SHENYANG, China, Feb. 11 /PRNewswire-Asia/ -- 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 full year ended December 31, 2009.
Dr. Jing Lou, chief executive officer of 3SBio, commented: “3SBio again delivered strong operating and financial performance in our third consecutive year since going public in early 2007. We are very pleased with our new strategic partnerships which we believe will provide an innovative platform for the future development of our product pipeline. We will also continue to invest in our internal R&D programs, including NuPIAO, our second generation EPO product. With construction of our Shenyang plant completed, we will now focus on seeking China GMP certification and validation as the next stage of our strategy to satisfy the growing demand in China for high quality, cost-effective oncology and nephrology treatments. Given the strong demand outlook for our core products, we anticipate achieving a 2010 total net revenue target of between US$56 million to US$58 million, representing approximately a 20-25% increase over 2009.”
Full Year Ended December 31, 2009 Unaudited Financial Results
Net revenues. Net revenues for 2009 increased by 30.3% to RMB316.9 million (US$46.4 million), from RMB243.2 million (US$35.7 million) in 2008. The increase was primarily attributable to increased sales from our EPIAO and TPIAO products, underpinned by continued strong demand in the oncology and nephrology markets.
Net revenues from EPIAO in 2009 increased by 26.9% to RMB196.1 million (US$28.7 million) from RMB154.6 million (US$22.7 million) in 2008. Net revenues from TPIAO in 2009 increased by 32.7% to RMB89.7 million (US$13.1 million) from RMB67.6 million (US$9.9 million) in 2008. In addition, revenue from our export business was RMB13.2 million (US$1.9 million), representing an increase of 59.4% over 2008, while revenue from IV Iron Sucrose was RMB10.7 million (US$1.6 million), representing an increase of 53.4% over 2008.
Gross profit. Gross profit for 2009 increased by 31.7% to RMB291.7 million (US$42.7 million) compared to RMB221.5 million (US$32.5 million) in 2008. Gross margin for 2009 increased to 92.0% compared to 91.1% in 2008.
Operating expenses. Non-GAAP operating expenses were RMB201.3 million (US$29.5 million) for 2009, an increase of 24.1% from RMB162.1 million (US$23.8 million) in 2008. GAAP operating expenses were RMB207.3 million (US$30.4 million) for 2009, an increase of 19.3% from RMB173.7 million (US$25.5 million) in 2008.
Operating income. Non-GAAP operating income increased by 52.3% to RMB90.9 million (US$13.3 million), compared to RMB59.7 million (US$8.8 million) in 2008. GAAP operating income for 2009 increased by 76.6% to RMB84.4 million (US$12.4 million), compared to RMB47.8 million (US$7.0 million) in 2008. Non-GAAP operating margin for 2009 was 28.7%, compared to 24.6% in 2008. GAAP operating margin for 2009 was 26.6%, compared to 19.6% in 2008.
Net income. Non-GAAP net income for 2009 increased by 20.3% to RMB90.3 million (US$13.2 million) compared with RMB75.0 million (US$11.0 million) in 2008. Non-GAAP net margin for 2009 was 28.5% as compared to 30.8% in 2008. Non-GAAP net income per ADS for 2009 increased to RMB4.18 (US$0.61) from RMB3.46 (US$0.51) in 2008.
GAAP net income for 2009 increased by 111.0% to RMB83.4 million (US$12.2 million) compared with RMB39.5 million (US$5.8 million) in 2008. GAAP net margin for 2009 was 26.3% as compared to 16.3% in 2008. GAAP net income per ADS on a fully-diluted basis for 2009 increased to RMB3.87 (US$0.57) from RMB1.82 (US$0.27) in 2008.
Cash and cash equivalents / Time deposits. 3SBio had positive operating cash flow of RMB87.7 million (US$12.9 million) for the year ended December 31, 2009 and as of December 31, 2009, had cash, cash equivalents, restricted cash and time deposits of RMB740.5 million (US$108.5 million), a 1.0% increase from RMB733.0 million (US$107.4 million) as of December 31, 2008.
Three Months Ended December 31, 2009 Unaudited Financial Results
Net revenues. Net revenues increased by 23.7% to RMB74.3 million (US$10.9 million) for the fourth quarter of 2009 from RMB60.1 million (US$8.8 million) for the same period in 2008. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 15.8% and 27.4%, respectively, over the same period in 2008. TPIAO remained 3SBio’s second largest revenue contributor in the quarter, accounting for 28.1% of total net revenues. Export sales increased by 255.7% to RMB4.1 million (US$0.6 million), and revenues from IV Iron Sucrose rose 12.2% to RMB2.0 million (US$0.3 million).
Gross profit. As a result of continued sales growth from key products, gross profit for the fourth quarter of 2009 increased by 25.0% to RMB68.0 million (US$10.0 million) from RMB54.4 million (US$8.0 million) for the same period in 2008. Gross margins increased to 91.6% for the fourth quarter of 2009 from 90.6% for the same period in 2008.
Operating expenses. Non-GAAP operating expenses were RMB54.7 million (US$8.0 million) for the fourth quarter of 2009, an increase of 12.9% from RMB48.5 million (US$7.1 million) for the same period in 2008. GAAP operating expenses were RMB58.1 million (US$8.5 million) for the fourth quarter of 2009, an increase of 2.4% from RMB56.7 million (US$8.3 million) for the same period in 2008.
Operating income. Non-GAAP operating income for the fourth quarter of 2009 grew by 122.5% to RMB13.5 million (US$2.0 million), compared to RMB6.1 million (US$0.9 million) in the fourth quarter of 2008. GAAP operating income was RMB9.9 million (US$1.5 million) for the fourth quarter of 2009, an increase of 12.2 million (US$1.8 million) from an operating loss of RMB2.3 million (US$0.3 million) for the same period in 2008. Non-GAAP operating margin was 18.2% for the fourth quarter of 2009, as compared to 10.1% in the same period in 2008. GAAP operating margin for the fourth quarter of 2009 was 13.4% as compared to -3.8% for the same period in 2008.
Interest income. The Company recorded net interest income of RMB2.4 million (US$0.3 million) for the fourth quarter of 2009, compared to RMB5.9 million (US$0.9 million) for the same period in 2008. This was largely due to a declining interest rate environment.
Net income. Non-GAAP net income for the fourth quarter of 2009 was RMB14.5 million (US$2.1 million), 28.0% higher than non-GAAP net income of RMB11.3 million (US$1.7 million) for the same period in 2008. Non-GAAP net income per ADS on a fully-diluted basis for the fourth quarter of 2009 increased to RMB0.66 (US$0.10) from RMB0.52 (US$0.08) for the same period in 2008. Non-GAAP net margin for the fourth quarter of 2009 was 19.5% as compared to 18.8% for the same period in 2008.
GAAP net income was RMB13.7 million (US$2.0 million) for the fourth quarter of 2009, an increase of RMB15.1 million over a net loss of RMB1.5 million (US$0.2 million) for the same period in 2008. GAAP net income per ADS on a fully-diluted basis for the fourth quarter of 2009 increased to RMB0.63 (US$0.09) from a loss of RMB0.07 (US$0.01) for the same period in 2008. GAAP net margin for the fourth quarter of 2009 was 18.4% as compared to -2.4% for the same period in 2008.
2010 Full Year Guidance and Selected Company Objectives
Based on current market and operating conditions and the following goals, the Company’s total net revenue target for the full year 2010 is between US$56 million to US$58 million, an estimated year-over-year increase of approximately 20% to 25%. Other operating objectives include:
Conference Call
3SBio’s senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 9:00 pm (Beijing/Hong Kong) on February 12, 2010 to discuss its 2009 fourth quarter and annual financial results and recent business activity. The conference call may be accessed using the dial-in numbers below:
A telephone replay will be available two hours after the call until February 20, 2010 at:
Webcast
A live webcast of conference will be available on the investor relations page of 3SBio’s website at http://bbs.3sbio.com/en/News/xinvestors.aspx and at http://tinyurl.com/3Sbio4Q09 . A replay of the webcast will be available within one hour after the conclusion of the call.
Non-GAAP Financial Measures: Reconciliation of GAAP to Non-GAAP
To supplement the Company’s financial information presented in accordance with generally 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 non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per share, and non-GAAP net income per ADS. 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 December 31, 2009 and December 31, 2008 and for the full year ended December 31, 2009 and December 31, 2008.
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, 2009. 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 RMB6.8259 to US$1.00, the noon buying rate for US dollars in effect on December 31, 2009 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. A rate of 6.8225 was used for comparative purposes as of December 31, 2008, 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 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 the disclosures of 3SBio, Inc. (the “Company” or “3SBio”) with respect to the fourth quarter and the year of 2009 (“Disclosures”) that are not purely historical in nature may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Disclosures include the press release, the conference call and any accompanying materials, and any other information issued, released or publicized by the Company with respect to the fourth quarter and the year of 2009.
These forward-looking statements address activities, events, conditions, or developments that we currently expect or anticipate may occur in the future, and include, but may not be limited to, discussions and statements regarding revenue guidance, product development, timing of plant construction completion, testing and certification, impact of the government policies and regulations, regulatory approval process, production capacity, capital expense estimate, future operations, investment portfolio management, and future strategies. Forward-looking statements can be identified by such terminology as “believe,” “expect,” “plans,” “strategy,” “potential”, “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “will” or “would”, “may” or “might”, and words, phrases, expressions, and usages of similar meaning or substance or the negative of such words, phrases, expressions and usages.
Forward-looking statements are based on management’s current assumptions, beliefs, expectations, and projections, in light of the information currently available to it, and actual results, performances, or achievements could differ materially from those implied or expressed by the forward-looking statements. 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 expected market growth for pharmaceutical products in China; market acceptance of 3SBio products; expected hospital or patient demand for our products; the completion of 3SBio’s ongoing clinical trials as planned; receipt and timing of regulatory approvals for 3SBio’s new products and uses; 3SBio’s ability to expand its production, sales and distribution network and other aspects of its operations; 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 factors identified above and other risk factors, uncertainties and assumptions that may affect 3SBio’s business, financial conditions and results of operations, please refer to the Company’s filings with the Securities and Exchange Commission at www.sec.gov, and, in particular, “Introduction - Cautionary Statement concerning Forward Looking Statements,” Item 3.D “Risk Factors,” Item 5. “Operating and Financial Review and Prospects,” and other applicable discussions in 3SBio’s annual report on Form 20-F for the year ended December 31, 2008.
All the statements in the Disclosures speak as of the date of the initial release, even if subsequently made available on the 3SBio website or otherwise. 3SBio undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, subsequent events or otherwise, after the date of this press release.
CONTACT: Investors, Bo Tan, Chief Financial Officer, +86-24-2581-1820, or
Tom Folinsbee, Director of Investor Relations, +852-8191-6991, both of
3SBio Inc., ir@3SBio.com
Web site: http://www.3sbio.com/
