SHENYANG, China, March 11 /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 fourth quarter and fiscal year ended December 31, 2008.
Dr. Jing Lou, Chief Executive Officer of 3SBio, commented, “3SBio delivered solid operating and financial performance in our second consecutive year since going public in early 2007. We once again demonstrated our ability to execute on our business strategy and achieve above market rate top-line growth and solid bottom-line operating profitability, despite significant investment in building brands in the marketplace, developing new products and growing the organization. 3SBio enters 2009 as a company with strengthened capabilities to generate a solid operating cash flow, a robust balance sheet, and a stream of near-term new product offerings to sustain mid- and long-term growth. Based on our 2008 performance and our view on the macro economic environment, as well as market and operating conditions in 2009, we are confident in setting a total net revenue target of between US$43 million to US$45 million for the full year of 2009.”
Fourth Quarter and Fiscal Year 2008 Unaudited Financial Results
Net revenues. Net revenues increased by 31.5% to RMB60.1 million (US$8.8 million) in the fourth quarter of 2008 from the same period in 2007. This increase was primarily due to the growth in TPIAO and EPIAO products, which increased by 32.0% and 39.7%, respectively, from the same period in 2007.
Net revenues increased by 35.0% to RMB243.2 million (US$35.7 million) in 2008 from RMB180.2 million (US$24.7 million) in 2007. This increase was primarily attributed to the continued growth in EPIAO products, sales of which increased by 27.5% from RMB121.2 million (US$16.6 million) in 2007 to RMB154.6 million (US$22.7 million) in 2008. The growth in sales from EPIAO was driven in part by an expanded oncology sales force, which continued to perform well. The Company also witnessed rapid market adoption of TPIAO products, which generated revenues of RMB67.6 million (US$9.9 million) in 2008, compared to RMB43.1 million (US$5.9 million) in 2007. TPIAO was 3SBio’s second largest revenue contributor in 2008, accounting for 27.8% of our total net revenues in the period. Sales from in-licensed Iron Sucrose supplement increased 117.8% to RMB7.0 million (US$1.0 million) in 2008. Export sales registered a steady growth of 22.2% to RMB8.3 million (US$1.2 million) in 2008, accounting for 3.4% of total net revenue.
Gross profit. As a result of strong sales across our product lines, gross profit increased by 36.3% to RMB54.4 million (US$8.0 million) in the fourth quarter of 2008 from RMB39.9 million (US$5.5 million) for the same period in 2007. Gross margin increased to 90.6% in the fourth quarter 2008 from 87.4% for the same period in 2007.
In 2008, gross profit grew 36.1% to RMB221.5 million (US$32.5 million) from RMB162.7 million (US$22.3 million) in 2007. Gross margin of 91.1% in 2008 remained in line with the gross margin of 90.3% in 2007.
Operating income/loss. Adjusted non-GAAP operating income for the fourth quarter was RMB6.1 million (US$0.9 million), excluding share-based compensation expense of RMB1.4 million (US$0.2 million) and a RMB6.9 million (US$1.0 million) recognition of the upfront payment related to the licensing deal with AMAG Pharmaceuticals. Adjusted non-GAAP operating income for the full year was RMB59.7 million (US$8.8 million), an increase of 20.6% over year 2007. Adjusted non-GAAP operating income was RMB49.5 million (US$6.8 million) for 2007.
GAAP operating loss was RMB2.3 million (US$0.3 million) in the fourth quarter 2008, down from operating income of RMB6.1 million (US$0.8 million) for the same period in 2007. Operating income decreased by 1.6% to RMB47.8 million (US$7.0 million) in 2008 from RMB48.5 million (US$6.7 million) in 2007.
Operating expenses. Adjusted non-GAAP operating expenses were RMB48.5 million (US$7.1 million) in the fourth quarter and RMB162.1 million (US$23.8 million) in the full year of 2008. This was an increase of 44.3% and 43.2% from adjusted non-GAAP operating expenses of RMB33.6 million (US$4.6 million) and RMB113.2 million (US$15.5 million) in the fourth quarter and full year of 2007 respectively.
In the fourth quarter of 2008, total GAAP operating expenses increased by 67.8% to RMB56.7 million (US$8.3 million) as compared to the same period in 2007. In 2008, total GAAP operating expenses increased by 52.1% to RMB173.7 million (US$25.5 million) from RMB114.2 million (US$15.7 million) in 2007.
Interest income. The Company recorded net interest income of RMB5.9 million (US$0.9 million) in fourth quarter 2008 as compared RMB9.0 million (US$1.2 million) for the same period in 2007. 3SBio recorded net interest income of RMB24.0 million (US$3.5 million) in 2008 as compared to net interest income of RMB35.2 million (US$4.8 million) for 2007. The decrease in interest income was due in part to an environment with decreasing interest rates.
Net income/loss. Adjusted non-GAAP net income for the fourth quarter was RMB11.3 million (US$1.7 million), excluding several one-off items, including recognition of the AMAG licensing deal of RMB6.9 million (US$1.0 million) and recognition of an RMB4.4 million (US$0.7 million) impairment loss on available-for-sale securities. For 2008, adjusted non-GAAP net income was RMB75.0 million (US$11.0 million), comparing to adjusted net income of RMB79.8 million (US$10.9 million) in 2007.
GAAP net loss was RMB1.5 million (US$0.2 million) in the fourth quarter 2008, compared to net income of RMB17.9 million (US$2.4 million) for the same period in 2007. GAAP net income for 2008 was RMB39.5 million (US$5.8 million), compared to RMB81.5 million (US$11.2 million) in 2007.
Cash and cash equivalents/Time deposits. As of December 31, 2008, 3SBio had cash, cash equivalents and time deposits of RMB733.0 million (US$107.4 million), compared to RMB811.0 million (US$111.2 million) as of December 31, 2007.
Based on these goals and current market and operating conditions, the Company’s total net revenue target for the full year 2009 is estimated to be between US$43 million to US$45 million, resulting in 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 Thursday, March 12, 2009. The conference call may be accessed using the dial-in numbers below:
A telephone replay will be available shortly after the call until March 19, 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://www.3sbio.com/en/News/ShowInfo_nnn11.aspx?ID=71 .
Reconciliation of GAAP to Adjusted Non-GAAP
The Company has utilized some adjusted 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. Please see the attached Reconciliation Tables of GAAP to Adjusted Non-GAAP Figures for an explanation of the amounts excluded to arrive at adjusted non-GAAP figures for the three-month and full year periods ended December 31, 2008 and 2007.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is preliminary and subject to adjustments and modifications. The audit of the financial statements and related notes to be included in our annual report on Form 20-F for the year ended December 31, 2008 is still in progress. 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 RMB6.8225 to US$1.00, the noon buying rate for US dollars in effect on December 31, 2008 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. 2007 RMB figures were translated into US dollars at the rate of RMB7.2946 to US$1.00, the noon buying rate for US dollars in effect on December 31, 2007.
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 & Selected Company Objectives” section, and management comments, 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. For additional information on these and other factors as well as risks, uncertainties and assumptions that may adversely and materially affect the 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 , particularly information set forth in Item 3.D “Risk Factors” in 3SBio’s annual report on Form 20-F for the year ended Dec. 31, 2007, 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.
Notes to reconciliation of our GAAP statements of income to our adjusted non-GAAP statements of income:
Notes to reconciliation of our GAAP statements of income to our adjusted statements of income:
Notes to reconciliation of our GAAP statements of to our adjusted non-GAAP statements of income:
Notes to reconciliation of our GAAP statements of income to our adjusted statements of income:
CONTACT: Investor Contact: Bo Tan, CFO of 3SBio Inc., +86-24-2581-1820 or
Tanbo@3sbio.com; Investor Relations (China): Peter Schmidt, FD Beijing,
+86-10-8591-1953 or Peter.schmidt@fd.com; Investor Relations (US): Evan
Smith, or John Capodanno, FD US, +1-212-850-5600
Web site: http://www.3sbio.com/
http://www.3sbio.com/en/News/ShowInfo_nnn11.aspx?ID=71/
