SHENYANG, China, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. (NASDAQ: SSRX) ("3SBio" or "the Company"), a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, today announced its unaudited financial results for the second quarter and first half ended June 30, 2011.
Second Quarter 2011 Financial Highlights:
First Half 2011 Financial Highlights:
About 3SBio Inc.3SBio is a leading, fully integrated, profitable biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China. Its focus is on addressing large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious diseases. With headquarters and GMP-certified manufacturing facilities in Shenyang, PRC, 3SBio employs over 700 people. Shares trade in the form of American Depositary Shares (ADSs) on the NASDAQ stock market under the ticker symbol "SSRX". Please see www.3SBio.com for more information.
Cautionary Statement concerning Forward Looking StatementsCertain statements in the disclosures of 3SBio with respect to the fiscal year 2011and the second quarter ("Disclosures") that are not purely historical in nature may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Disclosures include the press release, the conference call and any accompanying materials, and any other information issued, released or publicized by 3SBio with respect to the fiscal year 2011 and the second quarter.
These forward-looking statements address activities, events, conditions, or developments that we currently expect may occur in the future, and include, but may not be limited to, discussions and statements regarding: revenue guidance, business prospects of the Fund, product pricing trends, revenue contribution of new products, tendering process in government procurements, exports prospects, regulatory approval in new markets, business objectives, market size , dialysis growth, product development, clinical trial progress, regulatory approval process, collaborations, acquisitions and licensing, impact of government policies and regulations, production capacity, capital expense, and future operations and strategies. Forward-looking statements can be identified by such terminology as "believe," "expect," "plans," "strategy," "potential", "prospects," "forecast," "estimate," "project," "anticipate," "aim," "will" or "would", "may" or "might", and words, phrases, expressions, and usages of similar meaning or substance or the negative thereof.
Forward-looking statements are based on management's current assumptions, beliefs, expectations, and projections, in light of the information currently available, and actual results could differ materially from those implied or expressed by the forward-looking statements. Among the factors that could cause 3SBio's actual results to differ from what 3SBio currently anticipates may include: government policies, actions and measures; evolving healthcare reform at the central government and the provincial government level; regulatory environment and other risks in a new market; the ability of the Fund to raise additional capital; the ability of the Fund to invest successfully, in financial and strategic terms; regulatory compliance risk; the ability of 3SBio or any source it relies on to estimate or forecast accurately; competition from other domestic and foreign pharmaceutical companies; the market growth for pharmaceutical products in China; market acceptance of 3SBio products; hospital or patient demand for our products; the completion and results of 3SBio's ongoing clinical trials; receipt and timing of regulatory approvals for 3SBio's new products and indications; risks associated with collaborations, licensing, and acquisitions; risks in seeking international certification and approvals; 3SBio's ability to expand its production, sales and distribution network and other aspects of its operations; its ability to effectively protect its intellectual property; other changes in the healthcare industry and in the health insurance system in China; and fluctuations in general economic and business conditions in China.
For additional information on factors identified above and other risk factors, uncertainties and assumptions that may affect 3SBio's business, financial conditions and results of operations, please refer to 3SBio's filings with the Securities and Exchange Commission at www.sec.gov, and, in particular, "Introduction – Cautionary Statement concerning Forward Looking Statements", Item 3.D "Risk Factors", Item 5. "Operating and Financial Review and Prospects", and other applicable discussions in 3SBio's annual report on Form 20-F for the year ended December 31, 2010.
All the statements in the Disclosures speak as of the date of the initial release, even if subsequently made available on our website or otherwise. 3SBio undertakes no obligation to update or revise these statements after the date of release, whether as a result of new information, subsequent events or otherwise, except as required by law.
Investor ContactsBo TanChief Financial Officer3SBio Inc.Tel: + 86 24 2581-1820ir@3SBio.com Tom FolinsbeeDirector of Investor Relations3SBio Inc. Tel: + 852 8191-6991ir@3SBio.com 3SBio Inc. Unaudited consolidated balance sheets(expressed in thousands)December 31,2010June 30,2011June 30,2011RMBRMBUS$Assets (unaudited)(unaudited)Current assetsCash and cash equivalents
1,662663103Time deposits with financial institutions
378,405548,70284,892Accounts receivable, less allowance for doubtful accounts:December 31, 2010 – RMB2,663; June 30, 2011 – RMB2,633(US$407)
21,71820,5523,180Prepaid expenses and other receivables
50,66728,8444,463Prepaid to related parties
12,0009,0001,392Deferred tax assets
2,1982,841440Total current assets793,436880,166136,176Time deposits with financial institutions
12,69712,5191,937Investment in non-consolidated affiliates
3,8353,854596Property, plant and equipment, net
1,5559,3121,441Intangible assets, net
44,29951,4667,963Long term receivables, less allowance for doubtful accounts: December 31, 2010 - RMB 858; June 30, 2011 - RMB818 (US$127)
2,5583,411528Deferred tax assets
37332450Total assets1,186,3971,238,159191,563Liabilities and shareholders' equityCurrent liabilitiesAccounts payable
5,0304,336671Deferred grant income
1,37437458Accrued expenses and other payables
39,55247,5237,354Income tax payable
1,9866,9361,073Total current liabilities47,94259,1699,156Deferred grant income
2,4022,216343Total liabilities50,34461,3859,499Shareholders' equityShare capital - ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 152,654,148 and 153,400,192 issued and outstanding as of December 31, 2010 and June 30, 2011, respectively
12312319Additional paid-in capital
946,717960,627148,623Accumulated other comprehensive loss
278,744331,25851,251To Total shareholders' equity1,136,0531,176,774182,064Total liabilities and shareholders' equity1,186,3971,238,159191,5633SBio Inc.Unaudited quarterly consolidated statements of income(expressed in thousands, except per share , per ADS and other share and ADS data)For the Three Months EndedFor the Three Months EndedJune 30, 2010June 30, 2011RMBUS$RMBUS$(unaudited)(unaudited)(unaudited)(unaudited)Net Revenues:EPIAO
125Total net revenues
21,061Cost of revenues(10,332)
18,793Operating expensesResearch and development costs
(1,653)Sales, marketing and distribution expenses
(10,105)General and administrative expenses
(2,385)Total operating expenses
(14,143)Operating income 27,916
14Gain/(loss) from investment in non-consolidated affiliates
81Other income, net
226Total other income, net3,331
1,111Income before income tax expense
5,761Income tax expense
4,695Net income per share:Basic
0.03Basic weighted average number of shares outstanding
153,013,696Diluted weighted average number of shares outstanding
158,002,003Net income per ADS:Basic
0.21Basic weighted average number of ADSs outstanding
21,859,099Diluted weighted average number of ADSs outstanding
22,571,7153SBio Inc.Unaudited first half consolidated statements of income(expressed in thousands, except per share , per ADS and other share and ADS data)For the Six Months EndedFor the Six Months EndedJune 30, 2010June 30, 2011RMBUS$RMBUS$(unaudited)(unaudited)(unaudited)(unaudited)Net Revenues:EPIAO
250Total net revenues
39,355Cost of revenues(17,927)
34,720Operating expensesResearch and development costs
(2,852)Sales, marketing and distribution expenses
(18,670)General and administrative expenses
(4,802)Total operating expenses
(26,324)Operating income 56,142
184Gain/(loss) from investment in non-consolidated affiliates
3Other income, net
242Total other income, net6,718
1,779Income before income tax expense
10,175Income tax expense
8,126Net income per share:Basic
0.05Basic weighted average number of shares outstanding
152,861,181Diluted weighted average number of shares outstanding
157,373,613Net income per ADS:Basic
0.36Basic weighted average number of ADSs outstanding
21,837,312Diluted weighted average number of ADSs outstanding
22,481,945 (US$0.36) compared to net income per ADS on a fully-diluted basis of RMB2.37 (US$0.35) for the first half of 2010.
Second Quarter 2011 Business HighlightsOperations
Events Subsequent to June 30, 2011
Dr. Jing Lou, chief executive officer of 3SBio, commented, "We are pleased with the strong and rising demand for our core products in the dialysis and oncology areas. EPIAO's market share increased by 2.2% points, reaching an all-time high of 44.0%, more than the combined market share of our six closest competitors. The recent approval of high dosage EPIAO reinforces our pioneering role in the treatment of chemotherapy-related anemia in China. As a result of our educational efforts related to TPIAO's recently approved indication for ITP, the medical community is becoming more aware of the benefits for patients suffering from platelet disorders. Our export business also continues to gain momentum with GMP certificate renewal for EPIAO obtained in Brazil, a market with over 90,000 dialysis patients. We are laying the foundation for future growth in our export business with applications pending in Turkey and Malaysia."
Dr Lou continued, "We are also pleased to announce an investment partnership with Taizhou Oriental CMC Ltd in Taizhou China Medical City, a national level high-tech industrial park dedicated to life science. This platform will facilitate collaboration with China's public health care sector, providing both funding and access to larger scale initiatives and will play a key role in our future pipeline development for 3SBio. I am also pleased that David Chen will assume a new role as managing partner of 3SBio Ventures. We will continue to source innovative products from around the globe and execute our strategy of developing innovative products which address china's unmet medical needs."
Three Months Ended June 30, 2011 Unaudited Financial ResultsNet revenues. Net revenues increased by 29.0% to RMB136.1 million (US$21.1 million) for the second quarter of 2011 from RMB105.5 million (US$15.6 million) for the same period in 2010. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 27.7% and 31.7%, respectively, over the same period in 2010. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for an all-time high of 31.1% of total net revenues. Export sales increased by 54.1% year-on-year to RMB4.5 million (US$0.7 million), and revenues from Iron Sucrose rose 39.1% year-on-year to RMB6.2 million (US$1.0 million).
Gross profit. As a result of continued sales growth from key products, gross profit for the second quarter of 2011 increased by 27.7% to RMB121.5 million (US$18.8 million) from RMB95.2 million (US$14.0 million) for the same period in 2010. Gross margins declined 1.0% to 89.2% for the second quarter of 2011 from 90.2% for the same period in 2010. The decline was mainly attributable to new plant depreciation and increased material, labor and energy costs.
Operating expenses. Operating expenses were RMB91.4 million (US$14.1 million) for the second quarter of 2011, representing an increase of 35.9% from RMB67.2 million (US$9.9 million) for the same period in 2010.
Operating income. Operating income was RMB30.1 million (US$4.7 million) for the second quarter of 2011, a 7.7% increase from operating income of RMB27.9 million (US$4.1 million) for the same period in 2010. Operating margin for the second quarter of 2011 was 22.1%, a 4.4% decline from operating margin of 26.5% for the same period in 2010. The decline in operating margin is primarily due to increased depreciation expenses related to the new plant and increased R&D and sales, marketing and distribution expenses.
Interest income. Net interest income was RMB5.1 million (US$0.8 million) for the second quarter of 2011, compared to RMB2.7 million (US$0.4 million) for the same period in 2010. The increase is primarily due to the combined effect of increased time deposits and higher interest rates on time deposits.
Net income. Net income was RMB30.4 million (US$4.7 million) for the second quarter of 2011, a 18.9% increase over net income of RMB25.5 million (US$3.8 million) for the same period in 2010. Net income per ADS on a fully-diluted basis for the second quarter of 2011 increased to RMB1.34 (US$0.21) compared to RMB1.16 (US$0.17) for the same period in 2010. Net margin for the second quarter of 2011 was 22.4%, a 1.8% decrease over net margin of 24.2% for the same period in 2010.
Six Months Ended June 30, 2011 Unaudited Financial ResultsNet revenues. Net revenues increased by 26.0% to RMB254.4 million (US$39.4 million) for the first half of 2011 from RMB201.9 million (US$29.8 million) for the same period in 2010. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 24.1% and 28.8%, respectively, over the same period in 2010. TPIAO remained 3SBio's second largest revenue contributor in the first half, accounting for an all-time high of 31.5% of total net revenues. Export sales increased by 46.2% year-on-year to RMB8.7 million (US$1.4 million), and revenues from Iron Sucrose rose 29.0% year-on-year to RMB11.1 million (US$1.7 million).
Gross profit. As a result of continued sales growth from key products, gross profit for the first half of 2011 increased by 22.0% to RMB224.4 million (US$34.7 million) from RMB183.9 million (US$27.1 million) for the same period in 2010. Gross margins declined by 2.9% to 88.2% for the first half of 2011 from 91.1% for the same period in 2010. The decline was mainly attributable to new plant depreciation and increased material, labor and energy costs.
Operating expenses. Operating expenses were RMB170.1 million (US$26.3 million) for the first half of 2011, representing an increase of 33.1% from RMB127.8 million (US$18.8 million) for the same period in 2010.
Operating income. Operating income was RMB54.3 million (US$8.4 million) for the first half of 2011, a 3.4% decrease from operating income of RMB56.1 million (US$8.3 million) for the same period in 2010. Operating margin for the first half of 2011 was 21.4%, a 6.4% decline from operating margin of 27.8% for the same period in 2010. The decline in operating margin is primarily due to increased depreciation expenses related to the new plant and increased R&D and sales, marketing and distribution expenses.
Interest income. Net interest income was RMB8.7 million (US$1.4 million) for the first half of 2011, compared to RMB5.8 million (US$0.9 million) for the same period in 2010. The increase is primarily due to the combined effect of increased time deposits and higher interest rates on time deposits.
Net income. Net income was RMB52.5 million (US$8.1 million) for the first half of 2011, a 0.6% increase over net income of RMB52.2 million (US$7.7 million) for the same period in 2010. Net income per ADS on a fully-diluted basis for the first half of 2011 decreased to RMB2.34 (US$0.36) compared to RMB2.37 (US$0.35) for the same period in 2010. Net margin for the first half of 2011 was 20.7%, a 5.1% decrease over net margin of 25.8% for the same period in 2010.
Conference Call3SBio's senior management will host a conference call on Tuesday, August 16, 2011 at 5:00am (US Pacific) / 8:00am (US Eastern) / 8:00pm (Beijing) to discuss its unaudited second quarter and first half 2011 results and recent business activity. The conference call may be accessed using the dial-in numbers below:Conference ID:83204042Local dial-in:China landline:
718-354-1231 International toll-free dial-in:Hong Kong:
080-8234-6646International toll dial-in:65 6723 9381Replay- Conference ID:83204042A telephone replay will be available two hours after the call until August 23, 2011 at:
A replay of the webcast will be available within one hour after the conclusion of the call.
Statement Regarding Unaudited Financial InformationThe unaudited financial information set forth above is preliminary and subject to adjustments and modifications. The audited financial statements and related notes are to be included in the Company's annual report on Form 20-F for the year ending December 31, 2011. Adjustments and modifications to the financial statements may be identified during the course of the audit work, which could result in significant differences from this preliminary unaudited financial information.
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