Sinovac Biotech Ltd. Reports Unaudited Second Quarter 2012 Financial Results

Published: Aug 15, 2012

BEIJING, Aug. 15, 2012 /PRNewswire-Asia/ -- Sinovac Biotech Ltd. (the company) (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter financial results for the period ended June 30, 2012. Sinovac is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccine products. The company is making efforts to implement its business strategy to expand its range of product portfolio for both domestic and international markets. The Company has built a solid foundation of commercialized vaccines for hepatitis A, hepatitis A&B and seasonal flu. It has developed specialized pandemic flu vaccines for the H1N1 (swine flu) and H5N1 (avian flu) strains that have been stockpiled by Chinese government. Sinovac also has an extensive human vaccine pipeline inclusive of EV71 and pneumococcal vaccine candidates.

2012 Second Quarter Financial Highlights (year-over-year comparisons to second quarter 2011)

  • Total sales of core vaccines (hepatitis A, hepatitis A&B, and seasonal influenza) were $9.4 million, up 17.6% with Bilive (hepatitis A&B) sales up 25.8%. Total sales decreased 40.2%, compared to the same quarter in 2011 due to the non-core government stockpile H5N1 pandemic flu vaccine sales of $7.7 million booked during that quarter.
  • Gross profit margin based on core vaccine sales was 85.3%, compared to 84.2% in the same period of last year. Overall gross profit margin for the same period 2011 was 68.8%, due to revenue recognition of H5N1 vaccine with lower gross margin in the second quarter of 2011.
  • Net loss attributable to common stockholders was $0.9 million, or $0.02 per basic and diluted share.
  • Cash and cash equivalents totaled $89.4 million as of June 30, 2012, compared to $94.5 million as of March 31, 2012 and $104.3 million as of December 31, 2011, respectively.

Recent Business Highlights

  • On July 27, 2012, Gansu Bidding Center announced that Sinovac had successfully won the tender in Gansu province to supply 717,700 doses of Healive, the Company's inactivated hepatitis A vaccine. The vaccine will be administered within the year as part of a booster vaccination campaign in areas in Gansu province with a high incidence rate of hepatitis A. The total value of the bid is RMB 22.9 million ($3.6 million).
  • On July 23, 2012, the China State Food and Drug Administration (SFDA) issued a public notification stating that Sinovac Dalian's mumps vaccine production plant is in compliance with the new GMP guidelines (2010 version) following site inspection and documentation review. The Company is on track to receive the GMP certification for the mumps vaccine plant in the third quarter of 2012. Sinovac Dalian obtained the production license from the SFDA for its mumps vaccine in December 2011. After both GMP certificate and the production license are obtained, the Company intends to commercialize its mumps vaccine in the Chinese market.
  • The double-blinded, randomized, placebo controlled Phase III trial for Sinovac's EV71 vaccine is being conducted at three sites across China's Jiangsu province. A number of patients with HFMD symptoms have been identified as EV71 positive. The healthcare professionals in the surveillance system are actively monitoring the epidemic situation in order to achieve the targeted schedule.
  • In May 2012, an expert from the Center for Drug Evaluation within the SFDA completed an inspection of the three Phase III study sites in Jiangsu Province, as well as the central laboratories set up by the Chinese Center for Disease Control and Prevention (CDC), according to the Good Clinical Practice (GCP) guidelines. After the inspection, the SFDA expert positively acknowledged the comprehensive surveillance work performed by the clinical sites, and confirmed its importance to the clinical evaluation of the EV71 vaccine. Additionally, the SFDA expert indicated that the site inspection would facilitate further interaction between the SFDA and the investigators to solve any problems or issues that may arise during the study period, which will be beneficial as the Company advances through the regulatory process.
  • As of August 2012, the Company is conducting validation of the equipment and production process in the dedicated production plant for EV71 vaccine at its Changping facilities. The installation qualification (IQ) and the operation qualification (OQ) phases have been completed. The performance qualification is underway, after which the process validation, the last step for the internal validation, will commence. The GMP application for the EV71 plant will be submitted according to the clinical development and registration progress.
  • According to the GMP guidelines (2010 version), all vaccine manufacturers are required to pass the new GMP certification by the end of 2013. In addition to the GMP application for its new filling and packaging plant in Changping, the Company plans to submit GMP applications for its existing production plants for hepatitis vaccines and influenza vaccines.

Dr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "Our financial results for the first half of 2012 clearly demonstrate the management team's progress in executing on our business strategies. We continue to aggressively expand our hepatitis A&B vaccine business in the private pay market, and we believe that we can leverage this experience when we commercialize our EV71 vaccine and other pipeline products in China. Besides strengthening our capability in the private market, we have been making significant efforts to expand our presence in the public market. Recently, we attribute winning the Gansu tender to the development of our public pay market sales initiatives."

Dr. Yin continued, "The Company's increased investment in R&D is driven by our EV71 Phase III trial, which is continuing in line with our targeted schedule. We are pleased to see the progress we have made in this Phase III clinical trial. The healthcare professionals participating in the trial are actively collecting the required data based on the quality and quantity specified in the protocol for the efficacy analysis of the vaccine candidate. In parallel with the clinical trial, the preparation of our dedicated EV71 vaccine production plant is underway. We anticipate that once the clinical trial is completed and after SFDA approval is obtained, we can immediately apply for the GMP certification for the plant, and make sure the EV71 vaccine product can be launched into the market without delay."

Dr. Yin continued, "We are on track to receive the GMP certification for our mumps vaccine. We are very pleased to see that after more than two years of development, Sinovac Dalian's first product is expected to be launched into the market in the coming months. This product will be the first mumps vaccine launched domestically which is manufactured in the plant that is in compliance with the new GMP standards in China."

Dr. Yin concluded, "Our strong cash position and secured credit line with a local commercial bank ensure our short-term investment needs on pipeline product development and facilities to drive the short-term and medium-term growth."

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