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BMP Sunstone Reports Third Quarter 2009 Financial Results
Date:11/9/2009

PLYMOUTH MEETING, Pa., Nov. 9 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (Nasdaq: BJGP) ("BMP Sunstone" or the "Company"), today announced financial results for the third quarter ended September 30, 2009.

    Third Quarter 2009 Financial Highlights Include:
    -- Revenue increased to $33.6 million from $30.5 million in the prior year
       period, reflecting growth across all divisions, particularly in
       licensed products;
    -- Gross margin increased to 46.6% from 45.3% in the prior year period;
    -- Non-GAAP net income was $1.3 million, or approximately $0.03 per share.

David Gao, Chief Executive Officer of BMP Sunstone, stated, "We are pleased with our financial performance in the third quarter of 2009. The inventory and distribution challenges from last quarter appear to be subsiding and we are encouraged with the ongoing demand we see for our portfolio of leading prescription and over the counter brands. Our licensed products revenue was particularly strong this quarter and, in conjunction with a revenue mix shift toward higher margin products at Sunstone and Beijing Med-Pharm, improved our gross margin performance year over year. On the cost side, we reinvested for growth primarily through research and development at Sunstone. We believe the healthcare market in China continues to grow by 15-20 percent annually and we continue to anticipate outperforming the industry growth rate over the long term."

Third Quarter 2009 Financial Results

Revenue in the third quarter of 2009 increased 10.2% to $33.6 million from $30.5 million in the third quarter of 2008, reflecting increased demand for the Company's licensed and branded OTC products. Revenue from Sunstone (Tangshan) Pharmaceutical Co., Ltd. ("Sunstone"), increased 10.2% $17.1 million of revenue, from $15.5 million in the prior year period. Revenue from licensed products increased 57.3% to $2.1 million from $1.3 million in the prior year period, reflecting sales and marketing efforts of Anpo, Propess and Ferriprox compared to the prior year. Revenue from distribution in the third quarter of 2009 was up slightly to $14.5 million from $13.7 million in the prior year period, as the Company deliberately focused less on driving low margin distribution revenue and more on increasing high margin product sales.

Gross profit in the third quarter of 2009 increased to $15.7 million from $13.8 million in the third quarter of 2008. Gross margin was 46.6%, compared to 45.3% in the prior year period. Gross margin performance primarily reflects revenue mix shift toward higher margin products during the quarter, versus prior periods.

Operating income was $1.0 million in the third quarter of 2009, compared to $1.8 million in the third quarter of 2008. Operating expenses increased 21.3% from the year ago period, primarily reflecting a $1.2 million increase in research and development expenditure, as the Company positions itself to drive future growth. Additionally, general and administrative expenses as a percentage of revenue increased to approximately 14.3%, up from 9.5% in the

prior year period, reflecting a $525,000 reversal for an over accrual of social taxes in prior years.

Non-GAAP net income was $1.3 million, or $0.03 per diluted share, compared to $1.9 million, or $0.05 per diluted share, in the third quarter of 2008. On a GAAP basis, the Company reported a net loss of $208,000 in the third quarter of 2009, or ($0.01) per share, compared to a net loss of $816,000, or ($0.02) per share, in the prior year period. Adjusted EBITDA was $2.6 million for the quarter, compared to $3.6 million in the third quarter of last year. The earnings per share calculation is based on 50.8 million diluted shares outstanding, compared to 40.8 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 the Sunstone and Wanwei 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 and nine month periods ended September 30, 2008 and 2009.

Balance Sheet

On September 30, 2009, the Company had $13.2 million of cash and $10.6 million of notes receivable, totaling approximately $23.8 million. All notes receivables are guaranteed by established banks in China and have maturities of six months or less. Additionally, $7.6 million of other receivables is due from Alliance Unichem in August of 2010.

Financial Results for the Nine Months Ended September 30, 2009 For the nine months ended September 30, 2009, revenue increased 34.7% to $105.4 million from $78.2 million in the first nine months of 2008. During this same time period, gross profit increased 33.1% to $50.7 million from $38.1 million. Income from operations increased 120.5% to $4.4 million, compared to $2.0 million in the first nine months of 2008. Non-GAAP net income was $4.6 million, or $0.10 per diluted share, compared to $3.1 million, or $0.08 per diluted share, in the prior year period. On a GAAP basis, the Company reported a net loss of $3.9 million, or ($0.10) per share, compared to $4.9 million, or ($0.13) per share, in the first nine months of 2008. Adjusted EBITDA was $9.0 million, compared to $7.4 million in the first nine months of 2008. The EPS calculation is based on 48.2 million diluted shares outstanding, compared to 39.4 million diluted shares outstanding in the prior year period.

Financial Guidance

Due to slower than expected growth rates in the second quarter of 2009, today BMP Sunstone is adjusting revenue, adjusted EBITDA and non-GAAP net income guidance for the fiscal year 2009. The Company now expects revenue to reach $140 million to $150 million, adjusted EBITDA to reach $12 million to $13 million, and non-GAAP net income to reach $6 million to $7 million.

Today's revisited guidance is down from previous full year expectations of $150 million to $160 million in revenue, $16 million to $18 million in adjusted EBITDA, and $9 million to $11 million in non-GAAP net income.

Gao continued, "We believe that declines in purchases from distributors hit a low point during the second quarter, improved during the third quarter, and should noticeably improve when the pending Chinese healthcare policies are finalized and disclosed. Our 2009 financial guidance reflects sales and marketing expansion in China resulting from continued performance at all of our business units, especially at Sunstone and Beijing Med-Pharm."

Conference Call

The Company will hold a conference call at 5:00 pm ET on November 9, 2009 to discuss third quarter 2009 results. Listeners may access the call by dialing 1-888-713-4211 or +1-617-213-4864 for international callers, access code: 20626681. 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 November 16, 2009 by dialing 1-888-286-8010 or +1-617-801-6888 for international callers, access code: 24243405.

About BMP Sunstone Corporation

BMP Sunstone Corporation ("BMP Sunstone" or the "Company") is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone Pharmaceutical Co. Ltd., the Company manufactures leading pediatric and women's health products, including two of China's most recognized brands, "Hao Wawa" and "Confort," sold throughout the country in approximately 120,000 pharmacies. 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 China's healthcare industry on the Company's growth and financial performance, the Company's expected financial performance in 2009 and the Company's expectations for each of its business units in 2009. These statements are subject to uncertainties and risks including, but not limited to, operating performance, the timing of China's healthcare reform policy, 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.




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

                                            For the Three      For the Nine
                                            months ended       months ended
                                            September 30,      September 30,
                                            2009     2008      2009     2008

    Revenues:
    Third parties                         $33,358  $28,544  $101,001  $72,979
    Related parties                           268    1,959     4,370    5,251
    Total Revenues                         33,626   30,503   105,371   78,230
    Cost of Goods Sold                     17,950   16,676    54,643   40,120
    Gross Profit                           15,676   13,827    50,728   38,110
    Sales and Marketing Expenses            9,811    9,152    33,622   26,251
    General and Administration Expenses     4,825    2,910    12,755    9,886
    Total Operating Expenses               14,636   12,062    46,377   36,137
    Profit From Operations                  1,040    1,765     4,351    1,973
    Other Income (Expense):
    Interest Income                            52        6       159       68
    Interest Expense                         (895)  (1,590)   (3,369)  (4,770)
    Debt Issuance Cost Amortization          (101)    (210)     (326)    (630)
    Equity Method Investment Income           107       --       189      675
    Loss on Early Extinguishment of Debt       --       --    (4,573)      --
    Gain(Loss) on Derivatives                  --       --     1,204       --
    Total Other Income (Expense)             (837)  (1,794)   (6,716)  (4,657)
    (Profit) Loss Before Provision For
     Income Taxes                             203      (29)   (2,365)  (2,684)
    Provision For Income Taxes                430      787     1,583    2,198
    Net Loss                                $(227)   $(816)  $(3,948) $(4,882)
    Less: Net Loss Attributable to the
     Noncontrolling Interest                   19       --        35       --
    Net Loss Attributable to BMP Sunstone
     Corporation                            $(208)   $(816)  $(3,913) $(4,882)


    Basic and Fully-Diluted Loss Per
     Share                                 $(0.01)  $(0.02)   $(0.10)  $(0.13)

    Basic Weighted-average Shares
     Outstanding                           41,559   39,650    41,291   38,070
    Fully Diluted Weighted-average Shares
     Outstanding                           50,831   40,760    48,184   39,368




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

                                            For the Three       For the Nine
                                             Months ended       Months ended
                                             September 30,      September 30,
                                            2009     2008      2009     2008

    Revenues:
    Third parties                         $33,358  $28,544  $101,002  $72,979
    Related parties                           268    1,959     4,370    5,251
    Total Revenues                         33,626   30,503   105,372   78,230
    Cost of Goods Sold                     17,835   16,567    54,299   39,235
    Gross Profit                           15,791   13,936    51,073   38,995
    Sales and Marketing Expenses            9,058    8,237    31,390   24,075
    General and Administration Expenses     4,206    2,196    10,890    7,852
    Total Operating Expenses               13,264   10,433    42,280   31,927
    Profit From Operations                  2,527    3,503     8,793    7,068
    Other Income (Expense):
    Interest Income                             9        6        79       68
    Interest Expense                         (895)    (823)   (2,920)  (2,469)
    Debt Issuance Cost Amortization            --       --        --       --
    Equity Method Investment Income           107       --       189      675
    Loss on Early Extinguishment of Debt       --       --        --       --
    Gain on Derivatives                        --       --        --       --
    Total Other Income (Expense)             (779)    (817)   (2,652)  (1,726)
    Profit Before Provision For Income
     Taxes                                  1,748    2,686     6,141    5,342
    Provision For Income Taxes                430      787     1,583    2,198
    Net Profit                             $1,318   $1,899    $4,558   $3,144
    Less: Net Loss Attributable to the
     Noncontrolling Interest                   19       --        35       --
    Net Profit Attributable to BMP
     Sunstone Corporation                   1,337    1,899     4,593    3,144
    Basic Profit Per Share                  $0.03    $0.05     $0.11    $0.08
    Fully Diluted Profit Per Share          $0.03    $0.05     $0.10    $0.08

    Basic Weighted-average Shares
     Outstanding                           41,559   39,650    41,291   38,070
    Fully Diluted Weighted-average Shares
     Outstanding                           50,831   40,760    48,184   39,368



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

                                               September 30,      December 31,
                                                    2009              2008
    Assets
    Current Assets:
    Cash and Cash Equivalents                      $13,182           $15,740
    Restricted Cash                                  1,563             1,150
    Notes Receivable                                10,595            15,797
    Accounts Receivable, net of allowance
     for doubtful accounts of $116 and
     $127                                           42,493            30,897
    Inventory, net of allowance for
     obsolescence of $45 and $0                      8,940            10,184
    Receivable from Alliance Unichem                 7,550                --
    Due from Related Party                               5             1,834
    Other Receivables                                2,545             2,168
    VAT Receivable                                   1,060               921
    Prepaid Expenses and Other Current
     Assets                                          7,172             6,247
    Total Current Assets                            95,105            84,938
    Property and Equipment, net                     26,912            22,840
    Investment in Alliance BMP Limited                  --            15,093
    Investment in Shengda                            3,114                --
    Investments, at Cost                               146               146
    Goodwill                                        70,029            69,866
    Other Assets                                       519               875
    Land Use Rights, net of accumulated
     amortization                                    2,886             2,002
    Intangible Assets, net of accumulated
     amortization                                   39,377            41,891
    Total Assets                                  $238,088          $237,651

    Liabilities and Equity
    Current Liabilities:
    Notes Payable and Bank Borrowings,
     net of debt discounts                          $1,843           $33,591
    Accounts Payable                                24,941            27,482
    Due to Related Parties                           2,297             4,361
    Deferred Revenues                                  128               128
    Accrued Expenses                                15,704            14,601
    Total Current Liabilities                       44,913            80,163
    Long-Term Debt, including debt
     premium                                        31,949                --
    Deferred Taxes                                   9,510             9,856
    Total Liabilities                               86,372            90,019
    Equity:
    Common Stock, $.001 Par Value;
     75,000,000 Shares Authorized as of
     June 30, 2009 and December 31, 2008;
     41,560,155 and 40,246,410 Shares
     Issued and Outstanding as of
     September 30, 2009 and December 31,
     2008, respectively                                 42                40
    Additional Paid in Capital                     167,086           160,864
    Common Stock Warrants                            8,621             9,049
    Accumulated Deficit                            (34,956)          (31,042)
    Accumulated Other Comprehensive
     Income                                          9,422             8,721
    Total Equity                                   150,215           147,632
    Noncontrolling Interest                          1,501                --
    Total Liabilities and Equity                  $238,088          $237,651




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

                                         Three Months Ended  Nine Months Ended
                                             September 30,     September 30,
                                             2009     2008     2009     2008

    GAAP Gross Profit                      $15,676   13,827  $50,728  $38,110
    Amortization Related to Acquisitions       115      109      345      885
    Non GAAP Gross Profit                  $15,791  $13,936  $51,073  $38,995

                                         Three Months Ended  Nine Months Ended
                                             September 30,     September 30,
                                             2009     2008     2009     2008

    GAAP Operating Income                   $1,040   $1,765   $4,351   $1,973
    Stock Based Compensation                   600      636    1,784    1,816
    Amortization Related to Acquisitions       887    1,102    2,658    3,279
    Non GAAP Operating Income               $2,527   $3,503   $8,793   $7,068

                                         Three Months Ended  Nine Months Ended
                                             September 30,     September 30,
                                             2009     2008     2009     2008

    GAAP Net Loss                            $(208)   $(816) $(3,913) $(4,882)
    GAAP EPS                                $(0.01)  $(0.02)  $(0.10)  $(0.13)

    Stock Based Compensation                   600      636    1,784    1,816
    Debt Discount and Premium Amortization
     and Issuance Cost                          58      977      695    2,931
    Amortization Related to Acquisitions       887    1,102    2,658    3,279
    Loss on Early Extinguishment of Debt        --       --    4,573       --
    Gain (Loss) on Derivatives                  --       --   (1,204)      --
    Non GAAP Net Income                     $1,337   $1,899   $4,593   $3,144
    Non GAAP EPS                             $0.03    $0.05    $0.11    $0.08




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

                                          For the Three     For the Nine
                                           Months Ended     Months Ended
                                          September 30,    September 30,
                                           2009    2008    2009     2008

    Net Loss                               $(208)  $(816) $(3,913) $(4,882)
    Net Loss Reconciliation to Adjusted
     EBITDA:
    Interest expense, net                    879     817    2,841    2,401
    Income taxes                             430     787    1,583    2,198
    Depreciation                             592     615    1,745    1,424
    Amortization of intangibles and fair
     value of inventory increase             887   1,202    2,658    3,297
    Loss on Early Extinguishment of Debt      --      --    4,573       --
    Gain (Loss) on derivatives                --      --   (1,204)      --
    Amortization of debt discount and
     premium and debt issuance costs          59     977      695    2,931
    ADJUSTED EBITDA                       $2,639  $3,582   $8,978   $7,369

SOURCE BMP Sunstone Corporation


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SOURCE BMP Sunstone Corporation
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