CHENGDU, China, Dec. 24, 2014 /PRNewswire/ -- Tianyin Pharmaceutical Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in the patented biopharmaceutical, modernized traditional Chinese medicine (mTCM), branded generics and active pharmaceutical ingredients (API) released unaudited preliminary financial results for the first quarter of fiscal year 2015.
Fiscal Year 2015 Ended September 30, 2014 Financial Highlights:
- Revenue was $9.7 million compared with $14.7 million in 1Q14 with gross margins improved to 52% compared with 40% in 1Q14;
- Operating income was $1.4 million, compared with $2.2 million in 1Q14 as a result of increased R&D spending on Gingko Mihuan Oral Liquid (GMOL) cardiovascular franchise;
- Net Income was $1.0 million (10% net margin) compared with $1.5 million (10% gross margin) in 1Q14;
- Earnings per diluted share were $0.03 per share compared with $0.05 per share in 1Q14;
- Cash and cash equivalents totaled $15.6 million on September 30, 2014.
Comparison of results for the three months ended September 30, 2014 and 2013:
(In $ millions) | Three Months Ended September 30, | |||||||||
2014 | 2013 | |||||||||
Sales | 9.7 | 14.7 | ||||||||
Cost of sales | 4.7 | 8.8 | ||||||||
Gross profit | 5.1 | 6.0 | ||||||||
Income from Operation | 1.4 | 2.2 | ||||||||
Provision for income taxes | 0.4 | 0.6 | ||||||||
Net income | 1.0 | 1.5 | ||||||||
Sales for the quarter ended September 30, 2014 was $9.7 million as compared to $14.7 million for the quarter ended September 30, 2013. The sales decrease was a result of continuous pricing pressure and restrictive sales policies on generic products compared with the same period last year.
Gross Margin for the quarter ended September 30, 2014 was 52% as compared to 40% for the quarter ended September 30, 2013. As discussed above, our gross margin improved, predominately as a result of an increased higher margin products being sold during the period. We see the trend to continue for the rest of fiscal 2015.
Income from Operations was $1.4 million for the quarter ended September 30, 2014, as compared to $2.2 million for the quarter ended September 30, 2013. The decrease of income from operations was mainly due to the amount of research & development costs towards cardiovascular portfolio centered on GMOL.
Net Income was $1.0 million with net margin of 10% for the quarter ended September 30, 2014, as compared to net income of $1.5 million with net margin of 10% for the quarter ended September 30, 2013.
Diluted earnings per share was $0.03 per share based on 29.4 million shares for 1Q15 compared with the earnings of $0.05 per share for 1Q14, based on 29.4 million shares.
Balance Sheet and Cash Flow
As of September 30, 2014, the Company had working capital totaling $22.3 million, including cash and cash equivalents of $15.6 million. Net cash provided by operating activities was $(1.1) million for the three months ended September 30, 2014 as compared with net cash provided from operating activities as $0.2 million for the three months ended September 30, 2013. We believe that TPI is adequately funded to meet all of our working capital and capital expenditure needs for fiscal year 2015.
Business Development & Outlook
Research and Development (R&D)
We focused on innovative products as well as modifications and improvements of existing marketed products with substantial market potential. Our R&D partners include a number of most prestigious academic institutions in China. The partnership-based R&D strategy supports TPI to commercialize, produce, and broaden our product pipeline and to market those products through our sales and marketing infrastructure. In July 2014, the TPI’s subsidiary, Chengdu Tianyin, entered into a research and development agreement with a pharmaceutical research company to expand formulation varieties from Gingko Mihuan Oral Liquid (GMOL) to Capsule formulation. The project is expected to be completed before August 2017. TPI has also been in discussion with industrial leading enterprises in integrating sales network resources to boost the revenue of GMOL cardiovascular franchise for the coming year.
Jiangchuan Macrolide Facility (JCM)
In April 2014, JCM has developed a new line of Azithromycin API products that support steady monthly export orders to South Asia. Following a series of tests on quality, purity, intermediates contents, stereochemistry, stability in comparison with the international standards of Azithromycin API, JCM has received monthly orders for manufacturing one of the major intermediates of Azithromycin, Azithromycin Amine (AA) at a competitive international price which varies from month to month according to the market demands and the foreign exchange rate. The current monthly orders for Azithromycin APIs were 5-8 tons per month.
Pre-extraction and formulation plant development at Qionglai Facility (QLF)
In preparation for the new GMP standards stipulated by the government in early 2011, TPI initiated a process to optimize the manufacturing facilities and production lines of the Company in compliance with the new GMP standards. We received our current GMP certificate for both of our pre-extraction plant and formulate facilities until December 2015. In addition, under the guidance by provincial government, our facility is scheduled to be relocated to Qionglai County, south of Chengdu, which is designated for the pharmaceutical industry. Both the pre-extraction plant and the formulation plant will subsequently be relocated to form a combined QLF. The combined QLF, designed and constructed according to the latest GMP standards. The re-location cost for Phase I, which includes both the pre-extraction and formulation plant is estimated at $25 million, which is to boost the current capacity by at least 30-50%. The Phase II QLF, an additional $10 million may be invested to double the current capacity. By the first quarter of fiscal year 2015, the QLF construction project has been completed.
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