China Aoxing Pharmaceutical Corp. Reports Financial Results for the Third Quarter of Fiscal 2007
NEW YORK, May 15 /PRNewswire-FirstCall/ -- China Aoxing Pharmaceutical Company, Inc. , a pharmaceutical company based in China that specializes in analgesics and pain management products, including Oxycodone, Pholcodine, Naloxone, and Tilidine, today announced financial results for the third quarter of fiscal 2007 ended March 31, 2007.
China Aoxing Pharmaceutical Company reported revenues of $561,959 for the third quarter of fiscal 2007, a 62% sequential increase from the second quarter of fiscal 2007, reflecting sales of Shuanghuanglian, a traditional Chinese medicine treatment for cough and cold, and Naloxone Hydrochloride, an analgesic used to reverse the effects of narcotic drugs used during surgery. The Company commenced sales and distribution of Shuanghuanglian in December 2006 and Naloxone Hydrochloride in February 2007. Gross profit during this period was $123,374, a gross profit margin of 22%. The Company expects its gross margin performance to exceed 50% in the fiscal 2007 fourth quarter with further improvement expected in fiscal 2008 as new product manufacturing and sales ramp up.
Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing Pharmaceutical stated, "We are pleased to see an immediate contribution from our recent product launch of Naloxone Hydrochloride, which took place in February 2007. We are very optimistic about our Company's opportunity to bring to China established pain management drugs, all of which are industry standards in the United States and Europe. In China, these products are highly controlled and only available through a handful of manufacturers, so we are particularly excited about our growth opportunities as we move aggressively into the commercialization stage of our product pipeline."
Total operating costs and expenses for the third quarter of fiscal 2007 were $1.51 million, which reflected approximately $640,000 of general and administrative expense attributable to the production and launch of Naloxone Hydrochloride ("Naloxone"). In addition, the Company amortized $520,000 of non-cash deferred interest expense, and recognized interest expense of $265,194 as well as $83,000 of research and development costs. The Company reported a net loss of $1.38 million in the third quarter of fiscal 2007.
Business Update
In January 2007, China Aoxing Pharmaceutical Company's subsidiary, Hebei Aoxing Pharmaceutical, received State Federal Drug Administration (SFDA) approval and the final GMP certificate (H4107) for small volume injectables. The Company then launched Naloxone Hydrochloride injectables in the Chinese market in February 2007 in four dosage strengths: 0.4mg (1ml), 1mg (1ml), 2mg (2ml) and 4mg (10ml).
In April 2007, Hebei Aoxing received clearance from the SFDA for the clinical study of Tilidine Hydrochloride tablets and capsules for the treatment of moderate to severe pain associated with cancer and surgery. Tilidine is not currently available in China and Hebei Aoxing is the only authorized domestic manufacturer of Tilidine tablets and capsules. Through the year 2007, the Company will initiate a four-hundred patient, multi-center clinical study in China to confirm the efficacy and safety of Tilidine in reducing pain levels for Chinese patients.
Additionally, China Aoxing signed a letter of intent to acquire Shijiazhuang Le Ren Tang Pharmaceutical Ltd in April 2007. Completion of the transaction is expected to occur in the third quarter of fiscal 2007. The transaction is expected to become accretive upon closing and should expand the Company's market position and portfolio of pain management products.
Zhenjiang concluded, "Our goal is to be a leading, fully integrated pain management company in China. For the remainder of the calendar year, we will be diligently continuing our sales efforts of Naloxone as well as completing and integrating our Le Ren Tang acquisition. Le Ren Tang has a number of high value pain management products, including its flagship product, Zhong Tong An Capsules, that have not reached their full market potential. We expect that the acquisition will help us maximize operating resources and achieve efficiencies for new product launches expected in our business over the course of the next 12 to 18 months."
Balance Sheet
As of March 31, 2007, the Company had $1.24 million of cash. The net cash used in operating activities in the fiscal third quarter was $712,114. China Aoxing Pharmaceutical had a working capital deficit of approximately $9.5 million as of March 31, 2007. The Company had total borrowings of $14.6 million as of March 31, 2007.
About China Aoxing Pharmaceutical Group
China Aoxing Pharmaceutical Company, Inc. is a pharmaceutical company in China specializes in research, development, manufacturing and distribution of a variety of analgesics and pain management products. It owns 60% of the equity of its operating subsidiary, Hebei Aoxing Pharmaceutical Group Co. Ltd, a corporation organized under the laws of the People's Republic of China. Hebei Aoxing is one of only a handful of companies in China to be granted the license to manufacture drugs, including Oxycodone, Pholcodine, Naloxone, Tilidine, and is working closely with the Chinese government to assure their availability throughout China.
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. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. You are urged to read the Company's filings with the Securities and Exchange Commission, including, but not limited to, the risk factors contained therein. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
CONTACT Dr. Hui Shao Senior Vice President China Aoxing Pharmaceutical 201-420-1075 Ashley Ammon MacFarlane & Bill Zima Integrated Corporate Relations, Inc. 203-682-8200 CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (U.S. $) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2007 2006 2007 2006 REVENUES $561,959 $ - $902,818 $ - COST OF SALES 438,585 - 591,474 - GROSS PROFIT 123,374 - 311,344 - COSTS AND EXPENSES (INCOME): Research and development costs 82,984 87,084 203,557 107,441 General and admini- strative expenses 640,053 78,312 1,341,541 555,107 Grant from local government - - (63,665) - Interest expense 265,194 139,271 976,876 453,364 Amortization of deferred interest 519,915 - 1,012,218 - TOTAL COSTS AND EXPENSES 1,508,146 304,667 3,470,527 1,115,912 NET LOSS $(1,384,772) $(304,667) $(3,159,183) $(1,115,912) BASIC AND DILUTED EARNINGS PER SHARE $(0.03) N/A $(0.08) N/A WEIGHTED AVERAGE OF SHARES OUTSTANDING 40,116,659 N/A 40,079,319 N/A China Aoxing Pharmaceutical Co., Inc. and Subsidiaries BALANCE SHEETS (U.S. $) March 31, June 30, 2007 2006 (Unaudited) ASSETS CURRENT ASSETS: Cash $1,243,163 $777 Accounts receivable 312,414 - Inventories 95,822 - Prepaid expenses 208,539 156,463 TOTAL CURRENT ASSETS 1,859,938 157,240 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 18,494,998 17,822,043 DEFERRED INTEREST 10,051,686 - TOTAL ASSETS $30,406,622 $17,979,283 LIABILITIES AND STOCKHOLDERS - EQUITY CURRENT LIABILITIES: Short-term borrowings $259,000 $249,798 Accounts payable 1,243,452 789,957 Loans payable - other 385,744 499,849 Due to stockholders and officers 1,113,546 29,014 Accrued expenses and taxes payable 1,441,809 995,998 Current portion of long-term debt 6,959,330 2,997,564 TOTAL CURRENT LIABILITIES 11,402,881 5,562,180 LONG-TERM DEBT 4,273,500 7,898,582 CONVERTIBLE DEBENTURES 1,989,000 - STOCKHOLDERS - EQUITY 12,741,241 4,518,521 TOTAL LIABILITIES AND STOCKHOLDERS - EQUITY $30,406,622 $17,979,283
China Aoxing Pharmaceutical Group
CONTACT: Dr. Hui Shao, Senior Vice President of China AoxingPharmaceutical, +1-201-420-1075, or Ashley Ammon MacFarlane, or Bill Zima,both of Integrated Corporate Relations, Inc., +1-203-682-8200