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3SBio Inc. (SSRX) Announces Unaudited First Quarter 2012 Results


5/14/2012 10:41:50 AM

SHENYANG, China, May 13, 2012 /PRNewswire-Asia/ -- 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 first quarter ended March 31, 2012.

First Quarter 2012 Financial Highlights:

  • Total net revenues increased by 24.5% over the first quarter of 2011 to RMB147.2 million (US$23.4 million), compared to RMB118.2 million (US$18.1 million) in the first quarter of 2011.
  • Operating income was RMB35.5 million (US$5.6 million), compared to operating income of RMB25.3 million (US$3.9 million) in the first quarter of 2011.
  • Net income was RMB32.6 million (US$5.2 million), compared to net income of RMB22.2 million (US$3.4 million) in the first quarter of 2011.
  • Net income per American Depositary Share ("ADS") on a fully-diluted basis was RMB1.44(US$0.23) compared to net income per ADS on a fully-diluted basis of RMB0.99(US$0.15) for the first quarter of 2011.
  • Cash, cash equivalents, restricted cash and time deposits were RMB790.8 million (US$125.6 million), including restricted cash of RMB0.7 million.

First Quarter 2012 Business Highlights

Operations

  • EPIAO, the Company's flagship injectable recombinant human erythropoietin (EPO) product, demonstrated strong growth with net revenue in the first quarter of 2012 rising 21.7% to RMB83.7 million (US$13.3 million), compared to RMB68.8 million (US$10.5 million) in the first quarter of 2011.
  • Net revenues for TPIAO, the Company's novel recombinant human thrombopoietin (TPO) product, increased by 23.3% to RMB46.5 million (US$7.4 million) in the first quarter of 2012, compared to RMB37.7 million (US$5.8 million) in the first quarter of 2011.
  • Net revenues for Iron Sucrose Supplement increased by 40.6% to RMB6.8 million (US$1.1 million) in the first quarter of 2012, compared to RMB4.9 million (US$0.7 million) in the first quarter of 2011.
  • Net export revenues increased by 80.3% to RMB7.6 million (US$1.2 million), compared to RMB4.2 million (US$0.6 million) in the first quarter of 2011.

Regulatory

  • We continue to interact with the SFDA on pending submissions, including Feraheme registration trial, China arm of the global multi-center trial for voclosporin and phase 1 trial for NuPIAO, our second generation EPO product.

Partnerships and Business Development

  • As announced on March 9, 2012, we have entered into a strategic collaboration with DaVita Inc., to operate dialysis centers in Northeastern China, as well as a nationwide supply agreement for EPIAO.

Dr. Jing Lou, chief executive officer of 3SBio, commented:

"We are on budget for the first quarter and reiterate our full year guidance of US$99-108 million. While we are concerned about government-mandated price cuts, we are confident that our economies of scale, recognized product quality and reputation for innovative research and development will enable us to continue to adapt to China's evolving health care reforms. We continue to focus on the implementation of the our business objectives for 2012, including continued focus on developing our pipeline products, new business initiatives in the dialysis service segment, seeking international partners to develop Uricase-PEG 20, and leveraging our world-class manufacturing capability to obtain approvals in countries where we can be among the first to introduce quality biosimilars at competitive prices."

Three Months Ended March 31, 2012 Unaudited Financial Results

Net revenues. Net revenues increased by 24.5% to RMB147.2 million (US$23.4 million) for the first quarter of 2012 from RMB118.2 million (US$18.1 million) for the same period in 2011. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 21.7% and 23.3%, respectively, over the same period in 2011. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for 31.6% of total net revenues. Export sales increased by 80.3% year-on-year to RMB7.6 million (US$1.2 million), and revenues from Iron Sucrose rose 40.6% year-on-year to RMB6.8 million (US$1.1 million).

Gross profit. As a result of continued sales growth from key products, gross profit for the first quarter of 2012 increased by 28.7% to RMB132.5 million (US$21.0 million) from RMB102.9 million (US$15.7 million) for the same period in 2011. Gross margins increased by 2.9% to 90.0% for the first quarter of 2012 from 87.1% for the same period in 2011 and 89.4% for the fourth quarter of 2011. The increase was partly due to improved manufacturing productivity of the new plant.

Operating expenses.Operating expenses were RMB97.0 million (US$15.4 million) for the first quarter of 2012, representing an increase of 25.0% from RMB77.6 million (US$11.9 million) for the same period in 2011.

  • Research and development ("R&D") costs. R&D costs for the first quarter of 2012 were RMB10.8 million (US$1.7 million), or 7.3% of net revenues, compared to RMB7.8 million (US$1.2 million), or 6.6% of net revenues, for the same period in 2011. The increase is attributable to increased labor costs, clinical trials and testing expenses related to NuPIAO and Uricase-PEG 20.
  • Sales, marketing and distribution expenses. Sales, marketing and distribution expenses for the first quarter of 2012 were RMB69.7 million (US$11.1 million), or 47.3% of net revenues, compared to RMB55.4 million (US$8.5 million), or 46.8% of net revenues, for the same period in 2011. The increase is mainly attributable to increased sales efforts and marketing activities, including the expansion of our sales & marketing team from 417 as of March 31, 2011 to 497 as of March 31, 2012.
  • General and administrative expenses. General and administrative expenses for the first quarter of 2012 were RMB16.8 million (US$2.7 million), or 11.4% of net revenues, compared to RMB15.6 million (US$2.4 million), or 13.2% of net revenues for the same period in 2011. The decrease in general and administrative expenses as a percentage of net revenues is mainly due to improved economies of scale.

Operating income. Operating income was RMB35.5 million (US$5.6 million) for the first quarter of 2012, a 40.2% increase from operating income of RMB25.3 million (US$3.9 million) for the same period in 2011. Operating margin for the first quarter of 2012 was 24.2%, a 2.8% increase from operating margin of 21.4% for the same period in 2011. The improved operating margin is primarily due to improved gross margins and stable administrative overheads.

Interest income. Net interest income was RMB5.4 million (US$0.9 million) for the first quarter of 2012, compared to RMB3.6 million (US$0.6 million) for the same period in 2011.

Net income. Net income was RMB32.6 million (US$5.2 million) for the first quarter of 2012, a 47.1% increase over net income of RMB22.2 million (US$3.4 million) for the same period in 2011. Net income per ADS on a fully-diluted basis for the first quarter of 2012 increased to RMB1.44(US$0.23) compared to RMB0.99(US$0.15) for the same period in 2011. Net margin for the first quarter of 2012 was 22.2%, a 3.5% increase over net margin of 18.7% for the same period in 2011.

Cash Balances. Cash, cash equivalents and time deposits were RMB790.8 million (US$125.6 million, including restricted cash of RMB0.7 million), compared to RMB711.4 million (US$108.6 million, including restricted cash of RMB0.7 million) at March 31, 2011.


Conference Call

3SBio's senior management will host a conference call on Monday, May 14, 20128:00pm (China Standard Time), 8:00am (US Eastern) 5:00am (US Pacific) to discuss its unaudited first quarter 2012 results and recent business activity. The conference call may be accessed using the dial-in numbers below:

Conference ID: 73956752

Local dial-in:
China landline: 800-819-0121
China mobile: 400-620-8038
Hong Kong : 852-2475-0994
United States: 718-354-1231

International toll-free dial-in:
Hong Kong: 800930346
United States: 1-866-519-4004
United Kingdom: 080-8234-6646

International toll dial-in: 65 6723 9381

Replay- Conference ID: 73956752
A telephone replay will be available two hours after the call until May 22, 2012 at:
International: 61-2-8235-5000
United States: 1-866-214-5335

Webcast
A live webcast of the conference will be available on the investor relations section of 3SBio's website at www.3sbio.com and at http://www.media-server.com/m/p/i9xa65b6.

A replay of the webcast will be available within one hour after the conclusion of the call.

Statement Regarding Unaudited Financial Information

The 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.

Currency Convenience Translation

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.2975 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2012 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. A rate of 6.5483 was used for comparative purposes as of March 31, 2011, which was the noon buying rate for US dollars on that date for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York.

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 800 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.


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