SHENYANG, China, May 19 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. ("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, 2009.
* Please refer to "Non-GAAP Financial Measures: Reconciliation of GAAP to non-GAAP" section below for the definition and rationale of all of the non-GAAP measures. Non-GAAP items for the three-month period ended March 31, 2008 have been included as comparatives to conform to the current year's presentation basis.
"3SBio had a strong start to 2009, delivering revenue growth and demonstrating the continued acceptance of our keystone EPIAO and TPIAO products in domestic and international markets," commented Dr. Jing Lou, Chief Executive Officer of 3SBio. "Our operating margin was solid and we continued to generate positive cash flow, strengthening our bottom line performance while ensuring 3SBio is in a financial position to pursue synergistic business development opportunities that will positively benefit our company. 3SBio has worked diligently to develop a portfolio of current and future pharmaceutical products, and we remain on track to achieve our 2009 financial and operational objectives."
First Quarter 2009 Unaudited Financial Results
Net revenues. Net revenues increased by 23.7% to RMB68.6 million (US$10.0 million) for the first quarter of 2009 from RMB55.5 million (US$7.9 million) for the same period of 2008. This increase was largely due to continued strength from TPIAO and EPIAO products which increased by 21.3% and 21.0%, respectively, over the same period of 2008, and to a lesser degree by impressive growth from export sales which grew 75.6% and our iron product sales which grew 47.5% over the same period of last year.
The growth in sales from EPIAO was driven in part by an expanded oncology sales force, which continued to perform well. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for 27.3% of total net revenues. Export sales exceeded RMB3.3 million (US$0.5 million), and sales of 3SBio's IV Iron Sucrose rose to RMB2.0 million (US$0.3 million) for the first quarter of 2009.
Gross profit. As a result of continued sales growth from key products despite the economic situation, gross profit increased by 23.8% to RMB62.6 million (US$9.2 million) for the first quarter of 2009 from RMB50.6 million (US$7.2 million) for the same period of 2008. Gross margin increased slightly to 91.3% for the first quarter of 2009 from 91.1% for the first quarter of 2008 and 90.6% for the fourth quarter of 2008.
Operating income. Non-GAAP operating income for the first quarter of 2009 grew 40.7% year-over-year to RMB20.6 million (US$3.0 million). GAAP operating income was RMB20.1 million (US$2.9 million) for the first quarter 2009, an increase of 41.7% from operating income of RMB14.2 million (US$2.0 million) for the same period of 2008.
Operating expenses. Non-GAAP operating expenses were RMB42.1 million (US$6.2 million) for the first quarter of 2009. GAAP operating expenses were RMB42.5 million (US$6.2 million) for the first quarter of 2009, an increase of 16.8% from GAAP operating expenses of RMB36.4 million (US$5.2 million) for the same period of last year. Increase in operating expenses was largely driven by the increased sales & marketing expenses as 3SBio continued necessary marketing efforts.
* Please refer to "Non-GAAP Financial Measures: Reconciliation of GAAP to Non-GAAP" section below for specific non-GAAP operating expenses measures.
Interest income. The Company recorded net interest income of RMB4.1 million (US$0.6 million) for the first quarter of 2009, as compared RMB7.4 million (US$1.1 million) for the same period in 2008. As experienced last quarter, the decrease in interest income was partially due to the decrease in the prevailing market interest rates in the first quarter of 2009 compared to the same period of last year.
Net income. Non-GAAP net income for the first quarter of 2009 was RMB21.0 million (US$3.1 million), excluding share-based compensation and recognition of an impairment loss of RMB4.6 million (US$0.7 million) on available-for-sale securities. This was comparable to non-GAAP net income of RMB20.2 million (US$2.9 million) for the first quarter of 2008.
GAAP net income was RMB15.9 million (US$2.3 million) for the first quarter 2009, compared to net income of RMB19.8 million (US$2.8 million) for the same period of 2008. GAAP net income was largely impacted by the recognition of an impairment loss on available-for-sale securities. Based on the current market condition and the performance of the available-for-sale securities held by the Company, the Company expects no further impairment losses from the financial instruments currently being held.
Cash and cash equivalents/Time deposits. 3SBio had positive operating cash flows for the first quarter of 2009, and as of March 31, 2009 retained a strong balance sheet with cash, cash equivalents and time deposits of RMB752.3 million (US$110.1 million), an increase from RMB733.0 million (US$107.4 million) as of December 31, 2008 and a slight decline from RMB790.4 million (US$ 112.7 million) as of March 31, 2008.
Full Year 2009 Guidance
Based on current market conditions and visibility provided during the first quarter, the Company maintains its total net revenue target for the full year 2009 of between US$43 million to US$45 million, resulting in a year-over-year increase of approximately 21% to 26%.
Conference Call
3SBio's senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 8:00 pm (Beijing/Hong Kong) on Wednesday, May 20, 2009. The conference call may be accessed using the dial-in numbers below:
International Toll Dial-In Number: +6567357955
A telephone replay will be available shortly after the call until May 27, 2009, at:
A live webcast of the conference call and the replay will be available on the investor relations page of 3SBio's website at http://bbs.3sbio.com/en/News/xinvestors.aspx .
Filing of 20F
3SBio filed its Annual Report on Form 20-F for the year ended December 31, 2008 with the SEC on April 21, 2009. The Company's Form 20-F and complete audited financial statements can be found at http://www.3sbio.com . Hard copy versions of the complete audited financial statements are available free of charge upon request from 3SBio's Investor Relations.
Non-GAAP Financial Measures: Reconciliation of GAAP to non-GAAP
To supplement the Company's financial statements presented in accordance with general accepted accounting principles ("GAAP"), the Company has utilized some non-GAAP financial measures to provide investors and management with supplemental measures that facilitate comparisons of operating performance and trends with prior and future operating performance, and that may not otherwise be apparent on a GAAP basis. These non-GAAP financial measures include operating income and operating expenses before stock based compensation expense, and net income, and earnings per share before stock based compensation expense and recognition of an impairment loss on available-for-sale securities. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principals, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Please see the attached reconciliation of GAAP to non-GAAP for an explanation of the amounts excluded to arrive at non-GAAP financial measures for the three-month periods ended March 31, 2008 and March 31, 2009.
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 our annual report on Form 20-F for the year ending December 31, 2009. Adjustments and modifications to the financial statements may be identified during the course of this 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 RMB6.8329 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2009 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. 2008 RMB figures were translated into US dollars at the rate of RMB7.0120 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2008.
About 3SBio Inc.
3SBio Inc. is a leading, fully integrated biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, primarily in China. For more information, please visit 3SBio on the web at http://www.3sbio.com .
Safe Harbor Statement
Certain statements in this release that are not purely historical in nature, including the 2009 full year guidance information, statements contained in "2009 Full Year Guidance" section, management comments and the statements of Dr. Jing Lou, Chief Executive Officer of 3SBio, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon 3SBio management's current expectations, and actual results could differ materially. Among the factors that could cause 3SBio's actual results to differ from what the company currently anticipates may include: competition from other domestic and foreign pharmaceutical companies; the market conditions or pharmaceutical products in China; market acceptance of 3SBio products; hospital or patient demand for our products; 3SBio's ability to expand its production, sales and distribution network and other aspects of its operations; its ability to develop and commercialize additional products or additional indications for existing products; its ability to analyze additional in-licensing opportunities; its ability to effectively protect its intellectual property; changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government and changes in the healthcare insurance sector in the PRC; and fluctuations in general economic and business conditions in China. As a result, actual results may differ materially from the forward-looking statements contained herein. For additional information on risk factors identified herein and other risk factors, uncertainties and assumptions that may adversely and materially affect 3SBio's business, financial conditions and results of operations, please refer to the company's filings with the Securities and Exchange Commission at http://www.sec.gov , including information detailed in Item 3.D "Risk Factors" in 3SBio's annual report on Form 20-F for the year ended December 31, 2008, as continually amended and updated. 3SBio undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release, except as required by law.
Notes to reconciliation of our GAAP statements of income to our non-GAAP statements of income:
Notes to reconciliation of our GAAP statements of income to our non-GAAP statements of income:
CONTACT: 3SBio Inc., Bo Tan, CFO, +86-24-2581-1820, Tanbo@3sbio.com or FD
Beijing, Peter Schmidt, +86-10-8591-1953, Peter.schmidt@fd.com and FD US,
Evan Smith/John Capodanno, +1-212-850-5600, all for 3SBio Inc.
Web site: http://www.3sbio.com//
