SHENYANG, China, Nov. 12 /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 third quarter ended September 30, 2009.
Net revenues. Net revenues increased by 35.8% to RMB92.6 million (US$13.6 million) for the third quarter of 2009 from RMB68.2 million (US$10.0 million) for the same period in 2008. This increase was largely due to continued strength from EPIAO and TPIAO products, which increased by 32.6% and 41.3%, respectively, over the same period in 2008. TPIAO remained 3SBio’s second largest revenue contributor in the quarter, accounting for 30.1% of total net revenues. Export sales declined by 6.4% to RMB2.3 million (US$0.3 million), and revenues from our in-licensed IV Iron Sucrose supplement rose 113.7% to RMB3.7 million (US$0.5 million).
Gross profit. As a result of continued sales growth from key products, GAAP gross profit for the third quarter of 2009 increased by 38.3% to RMB86.1 million (US$12.6 million) from RMB62.2 million (US$9.2 million) for the same period in 2008. GAAP gross margin increased by 1.7% to 93.0% for the third quarter of 2009 from 91.3% for the same period in 2008.
Operating expenses. GAAP operating expenses were RMB57.6 million (US$8.4 million) for the third quarter of 2009, an increase of 38.6% from GAAP operating expenses of RMB41.5 million (US$6.1 million) for the same period in 2008. Non-GAAP operating expenses were RMB56.4 million (US$8.3 million) for the third quarter of 2009, an increase of 40.3% from non-GAAP operating expenses of RMB40.2 million (US$5.9 million) for the same period in 2008. The increase in operating expenses was largely driven by higher R&D expenses, particularly at the early stage of the pipeline.
Operating income. GAAP operating income was RMB28.5 million (US$4.2 million) for the third quarter of 2009, an increase of 37.8% from operating income of RMB20.7 million (US$3.1 million) for the same period in 2008. Non-GAAP operating income for the third quarter of 2009 grew by 34.7% to RMB29.8 million (US$4.4 million), compared to RMB22.1 million (US$3.3 million) in the third quarter of 2008.
GAAP operating margin for the third quarter of 2009 was 30.8% as compared to 30.4% for the same period in 2008. Non-GAAP operating margin was 32.2% for the third quarter of 2009, as compared to 32.4% in the same period in 2008.
Interest income. The Company recorded net interest income of RMB2.6 million (US$0.4 million) for the third quarter of 2009, compared to RMB5.5 million (US$0.8 million) for the same period in 2008.
Net income. GAAP net income was RMB26.9 million (US$3.9 million) for the third quarter of 2009, 1343.5% higher than net income of RMB1.9 million (US$0.3 million) for the same period in 2008. GAAP net income per ADS on a fully-diluted basis for the third quarter of 2009 increased to RMB1.25 (US$0.18) from RMB0.09 (US$0.01) for the same period in 2008. GAAP net margin for the third quarter of 2009 was 29.1% as compared to 2.7% for the same period in 2008.
Non-GAAP net income for the third quarter of 2009 was RMB28.2 million (US$4.1 million), 25.6% higher than non-GAAP net income of RMB22.4 million (US$3.3 million) for the same period in 2008. Non-GAAP net income per ADS on a fully diluted basis for the third quarter of 2009 increased to RMB1.31 (US$0.19) from RMB1.03 (US$0.15) for the same period in 2008. Non-GAAP net margin for the third quarter of 2009 was 30.4% as compared to 32.9% for the same period in 2008.
Nine months ended September 30, 2009 Unaudited Financial Results
Net revenues. Net revenues for the first nine months of 2009 increased by 32.5% to RMB242.6 million (US$35.5 million), from RMB183.2 million (US$27.0 million) for the same period 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 for the first nine months of 2009 increased by 30.6% to RMB150.5 million (US$22.1 million) from RMB115.2 million (US$17.0 million) for same period in 2008. Net revenues from TPIAO in the first nine months of 2009 increased by 34.4% to RMB68.8 million (US$10.1 million) from RMB51.2 million (US$7.5 million) for the same period in 2008. In addition, revenue from our export business was RMB9.1 million (US$1.3 million), representing an increase of 27.9% over the first nine months of 2008, while revenue from our in-licensed IV Iron Sucrose supplement was RMB8.7 million (US$1.3 million), representing an increase of 67.7% over the first nine months of 2008.
Gross profit. GAAP gross profit for the first nine months of 2009 increased by 33.9% to RMB223.7 million (US$32.8 million) from RMB167.1 million (US$24.6 million) for the same period in 2008. GAAP gross margin increased by 1.0% to 92.2% for the first nine month months of 2009 from 91.2% for the same period in 2008.
Operating income. For the first nine months ended September 30, 2009, GAAP operating income increased by 48.6% to RMB74.5 million (US$10.9 million), compared to RMB50.1 million (US$7.4 million) for the same period in 2008. Non- GAAP operating income increased by 44.3% to RMB77.5 million (US$11.4 million), compared to RMB53.7 million (US$7.9 million) for the same period in 2008.
GAAP operating margin for the first nine months ended September 30, 2009 was 30.7% as compared to 27.3% for the nine months ended September 30, 2008. Non-GAAP operating margin was 31.9% for the nine months ended September 30, 2009, as compared to 29.3% in the same period in 2008.
Net income. GAAP net income for the first nine months of 2009 increased by 70.2% to RMB69.8 million (US$10.2 million) compared with RMB41.0 million (US$6.0 million) for the same period in 2008. GAAP net margin for the first nine months ended September 30, 2009 was 28.8% as compared to 22.4% for the same period in 2008. GAAP net income per ADS on a fully diluted basis for the first nine months of 2009 increased to RMB3.24 (US$0.47) from RMB1.89 (US$0.28) for the same period in 2008.
Non-GAAP net income for the first nine months of 2009 increased by 19.0% to RMB75.8 million (US$11.1 million) compared with RMB63.7 million (US$9.4 million) for the same period in 2008. Non-GAAP net margin for the first nine months ended September 30, 2009 was 31.2% as compared to 34.8% for the same period in 2008. Non-GAAP net income per ADS for the first nine months of 2009 increased to RMB3.52 (US$0.52) from RMB2.93 (US$0.43) for the same period in 2008.
Cash and cash equivalents / Time deposits. 3SBio had positive operating cash flows of RMB61.6 million (US$9.0 million) for the first nine months of 2009, and as of September 30, 2009 retained a strong balance sheet with cash, cash equivalents and time deposits of RMB731.5 million (US$107.2 million), a 0.2% decrease from RMB733.0 million (US$107.4 million) as of December 31, 2008.
2009 Full Year Guidance
Based on current market conditions and visibility provided during the third quarter, the Company reiterates its total net revenue target for the full year of 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) / 9:00 pm (Beijing/Hong Kong) on November 13, 2009 to discuss its 2009 third quarter financial results and recent business activity. The conference call may be accessed using the dial-in numbers below:
Webcast
A live webcast of the 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/yf93ntk . 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 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 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 September 30, 2009 and September 30, 2008 and for the nine month periods ended September 30, 2009 and September 30, 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 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 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 RMB6.8262 to US$1.00, the noon buying rate for US dollars in effect on September 30, 2009 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. A rate of 6.7899 was used for comparative purposes as of September 30, 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 the disclosures of 3SBio, Inc. (the “Company” or “3SBio”) for the third quarter of fiscal 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 third quarter of fiscal 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: Investor Contacts - Bo Tan, Chief Financial Officer of 3SBio
Inc., +86-24-2581-1820, or ir@3SBio.com; Or Tom Folinsbee, Director of
Investor Relations of 3SBio Inc., +852-8191-6991, or ir@3SBio.com
Web site: http://www.3SBio.com/
http://bbs.3sbio.com/en/News/xinvestors.aspx/
http://tinyurl.com/yf93ntk/
