BEIJING, Aug. 14, 2014 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter and half year financial results for the period ended June 30, 2014.
Second Quarter 2014 Financial Highlights
(compared to the second quarter 2013)
- Quarterly sales were $12.1 million, a decrease of 30.7% from $17.5 million in the prior year period. Sales for the first six months were $25.6 million, a decrease of 6.8% YoY from $27.5 million.
- Gross profit was $9.1 million, a decrease of 33.3% from $13.6 million in the prior year period.
- Gross margin was 75.0%, compared to 77.9% in the prior year period.
- Net loss attributable to common stockholders was $2.2 million, or $(0.04) per basic and diluted share, compared to net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the second quarter of 2013.
Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "While sales were impacted during the second quarter by short-term challenges from the external market environment, we are continuing to grow our sales channels and make strong progress in the development of our pipeline vaccines."
"In July, we received the first tranche of our RMB 60 million government grant to build a dedicated facility for the production of the EV71 vaccine, which is currently under review by the Center for Drug Evaluation. During the second quarter, we received our clinical trial license for the pneumococcal polysaccharide vaccine (PPV) from the CFDA and expect to begin trials later this year."
"Although we experienced decreased sales in the second quarter, we remain confident in our ability to execute our proven sales and marketing strategies, and continue to develop new vaccines that are both effective and safe. We expect these initiatives to meaningfully contribute to our performance as market conditions improve." Mr. Yin concluded.
Second Quarter 2014 Business Highlights
Sales Update
Public Tenders Sinovac has been selected by the Beijing Health Bureau as the sole supplier of inactivated hepatitis A vaccine in pre-filled syringe dosage to the Expanded Program of Immunization (EPI) for Beijing. The tender is valued at approximately RMB 16 million. The vaccines purchased by the Beijing Health Bureau will be used for the period from 2014 to 2016. The Company expects to begin delivery in the coming months.
Additionally, Sinovac has also been selected by the Beijing Centers for Disease Control and Prevention to be a supplier of the seasonal influenza vaccine to the citizens of Beijing for 2014. The Company expects to begin delivery in the third quarter of 2014.
International Sales to Mexico Sinovac obtained its commercialization license for Anflu in Mexico late last year. In early July, the Company delivered its first order of 150,000 doses of Anflu to Mexico, as it continues its efforts in international market expansions.
R&D Update
PPV The Company received clinical trial approval for its PPV in May. Sinovac has selected a site for the clinical trial and its draft proposal is currently under expert review. The Company expects clinical trials to begin by the end of 2014, following approval by an ethics committee.
Other Operation Updates
Government Grant In April, Sinovac received approval for a RMB 60 million government grant from China's Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, and National Health and Family Planning Commission for construction of the Company's dedicated EV71 vaccine production facility. Sinovac received the first RMB 20 million of the grant in July. The remainder will be provided once construction and approval criteria are met.
VAT Rate Reduction The value added tax (VAT) rate applied to the sales of Sinovac's vaccine products has been reduced to 3% from 6%, as authorized by the Ministry of Finance and State Administration of Taxation of China. The reduced VAT rate was effective July 1, 2014, and therefore did not impact second quarter results. Going forward, the reduced VAT rate will contribute to an improvement in the profitability of the Company's vaccines in Chinese market.
Unaudited Financial Results for Second Quarter 2014
2014 Q2 | % of Sales | 2013 Q2 | %of Sales | ||
(In USD'000 except percentage data) | |||||
Hepatitis A Healive | 5,113 | 42.3% | 7,021 | 40.2% | |
Hepatitis A&B Bilive | 6,439 | 53.3% | 9,586 | 54.9% | |
Hepatitis vaccines | 11,552 | 95.6% | 16,607 | 95.1% | |
Influenza vaccine | - | - | 48 | 0.3% | |
Animal vaccine | 18 | 0.1% | 65 | 0.4% | |
Mumps vaccine | 520 | 4.3% | 732 | 4.2% | |
Regular sales | 12,090 | 100.0% | 17,452 | 100.0% | |
H5N1 | - | - | - | - | |
Total sales | 12,090 | 100.0% | 17,452 | 100.0% | |
Cost of goods sold | 3,025 | 25.0% | 3,861 | 22.1% | |
Gross profit | 9,065 | 75.0% | 13,591 | 77.9% |
In the second quarter 2014, total sales were $12.1 million, a decrease of 30.7% from $17.5 million during the same period in 2013. This decrease was primarily due to softer demand in the private vaccine market. China's CDCs have been also more conservative in their vaccination programs. Nevertheless, the Company achieved record sales in the second quarter of 2013, which resulted in a higher basis for year-over-year comparison.
Gross profit was $9.1 million in the second quarter 2014, compared to $13.6 million in the prior year period. Gross margin decreased to 75.0% from 77.9% in the prior year period. The slight decrease in gross margin is attributable to idle capacity in the Company's influenza facility during the second quarter, which was charged to cost of goods sold.
Selling, general and administrative expenses for the second quarter 2014 were $8.6 million, compared to $8.8 million in the same period of 2013.
R&D expenses for the second quarter of 2014 were $3.3 million, a $1.2 million increase over the same period in 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates, including sIPV, EV71, PPV, and varicella vaccine.
Net loss attributable to common stockholders for the second quarter of 2014 was $2.2 million, or $ (0.04) per basic and diluted share, compared to a net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the same period last year.
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