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Sinovac Reports Unaudited Third Quarter 2012 Financial Results

BEIJING, Nov. 15, 2012 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of vaccines in China, announced today its unaudited financial results for the third quarter ended September 30, 2012.

Third Quarter 2012Financial Highlights (year-over-year comparisons to third quarter 2011)

  • Hepatitis vaccines sales in private pay market rose 31.2%; total sales decreased 7.0% to $14.3 million.
  • Gross margin was 52.6%, compared to 56.8%.
  • Net loss attributable to common stockholders was $3.0 million, or $0.06 per basic and diluted share.
  • Cash and cash equivalents totaled $82.0 million as of September 30, 2012, compared to $104.3 million as of December 31, 2011.
  • Recent Business Highlights-- Sales and Marketing

    Both Bilive sales and Healive sales in the private pay market continued to exhibit solid year-over-year growth in the third quarter compared to the same period of 2011. In addition to the private pay market sales growth, Sinovac continues to execute its sales plan in the public market. In the past few months, the Company was awarded multiple provincial tender awards for both Healive and Anflu. Besides the tender awards in Gansu Province, Beijing, and Shanghai previously announced, in October, Sinovac was selected by Jiangsu Centers for Disease Control and Prevention (Jiangsu CDC) as one of the two vaccine manufacturers to supply inactivated hepatitis A vaccine for the EPI in Jiangsu province in 2013. In the third quarter, total sales were mainly impacted by the decrease of Healive revenue in the public market, and sales are expected to increase in the coming quarters after vaccine delivery.

    -- Phase III Clinical Trial for EV71 Vaccine Candidate

    The EV71 vaccine Phase III clinical trial is progressing on schedule. The hand, foot and mouth disease (HFMD) case surveillance is ongoing, and documentation collection, data input, data review, and quality control on the database are well underway and progressing on schedule.

    -- Mumps Vaccine Progress

    In the third quarter, Sinovac Biotech received Good Manufacturing Practices (GMP) certification from the China SFDA for the Company's dedicated mumps vaccine production plant at its Sinovac Dalian facility. 

    -- 2012 Annual General Meeting

    On August 22, 2012, Sinovac held its 2012 Annual General Meeting of shareholders. During the meeting, four proposals, including the 2012 Share Incentive Plan were approved, while a fifth, a proposal to amend the Company's by-laws, was not approved.

    Dr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "During the third quarter 2012, our hepatitis vaccine business grew in the private pay market, while the Healive sales in the public market decreased compared to the same period of last year, impacting our total sales. In the coming quarters we expect sales of Healive in the public market will pick up, as we continue to improve our capabilities and expand our presence in that market."

    Dr. Yin continued, "We expect the commercialization of our EV71 vaccine to become our key future growth catalyst. Currently, the Phase III clinical trial of our EV71 vaccine is being executed smoothly and moving forward well on schedule. We remain in close communication with the relevant authorities and experts on the expected schedule for trial conclusion and data unblinding, and we will share that information when appropriate."

    Dr. Yin concluded, "Our cash position and credit line facilities with local commercial banks provide us with the resources to commercialize our EV71 vaccine being developed for HFMD.
    We are in the position to drive the future growth of our business with a combination of commercialized vaccines and vaccine candidates."

    Financial Review for Third Quarter Ended September 30, 2012An analysis of sales and gross profit is as follows:In USD2012Q3% of Sales2011Q3%of SalesIncrease /
    - Decrease %Hepatitis A – Healive4,931,790




    -11.9%Hepatitis A&B – Bilive5,548,237




    6.6%Hepatitis vaccines10,480,027




    -3.0%Influenza vaccines3,806,454




    -16.5%Animal vaccine619

    0.0%Total sales 14,287,100




    -7.0%Cost of goods sold6,770,712




    2.1%Gross profit7,516,388




    -13.9%Total sales in the third quarter of 2012 decreased 7.0%, compared to $15.4 million in the same period of 2011.

    The decrease in total third quarter 2012 sales were primarily due to decreased Healive sales to the public market and reduced Anflu sales that started later this year. This was partially offset by the increase of both Healive and Bilive sales in the private pay market. The Company ended the quarter with a net total sales decrease of $1.1 million, or 7.0%, compared to the same quarter of last year.

    Core vaccines sales for the nine months period ended September 30, 2012, increased 6.0% to $29.6 million, compared to $28.0 million in the same period of 2011. Despite a 29.0% increase in Bilive sales, total sales decreased 17.0% to $29.6 million, compared to $35.7 million in the same period of last year. The decrease was mainly affected by non-core government stockpiling of the pandemic flu H5N1 vaccine sales of $7.7 million in the 2011 period, as there were no government stockpiling sales in the current fiscal year to date. Please refer to note 1 below for the sales analysis for the nine months period ended September 30, 2012.

    Gross margin in third quarter of 2012 was 52.6%, compared to 56.8% in the same period of last year. The lower quarterly gross margin was mainly due to the increased provision for expired H1N1 inventory costs and overhead allocated to cost of goods sold arising from seasonal excess capacity. After deducting depreciation of land use rights, amortization of licenses and permits, the gross margin was 52.4% and 56.5% for the third quarter of 2012 and 2011, respectively.

    Selling, general and administrative expenses as a percentage of third quarter 2012 sales were 54.9%, compared to 49.8% for the same quarter of the prior year. The increase in the year-over-year quarterly SG&A expenses was mainly due to the ongoing preparation costs for the GMP upgrade and the Changping site validation.

    Research and development expenses for the third quarter were $3.8 million, a $1.4 million increase over the same period in 2011, mainly due to the ongoing EV71 clinical trial development.

    The increase in depreciation of property, plant and equipment and amortization of licenses and permits for the third quarter of 2012 was mainly due to the assets at Changping site that were in use in the quarter.

    As of September 30, 2012, cash and cash equivalents totaled $82.0 million, compared to $104.3 million as of December 31, 2012. The Company utilized $1.1 million and $6.5 million of its cash resources in the third quarter and nine months period, respectively, to contribute to its ongoing clinical trial for its proprietary EV71 vaccine. The Company intends to provide the trial with approximately an additional $3.4 million during the remaining quarter of the year and $1.5 million in 2013. During the quarter and the first nine months period, $3.7 million and $8.7 million, respectively, were spent for the ongoing capital needs of the Changping site development, which were in part covered by the credit line arrangements already in place. Capital expenditure payments to complete the Changping site, which are in part covered by the credit line arrangements, are estimated up to $7.0 million in the remaining quarter of 2012 and $8.7 million in 2013. The cash position and credit line facilities with local commercial banks provide the Company with the resources to commercialize the EV71 vaccine being developed for HFMD.
    The Company is in the position to drive the future growth of the business with a combination of commercialized vaccines and vaccine candidates.

    Note 1

    Sales Analysis for the Nine-month Period ended September 30, 2012In USD2012 1-9% of sales2011 1-9%of salesIncrease /
    - Decrease %Hepatitis A – Healive10,104,218




    -10.2%Hepatitis A&B – Bilive15,633,272




    29.0%Hepatitis vaccines25,737,490




    10.2%Influenza vaccines3,852,860




    -16.0%Animal vaccine


    Core vaccines34,849 










    21.7%Total sales29,625,199




    -17.0%Cost of goods sold10,401,918




    -20.6%Gross profit19,223,281




    -15.0%Conference Call DetailsThe Company will host a conference call on Thursday, November 15, 2012 at 8:00 a.m. EST (November 15, 2012 at 9:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International). A replay of the call will be available from 11 a.m. EST on November 15, 2012 to November 29, 2012 at midnight. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 403079.

    A live audio webcast of the call will also be available from the investors section on the corporate web site at A webcast replay can be accessed on the corporate website beginning November 15, 2012, and the replay will remain available for 30 days.

    About SinovacSinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza and mumps, as well as animal rabies vaccine.  In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program.  The company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program.  Sinovac is developing a number of new pipeline vaccines including vaccines for enterovirus 71 (against hand, foot, and mouth disease), of which the EV71 vaccine is currently in Phase III clinical trials, pneumococcal conjugate, pneumococcal polysaccharides, varicella and rubella.  Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines.

    Safe Harbor StatementThis announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    Helen Yang/Chris Lee
    Sinovac Biotech Ltd.
    Tel:  +86-10-8279-9871/9659
    Fax:  +86-10-6296-6910

    Stephanie Carrington
    The Ruth Group
    Tel:  +1-646-536-7017

    Tracy Lessor
    The Ruth Group
    Tel:  +1-646-536-7006

     SINOVAC BIOTECH LTD.Incorporated in Antigua and  BarbudaConsolidated Balance Sheets(Unaudited)(Expressed in U.S. Dollars)September 30 2012December 31 2011ASSETSCurrent assetsCash and cash equivalents




    104,286,695  Accounts receivable – net 25,316,30417,834,407  Inventories14,099,9028,113,428  Prepaid expenses and deposits905,4371,804,555Total current assets122,284,063132,039,085Property, plant and equipment 82,994,26175,627,881Long-term inventories 2,227,1965,248,237Long-term prepaid expenses 311,079408,656Prepayments for acquisition of equipment525,972828,902Deferred tax assets 351,627419,114Licenses and permits1,261,8201,336,254Total assets209,956,018215,908,129LIABILITIES AND EQUITYCurrent liabilities  Loans payable 4,773,4224,713,498  Accounts payable and accrued liabilities 27,529,20729,522,495Income tax payable236,6973,351,127Deferred revenue8,108,669429,416  Dividends payable-795,106  Deferred government grants 101,9921,830,566Total current liabilities40,749,98740,642,208Deferred government grants2,761,7582,277,428Loans payable 24,670,31817,321,327Due to related party 3,201,375-Deferred revenue4,194,24610,369,695Total long term liabilities34,827,69729,968,450Total liabilities75,577,68470,610,658Commitments and contingencies EQUITYPreferred stock--  Authorized 50,000,000 shares at par value of $0.001 each  Issued and outstanding: nilCommon stock 55,02454,774  Authorized: 100,000,000 shares at par value of $0.001 each  Issued and outstanding:  55,023,461 (2011 –54,773,961)Additional paid-in capital106,204,800105,383,346Accumulated other comprehensive income10,899,1029,978,325Statutory surplus reserves11,808,27111,808,271Retained earnings(accumulated deficit) (6,867,075)2,696,227Total stockholders' equity122,100,122129,920,943Non-controlling interests 12,278,21215,376,528Total equity134,378,334145,297,471Total liabilities and equity209,956,018215,908,129 

     SINOVAC BIOTECH LTD.Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)Three and Nine Months Ended September 30, 2012 and 2011(Unaudited)(Expressed in U.S. Dollars)Three months endedNine months endedSeptember 30September 302012201120122011Sales$







    35,698,488Cost of sales-(exclusive of depreciation of land-use rights and amortization of licenses and permits of $35,800 (2011 - $47,394) for three months and  $107,770  (2011 -$257,019) for nine months6,770,7126,631,67210,401,91813,095,652Gross profit7,516,3888,730,12519,223,28122,602,836Selling, general and administrative expenses 7,844,8617,644,46618,865,67616,730,771Research and development expenses - net of 3,773,6252,366,84215,792,5006,744,862$nil (2011- $nil) for three months and $78,980(2011- $(215,431)) for nine months in government research grants Depreciation of property, plant and equipment  and amortization of  licenses and permits471,242225,3981,103,6291,071,553Provision for doubtful debts97,0671,226,45697,0671,226,456Government grants recognized in income(78,053)(70,061)(1,535,383)(207,508)Total operating expenses12,108,74211,393,10134,323,48925,566,134Operating income (loss)(4,592,354)(2,662,976)(15,100,208)(2,963,298)Interest income464,512333,7971,561,039841,766Interest and financing expenses302,846(181,298)(143,552)(446,316)Loss on disposal of equipment(24,574)(229,015)(23,712)(195,509)Other income (Expenses)(22,709)135,033109,142157,414Income (loss)  before income taxes and non-controlling interests(3,872,279)(2,604,459)(13,597,291)(2,605,943)Income tax recovery (expenses)(5,958)(271,230)794,406(2,056,723)Consolidated net income (loss)(3,878,237)(2,875,689)(12,802,885)(4,662,666)Less: income (loss) attributable to non-controlling interests(849,619)(733,453)(3,239,583)(1,049,116)Net income (loss) attributable to stockholders(3,028,618)(2,142,236)(9,563,302)(3,613,550)Net income (loss)(3,878,237)(2,875,689)(12,802,885)(4,662,666)Other comprehensive income (loss)Foreign currency translation adjustment890,063838,0291,062,0452,850,339Total comprehensive income (loss)(2,988,174)(2,037,660)(11,740,840)(1,812,327)Less: comprehensive income (loss) attributable to non-controlling interests(744,732)(619,032)(3,098,315)(622,407)Comprehensive income(loss) attributable to stockholders(2,243,442)(1,418,628)(8,642,525)(1,189,920) Basic and diluted earnings (loss) per share-0.06-0.04-0.17-0.07Weighted average number of sharesof common stock outstanding - Basic55,023,07054,674,18254,881,87454,504,318- Diluted55,023,07054,674,18254,881,87454,504,318SINOVAC BIOTECH LTD.Consolidated Statements of Cash FlowsThree and Nine Months Ended September 30, 2012 and 2011(Unaudited)(Expressed in U.S. Dollars)Three Months ended September 30Nine Months ended September 302012201120122011Cash flows from (used in) operating activities  Net income(loss) for period








    (4,662,666)  Adjustments to reconcile net income (loss) to net cash from----(used by) operating activities:----  - deferred income taxes5,958285,83872,2872,056,723  -write-off of equipment and loss (gain) on disposal24,574229,01523,712195,509FA Impairment provision(21,106)(17,784)  - unrealized foreign exchange gain--(43,880)-  - stock-based compensation134,13863,759388,104164,392- inventory provision776,8381,298,3471,365,6281,298,347-provision for doubtful debt97,0671,226,45697,0671,226,456  - depreciation of property, plant and equipment, and
    amortization of licenses and permits1,161,5921,020,1313,719,7953,612,185  - research and development expenditures qualifying for government grant(78,980)(215,431)- deferred government grant recognized in income(68,712)(70,061)(1,446,925)(207,508)- accretion expenses48,56086,221185,349290,630  - accounts receivable(6,631,251)(4,648,768)(7,302,483)(271,247)  - inventories1,287,997820,897(4,140,923)(1,806,090)- income tax payable(375)(17,984)(3,124,852)(523,917)  - prepaid expenses and deposits560,26488,3511,048,642(423,439)- deferred revenue and advances from customers1,456,1271,812,2411,356,605(1,505,409)  - accounts payable and accrued liabilities(1,213,161)2,315,631(3,735,436)(1,870,927)Net cash provided by (used in) operating activities(6,259,727)1,634,385(24,436,959)(2,642,392)Cash flows from (used in) financing activities  - Loan proceeds1,288,5492,111,1507,298,0563,992,522  - Loan repayment---(1,383,338)  - Proceeds from issuance of common stock5,760197,852399,200734,400 - Repayment from non-controlling shareholder of  Sinovac Beijing

    ---3,397,522- Subscriptions received32,0002,88034,40011,360  - Dividends paid to non-controlling shareholder of Sinovac Beijing

    --(799,376)(5,862,676)- Loan from non-controlling shareholder of  Sinovac Dalian-3,178,164-  - Government grant received--240,5807,636Net cash provided by (used in) financing activities1,326,3092,311,88210,351,024897,426Cash flows used in investing activities- Proceeds from disposal of equipment-117,292-117,292- Proceeds from redemption of short-term investments---1,547,030- Purchase of short-term investments-(9,845,966)-(32,277,897)- Acquisition of property, plant and equipment(4,322,153)(2,945,723)(10,941,774)(8,643,864)Net cash used in investing activities(4,322,153)(12,674,397)(10,941,774)(39,257,439)Exchange effect on cash and cash equivalents1,777,618(163,169)2,703,434812,896Increase (decrease) in cash and cash equivalents(7,477,953)(8,891,299)(22,324,275)(40,189,509)Cash and cash equivalents, beginning of period89,440,37370,287,280104,286,695101,585,490Cash and cash equivalents, end of period81,962,42061,395,98181,962,42061,395,981Cash paid for interest493,244167,8831,375,203809,303Cash paid for income taxes-866,693520,514Supplemental schedule of non-cash activities:  Acquisition of property, plant and equipment included in8,183,0938,021,8818,183,0938,021,881  accounts payable and accrued liabilities

    SOURCE Sinovac Biotech Ltd.
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