borrowings,
     net of debt discounts                          $2,813            $6,406
    Accounts Payable                                22,724            24,465
    Due to Related Parties                           1,309             1,437
    Deferred Revenues                                  128               208
    Accrued Expenses                                21,582            18,478
    Total Current Liabilities                       48,556            50,994
    Long-Term Debt, including debt
     premium                                        36,320            36,749
    Deferred Taxes                                   8,956             9,097
    Total Liabilities                               93,832            96,840
    Commitment and Contingencies                        --                --
    Equity:
    Common Stock, $.001 Par Value;
     75,000,000 and 50,000,000 Shares;
     42,125,320 and 41,931,987 Shares
     Issued and Outstanding as of
     March 31, 2010 and December 31,
     2009, respectively                                 42                42
    Additional Paid in Capital                     170,208           168,772
    Common Stock Warrants                            8,621             8,621
    Accumulated Deficit                            (32,321)          (32,946)
    Accumulated Other Comprehensive
     Income                                          9,520             9,486
    Total BMP Sunstone Corporation
     Stockholders' Equity                          156,070           153,975
    Noncontrolling Interest                          4,475             1,440
    Total Liabilities and Equity                   254,377          $252,255




                    BMP Sunstone Corporation and Subsidiaries
                            Non GAAP Reconciliations
                   ($ amounts, except per share in thousands)


                                                 Three months Ended March 31,
                                                      2010              2009
    GAAP Gross Profit                              $20,992           $20,658
    Amortization Related to Acquisition                164               115
    Non GAAP Gross Profit                          $21,156           $20,773

                                                 Three months Ended March 31,
                                                      2010              2009
    GAAP Operating Income                           $3,011            $3,218
    Stock Based Compensation                           850               585
    Amortization Related to Acquisitions               993               860
    Non GAAP Operating Income                       $4,854            $4,663

                                                 Three months Ended March 31,
    (all amounts in $000)                             2010              2009
    GAAP Net Income (Loss)                            $625           $(1,990)
    GAAP Basic and Fully Diluted EPS                 $0.01            $(0.05)

    Stock Based Compensation                           850               585
    Debt Discount and Premium
     Amortization and Issuance Cost                     95               578
    Amortization Related to Acquisitions               993               860
    Loss on Early Extinguishment of Debt                --             4,573
    Gain (Loss) on Derivatives                          --            (1,651)
    Non GAAP Net Income                             $2,563            $2,955
    Non GAAP EPS                                     $0.06             $0.07



                    BMP Sunstone Corporation and Subsidiaries
                          Adjusted EBITDA Reconciliation
                             ($ amounts in thousands)


                                          For the three months Ended March 31,
    (all amounts in $000)                             2010               2009
    Net Income (Loss)                                 $625            $(1,990)
    Net Income Reconciliation to Adjusted
     EBITDA:
    Interest expense, net                            1,336                943
    Income taxes                                       916                782
    Depreciation                                       720                522
    Amortization of intangibles and fair
     value of inventory increase                       993                860
    Loss on Early Extinguishment of Debt                 0              4,573
    Gain on derivatives                                  0             (1,651)
    Amortization of debt discount and
     debt issuance costs                                95                577
    ADJUSTED EBITDA                                 $4,685             $4,616


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SOURCE BMP Sunstone Corporation
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