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Jiangbo Pharmaceuticals Announces First Quarter Fiscal Year 2010 Results
Date:11/17/2009

LAIYANG, China, Nov. 17 /PRNewswire-Asia-FirstCall/ -- Jiangbo Pharmaceuticals, Inc. (OTC Bulletin Board: JGBO) ("Jiangbo" or the "Company"), a pharmaceutical company with its principal operations in the People's Republic of China, today announced its financial results for its first quarter of fiscal year 2010 ended September 30, 2009.

    First Quarter Fiscal Year 2010 Highlights:
    -- Revenues were $24.4 million
    -- Gross profit was $18.1 million
    -- Operating income rose 72.6% year-over-year to $12.7 million compared to
       $7.3 million in the first quarter of fiscal year 2009
    -- Net income was $2.0 million, or $0.18 per fully diluted share
    -- Excluding non-cash expenses related to the change in fair value from
       derivative liabilities of $4.8 million and the amortization of debt
       discount and debt issuance costs related to convertible debentures of
       $2.3 million, non-GAAP adjusted net income was $9.1 million, or $0.60
       per fully diluted share for the three months ended September 30, 2009,
       up 128.5% from non-GAAP adjusted net income of $4.0 million, or $0.28
       per fully diluted share, for the quarter ended September 30, 2008.(*)

"Our first quarter fiscal 2010 results reflect the restructuring of our distribution and sales system, which we began in January 2009," said Mr. Wubo Cao, Chairman and Chief Executive Officer. "Although summer is usually the slowest season for our sales, we believe that we were able to still achieve strong growth in our operating income as we efficiently managed our selling and marketing expenses. We believe that our strong cash position will provide us with significant flexibility to pursue continued organic growth and strategic acquisitions."

First Quarter Results

Total revenue was $24.4 million, an 11.5% decrease compared to $27.6 million for the first quarter of 2009. While the quantities sold for Clarithromycin sustained-released tablets and Baobaole chewable tablets increased this quarter compared to the same period last year, the decrease in the total revenue was primarily attributable to the decrease of the per unit price by an average of 26% for Clarithromycin sustained-released tablets, Itopride Hydrochloride granules and Baobaole chewable tablets, the Company's top three selling products, for the period ended September 30, 2009. The three products accounted for approximately 86.5% of total revenue for the quarter.

In January 2009, the Company restructured its distribution and sales system to sell its products primarily through 28 large independent regional distributors and lowered the per unit prices of the three major products to the distributors. The Company also significantly reduced the commission paid to its sales representatives on those products.

The decrease in the revenue generated from the three major products was partially offset by the increase in revenue from Radix Isatidis dispersible tablets which were first released in the second quarter of fiscal year 2009. Radix Isatidis dispersible tablets experienced a significant increase in demand caused by H1N1 concerns during the three months ended September 30, 2009.

In the first quarter of fiscal 2010, sales of traditional Chinese medicines ("TCMs") accounted for 39.2% of total revenues, compared to 26.7% for the comparable period of fiscal 2009.

Gross profit decreased 16.9% to $18.1 million from $21.8 million in the comparable period of fiscal 2009. Gross margin was 74.3%, compared to 79.1% in the first quarter of fiscal 2009, primarily due to the lower unit price charged as a result of the previously mentioned sales network restructuring.

Selling, general and administrative expenses decreased 67.5% to $4.3 million from $13.4 million in the same period of fiscal 2009, primarily because the Company significantly reduced the commissions paid to its sales representatives and better managed its marketing, advertising, and promotional spending.

Operating income rose 72.6% to $12.7 million, as compared to $7.3 million in the same period of fiscal 2009. Operating margin as a percentage of revenue increased 25 percentage points to 52.0% from 26.7% in the same period of fiscal 2009.

Other expenses were $7.4 million compared to $2.2 million for the three months ended September 30, 2008. The increase in other expenses was primarily due to non-cash expenses related to the change in fair value from derivative liabilities of $4.8 million, which the Company did not incur in the prior corresponding period, and the amortization of debt discount and debt issuance costs related to convertible debentures of $2.3 million versus $0.7 million in the prior year period.

Net income was $2.0 million, or $0.18 per fully diluted share, versus $3.1 million, or $0.32 per fully diluted share, in the same period last year. Excluding non-cash expenses related to the change in fair value from derivative liabilities of $4.8 million and the amortization of debt discount and debt issuance costs related to convertible debentures of $2.3 million, non-GAAP adjusted net income was $9.1 million, or $0.60 per fully diluted share, for the three months ended September 30, 2009, up 128.5% from non-GAAP adjusted net income of $4.0 million, or $0.28 per fully diluted share, for the quarter ended September 30, 2008.(*)

    (*) See the reconciliation table at the end of this press release for a
        reconciliation of net income and EPS to non-GAAP adjusted net income
        and EPS.

Financial Condition

As of September 30, 2009, the Company had $122.9 million in cash and an additional $14.6 million in restricted cash, as compared to $104.4 million and $7.3 million, respectively, at the end of fiscal 2009. Working capital was $66.3 million versus $99.8 million as of June 30, 2009. Shareholder's equity was $90.2 million, as compared to $126.1 million at the end of fiscal 2009. The decrease in working capital and shareholder's equity is the result of the reclassification of the Company's derivative instruments from the equity section to the liability section of the balance sheet. The Company generated $17.9 million in cash flow from operating activities for the first quarter of fiscal 2010.

Business Outlook and Guidance

While the Company expects its sales from TCMs to continue to grow, its sales from western pharmaceutical medicines will have minimal growth as both Clarithromycin sustained-release tablets and Itopride Hydrochloride granules have entered into their maturity phase. In terms of its TCM business, the Company expects sales of Radix Isatidis dispersible tablets to remain strong, in part due to the threat posed by the H1N1 flu. In addition, the Company expects its TCM business to benefit from the renovation of the Hongrui production facility, which is on track and scheduled to be fully online by April 2010. The Company believes that Hongrui's TCM products have good sales potential, and some of those products have been classified by the PRC government as appropriate for early treatment of the H1N1 flu. The Company continues to expect that once production has been ramped up, Hongrui's products should contribute between $4.5 million and $8 million in revenues per year.

The Company anticipates that it will receive final SFDA approval for the production of Felodipine sustained release tablets in the third quarter of fiscal 2010, which is expected to have a gross margin of approximately 85%. The Company continues to expect revenues for fiscal 2010 of between $96 million and $98 million and operating income of between $42 million and $44 million. The Company's current outlook reflects only the drugs that it has in production today and will be subject to update as the Company upgrades its Hongrui production facility, prepares for the introduction of new drugs, and pursues additional opportunities for both organic growth and potential strategic acquisitions.

Mr. Cao concluded, "We continue to remain confident with respect to our future prospects. We are leveraging our sales network and expect to maximize the contribution of our products that are in their maturity phase. We believe that our TCM business is healthy, with strong growth in our Radix Isatidis dispersible tablets product. Additionally, we are looking forward to the full re-opening of our Hongrui production facility in a couple of months. Overall, we continue to believe that fiscal 2010 will be a transition year for the Company, as we lay the groundwork and make the investments necessary for our next phase of growth."

Conference Call

Jiangbo Pharmaceuticals, Inc. management will host a conference call at 9:00 a.m. Eastern Time on Wednesday, November 18, 2009, to discuss financial results for the first quarter of fiscal year 2010, three months ended September 30, 2009. Mr. Wubo Cao, Chairman and CEO, and Ms. Elsa Sung, CFO, of Jiangbo will host the conference call. To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 688-0796. International callers should call +1 (617) 614-4070. The conference passcode is 61681613. A replay of the conference call will be available from Wednesday, November 18, 2009, at 11:00 a.m. Eastern Time for 14 days. To access the replay, call (888) 286-8010. International callers should call +1 (617) 801-6888. The conference passcode is: 46413398.

Use of Non-GAAP Adjusted Financial Information

This press release includes certain financial information, non-GAAP adjusted net income and non-GAAP adjusted fully diluted earnings per share, which are not presented in accordance with GAAP. Non-GAAP adjusted net income was derived by taking net income and adjusting it with non-cash expenses related to the change in fair value from derivative liabilities and the amortization of debt discount and debt issuance costs related to convertible debentures. The Company's management believes that these non-GAAP adjusted measures provide investors with a better understanding of the Company's historical results from its core business operations. To supplement the Company's condensed consolidated financial statements presented on a non-GAAP adjusted basis, the Company has provided non-GAAP adjusted financial information, which is non-GAAP adjusted net income and non-GAAP adjusted earnings per share, excluding the impact of these items in this press release. The non-GAAP adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP adjusted financial information provided by the Company may also differ from non-GAAP adjusted information provided by other companies. A table at the end of this press release provides a reconciliation of the non-GAAP adjusted financial information to the nearest GAAP measure.

About Jiangbo Pharmaceuticals, Inc.

Jiangbo Pharmaceuticals, Inc. is a U.S. public company engaged in the research, development, production, marketing and sales of pharmaceutical products in the People's Republic of China. Its operations are located in Eastern China in an Economic Development Zone in Laiyang City, Shandong province. Jiangbo is a major pharmaceutical company in China producing both western and Chinese herbal-based medical drugs in tablet, capsule, granule, syrup and electuary (sticky syrup) form. http://www.jiangbopharma.com

Safe Harbor Statement

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to introduce, manufacture and distribute new drugs. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers and product obsolescence. More information about the potential factors that could affect the Company's business and financial results is included in the Company's filings, available via the United States Securities and Exchange Commission.

    For further information, please contact:

    Jiangbo Pharmaceuticals, Inc.
     Ms. Elsa Sung, CFO
     Phone: +1-954-727-8435
     Email: elsasung@jiangbo.com
     Web:   http:// www.jiangbopharma.com

    CCG Investor Relations
     Mr. Crocker Coulson, President
     Phone: +1-646-213-1915
     Email: crocker.coulson@ccgir.com
     Web:   http://www.ccgirasia.com



                 JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
          (FORMERLY KNOWN AS GENESIS PHARMACEUTICAL ENTERPRISES, INC.)
        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
               FOR THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                   (UNAUDITED)

                                                   2009              2008
    REVENUES:
    Sales                                      $24,384,054       $27,320,750
    Sales - related parties                             --           243,843
    Total revenues                              24,384,054        27,564,593
    COST OF SALES
    Cost of sales                                6,260,399         5,713,059
    Cost of sales - related parties                     --            54,478
    Total cost of sales                          6,260,399         5,767,537
    GROSS PROFIT                                18,123,655        21,797,056
    RESEARCH AND DEVELOPMENT EXPENSE             1,099,575         1,097,925
    SELLING, GENERAL AND ADMINISTRATIVE
     EXPENSES                                    4,341,806        13,351,975
    INCOME FROM OPERATIONS                      12,682,274         7,347,156
    OTHER (INCOME) EXPENSE:
    Change in fair value of derivative
     liabilities                                 4,821,093                --
    Other (income) expense, net                         --           914,970
    Other income - related parties                 (80,636)         (143,950)
    Non-operating (income) expense                (152,414)           74,621
    Interest expense, net                        2,757,178         1,352,794
    Loss from discontinued operations               77,208            45,216
    Total other expense, net                     7,422,429         2,243,651
    INCOME BEFORE PROVISION FOR INCOME
     TAXES                                       5,259,845         5,103,505
    PROVISION FOR INCOME TAXES                   3,287,791         1,970,021
    NET INCOME                                   1,972,054         3,133,484
    OTHER COMPREHENSIVE INCOME:
    Foreign currency translation
     adjustment                                    152,180           330,641
    Unrealized holding gain (loss)                  23,544        (1,562,967)
    COMPREHENSIVE INCOME                        $2,147,778        $1,901,158
    BASIC WEIGHTED AVERAGE NUMBER OF
     SHARES                                     10,502,527         9,769,329
    BASIC EARNINGS PER SHARE                         $0.19             $0.32
    DILUTED WEIGHTED AVERAGE NUMBER OF
     SHARES                                     10,885,535         9,861,671
    DILUTED EARNINGS PER SHARE                       $0.18             $0.32




                 JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
          (FORMERLY KNOWN AS GENESIS PHARMACEUTICAL ENTERPRISES, INC.)
                           CONSOLIDATED BALANCE SHEETS


                                              September 30,        June 30,
                                                  2009               2009
                                               (Unaudited)
    ASSETS
    CURRENT ASSETS:
    Cash                                      $122,865,467      $104,366,117
    Restricted cash                             14,552,640         7,325,000
    Investments                                    758,238           879,228
    Accounts receivable, net of allowance
     for doubtful accounts of $822,469
     and $694,370 as of September 30,
     2009 and June 30, 2009, respectively       12,138,964        19,222,707
    Other receivable - related parties              80,685                --
    Inventories                                  2,762,438         3,277,194
    Other receivables                              299,998           167,012
    Advances to suppliers                          370,424           236,496
    Financing costs - current                      669,692           680,303
    Total current assets                       154,498,546       136,154,057
    PLANT AND EQUIPMENT, net                    13,817,279        13,957,397
    OTHER ASSETS:
    Restricted investments                         902,623         1,033,463
    Financing costs, net                           379,191           556,365
    Intangible assets, net                      16,662,666        17,041,181
    Total other assets                          17,944,480        18,631,009
    Total assets                              $186,260,305      $168,742,463
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Accounts payable                            $3,902,884        $6,146,497
    Short term bank loans                        2,200,500         2,197,500
    Notes payable                               14,552,640         7,325,000
    Other payables                               2,678,757         2,152,063
    Refundable security deposits due to
     distributors                                4,107,600         4,102,000
    Other payables - related parties               284,501           238,956
    Accrued liabilities                            342,719         1,356,898
    Liabilities assumed from
     reorganization                              1,609,208         1,565,036
    Derivative liabilities                      44,369,176                --
    Taxes payable                               14,126,847        11,248,226
    Total current liabilities                   88,174,832        36,332,176
    CONVERTIBLE DEBT, net of discount
     $26,412,221 and $28,493,089 as of
     September 30, 2009 and June 30,
     respectively                                7,927,779         6,346,911
    Total liabilities                           96,102,611        42,679,087
    COMMITMENTS AND CONTINGENCIES
    SHAREHOLDERS' EQUITY:
    Convertible preferred stock Series A
     ($0.001 par value; 0 shares issued
     and outstanding as of September 30,
     2009 and June 30, 2009)                            --                --
    Common stock ($0.001 par value,
     22,500,000 and 15,000,000 shares
     authorized, 10,582,046 and
     10,435,099 shares issued and
     outstanding as of September 30, 2009
     and June 30, 2009, respectively)               10,582            10,435
    Paid-in-capital                             15,285,350        48,397,794
    Capital contribution receivable                (11,000)          (11,000)
    Retained earnings                           64,919,558        67,888,667
    Statutory reserves                           3,253,878         3,253,878
    Accumulated other comprehensive
     income                                      6,699,326         6,523,602
    Total shareholders' equity                  90,157,694       126,063,376
    Total liabilities and shareholders'
     equity                                   $186,260,305      $168,742,463




                  JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
           (FORMERLY KNOWN AS GENESIS PHARMACEUTICAL ENTERPRISES, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                   (Unaudited)


                                                   2009               2008
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                   $1,972,054        $3,133,484
    Loss from discontinued operations                77,208            45,216
    Income from continuing operations             2,049,262         3,178,700
    Adjustments to reconcile net income
     to net cash, net of acquisition,
     provided by operating activities:
    Depreciation                                    196,353           146,694
    Amortization of intangible assets               401,533            73,540
    Amortization of deferred debt
     issuance costs                                 187,785           170,076
    Amortization of debt discount                 2,080,868           662,551
    Loss from issuance of shares in lieu
     of interest                                    317,124                --
    Bad debt expense                                127,073            63,350
    Realized gain on marketable
     securities                                     (19,065)         (124,523)
    Unrealized (gain) loss on marketable
     securities                                    (251,004)        1,044,083
    Other non-cash settlement                            --           (20,000)
    Change in fair value of derivative
     liabilities                                  4,821,093                --
    Stock-based compensation                         87,400            23,854
    Changes in operating assets and
     liabilities
    Accounts receivable                           6,978,550        (1,039,428)
    Other receivable - related parties              (80,636)          488,446
    Inventories                                     518,912           851,126
    Other receivables                              (133,676)          (48,205)
    Other receivables - related parties                  --          (378,174)
    Advances to suppliers and other
     assets                                        (132,555)          839,097
    Accounts payable                             (2,250,601)          188,211
    Accrued liabilities                            (410,403)          138,310
    Other payables                                  523,435           901,863
    Other payables - related parties                 45,400           227,135
    Liabilities assumed from
     reorganization                                 (33,036)               --
    Taxes payable                                 2,861,529         6,289,257
    Net cash provided by operating
     activities                                  17,885,341        13,675,963
    CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of marketable
     securities                                     498,353            88,743
    Purchase of equipment                           (37,280)          (19,877)
    Net cash provided by investing
     activities                                     461,073            68,866
    CASH FLOWS FROM FINANCING ACTIVITIES:
    Change in restricted cash                    (7,213,212)          (39,795)
    Principal payments on short term bank
     loans                                               --        (2,781,410)
    Proceeds from notes payable                   7,653,042         2,036,285
    Principal payments on notes payable            (439,830)               --
    Net cash used in financing activities                --          (784,920)
    EFFECTS OF EXCHANGE RATE CHANGE IN
     CASH                                           152,936           114,229
    INCREASE IN CASH                             18,499,350        13,074,138
    CASH, beginning                             104,366,117        48,195,798
    CASH, ending                               $122,865,467       $61,269,936
    SUPPLEMENTAL DISCLOSURES OF CASH FLOW
     INFORMATION:
    Cash paid for Interest                         $390,861           $58,650
    Cash paid for Income taxes                   $1,289,849           $62,943
    Non-cash investing and financing
     activities:
    Common stock issued for interest
     payment                                       $667,500               $--
    Common stock issued for convertible
     notes conversion                              $500,000               $--
    Derivative liability reclassified to
     equity upon conversion                        $369,324               $--





                 JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
          (FORMERLY KNOWN AS GENESIS PHARMACEUTICAL ENTERPRISES, INC.)
                      RECONCILIATION OF NON-GAAP NET INCOME

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

    Net Income                                  $1,972,054        $3,133,484
    Change in fair value of derivative
     liabilities                                 4,821,093                --
    Amortization of debt discount and
     debt issuance costs related to
     convertible debetures                       2,268,653           832,627
    Adjusted Net Income*                         9,061,800         3,966,111
    Basic Weighted Average Number of
     Shares                                     10,502,527         9,769,329
    Diluted Weighted Average Number of
     Shares**                                   15,178,035        14,236,671
    Adjusted Earnings Per Weighted
     Average Number of Shares                        $0.86             $0.41
    Adjusted Diluted Earnings Per
     Weighted Average Number of Shares               $0.60             $0.28

    *  Excluding non-cash charges related to the Company's convertible debts
       during the periods
    ** Including outstanding options and warrants using treasury method of
       calculation plus the number of shares if converted from the convertible
       debts

SOURCE Jiangbo Pharmaceuticals, Inc.


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SOURCE Jiangbo Pharmaceuticals, Inc.
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