Site icon pharmaceutical daily

Sinovac second half 2018 sales remains same, 2018 annual report on Form 20-F

BusinessWire

BEIJING–(BUSINESS WIRE)–Sinovac Biotech Ltd. (NASDAQ: SVA) (“Sinovac” or the “Company”), a
leading provider of biopharmaceutical products in China, has filed its
2018 annual report on Form 20-F with the U.S. Securities and Exchange
Commission for the year ended December 31, 2018. The Company also
reported its unaudited financial results for the second half of the year
ended December 31, 2018.

Second Half of 2018 Financial Highlights

Full Year 2018 Financial Highlights

Business Highlights

Marketing and Sales

The overall vaccine market in China grew in 2018 despite serious impacts
from the Changchun vaccine scandal. In addition, although there was no
seasonal flu vaccine supply in 2018 due to the production suspension,
total sales of the Company’s regular products increased by 31.7% year
over year.

Research and Development

Varicella – Human clinical studies have been completed. The new
drug application (NDA) was filed with the National Medical Products
Administration (NMPA, previously known as the China State Food and Drug
Administration) in November 2017. The clinical site inspection was
completed in 2018. The technical review on the registration dossier was
also conducted in 2018 and supplementary documents were issued and
responded to during the year.

Sabin Inactivated Polio Vaccine (sIPV) – The Company has
completed phase III clinical studies, which found that the immune
responses against the three types of poliovirus in the studied sIPV were
not inferior to those achieved with the control IPV and demonstrated a
good safety profile. A sequential study of inoculation with bivalent
oral polio vaccine (bOPV) was completed in 2018. In January 2019, the
NDA was submitted to the NMPA. The consistency study on three
consecutive lots is expected to start in 2019.

23 Valent Pneumococcal Polysaccharide Vaccine – The Company filed
an NDA in June 2017. The clinical trial site inspection has been
completed, and a registration dossier is being reviewed by the NMPA. The
technical review on the registration dossier was conducted in 2018 and
supplementary documents were issued and responded to during the year.

Quadrivalent Influenza Vaccine (QIV) – Phase III trial has been
completed. The preliminary results of the trial show that the vaccine is
safe and immunogenic. The NDA has been filed, and the application is
under review by the NMPA.

Unaudited Financial Results for Second Half of 2018

Summary of sales and gross profit

(In $000 except percentage data) 2018 2H % of Sales 2017 2H % of Sales
Hepatitis A – Healive 26,567 24.8% 14,542 13.5%
Hepatitis A&B – Bilive 662 0.6% 5,502 5.2%
Hepatitis vaccines subtotal 27,229 25.4% 20,044 18.7%
Influenza vaccine (35) 0.0% 13,550 12.6%
Enterovirus 71 vaccine 78,424 73.2% 72,533 67.5%
Mumps vaccine 1,542 1.4% 1,311 1.2%
Total sales 107,160 100.0% 107,438 100.0%
Cost of sales 11,386 10.6% 12,505 11.6%
Gross profit 95,774 89.4% 94,933 88.4%

Sales for the second half of 2018 were $107.2 million, which remains the
same compared to $107.4 million in the prior year period. Revenue
generated by Hepatitis A vaccine increased by $12.0 million compared to
same period in 2017, which was offset by $13.6 million decrease in the
Company’s influenza vaccine. In second half of 2018, nil revenue
generated by the Company’s influenza vaccine in the flu season 2018-2019
caused by the suspension of influenza vaccine production and destruction
of inventory in April 2018 as a result of the disruptive actions of the
minority shareholder of our subsidiary, Sinovac Biotech Co., Ltd.

Gross profit was $95.8 million compared to gross profit of $94.9 million
in the prior year period. Gross margin was 89.4% compared to 88.4% in
the prior year period. Gross profit in the second half of 2018 increased
slightly due to a change in sales mix, with a greater proportion of
sales generated by the Company’s higher-margin EV71 vaccine.

Selling, general and administrative expenses in the second half of 2018
were $69.2 million compared to $50.6 million in the same period of 2017.
The increase was mainly due to higher professional and consulting fees
associated with ongoing litigation.

R&D expenses in the second half of 2018 were $11.8 million compared to
$11.7 million in the same period of 2017.

Net income in the second half of 2018 was $13.5 million compared to
$20.9 million in the prior year period.

Net income attributable to common shareholders was $7.7 million, or
$0.11 per basic and diluted share, compared to net income attributable
to common shareholders of $15.0 million, or $0.26 per basic and diluted
share, in the prior year period.

Non-GAAP adjusted EBITDA was $20.6 million in the second half of 2018
compared to $35.4 million in the prior year period. Non-GAAP net income
in the second half of 2018 was $15.9 million compared to $20.2 million
in the prior year period. Non-GAAP diluted earnings per share in the
second half of 2018 were $0.13 compared to $0.25 per share in the prior
year period. Reconciliations of non-GAAP measures to the nearest
comparable GAAP measures are included at the end of this earnings
announcement.

Financial Results for the Twelve Months Ended December 31, 2018

Summary of sales and gross profit

(In $000 except percentage data) 2018 % of Sales 2017 % of Sales
Hepatitis A – Healive 52,420 22.8% 27,421 15.7%
Hepatitis A&B – Bilive 11,006 4.8% 10,430 6.0%
Hepatitis vaccines subtotal 63,426 27.6% 37,851 21.7%
Influenza vaccine 2,028 0.9% 13,544 7.7%
Enterovirus 71 vaccine 162,537 70.8% 121,284 69.6%
Mumps vaccine 1,659 0.7% 1,667 1.0%
Total sales 229,650 100.0% 174,346 100.0%
Cost of sales 24,723 10.8% 20,240 11.6%
Gross profit 204,927 89.2% 154,106 88.4%

Sales in 2018 were $229.7 million, an increase of 31.7% from $174.3
million in 2017. Sales increased primarily due to revenue generated by
the Company’s EV71 and hepatitis vaccines.

Gross profit in 2018 was $204.9 million, an increase of 33.0% from
$154.1 million in 2017. Gross margin was 89.2% compared to 88.4% in
2017. Gross profit in 2018 also increased primarily due to higher sales
generated by the Company’s EV71 vaccine.

Selling, general and administrative expenses in 2018 were $137.0 million
compared to $87.4 million in 2017. The Company’s selling, general and
administrative expenses increased with the higher level of sales
activity. The Company incurred $11.4 million in professional and
consulting fees associated with ongoing litigation.

R&D expenses in 2018 were $21.9 million compared to $20.5 million in
2017. R&D expenses were mainly incurred by the development of varicella
vaccine and sIPV.

Net income was $36.1 million in 2018 compared to net income of $36.7
million in 2017.

Net income attributable to common shareholders was $21.8 million, or
$0.34 per basic and diluted share in 2017, compared to net income
attributable to common shareholders of $25.8 million, or $0.45 per basic
and diluted share in 2017.

Non-GAAP adjusted EBITDA was $54.8 million in 2018 compared to $51.3
million in 2017. Non-GAAP net income in 2018 was $39.9 million compared
to net income of $36.4 million in 2017. Non-GAAP diluted earnings per
share in 2018 were $0.38 compared to diluted earnings per share of $0.44
in 2017. Reconciliations of non-GAAP measures to the nearest comparable
GAAP measures are included at the end of this earnings announcement.

As of December 31, 2018, cash and cash equivalents and restricted cash
totaled $158.2 million compared to $116.0 million as of December 31,
2017. In 2018, net cash provided by operating activities was $7.9
million. Net cash used in investing activities was $25.3 million, which
was primarily due to the purchase of short-term investments. Net cash
provided by financing activities was $64.2 million, including loan
proceeds of $18.9 million and loan repayment of $43.9 million. As of
December 31, 2018, the Company had $3.3 million of bank loans due within
one year. The Company expects that its current cash position will be
able to support its operations for at least the next 12 months.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical Company that
focuses on the research, development, manufacturing and
commercialization of vaccines that protect against human infectious
diseases. Sinovac’s product portfolio includes vaccines against
enterovirus71, or EV71, hepatitis A and B, seasonal influenza, H5N1
pandemic influenza (avian flu), H1N1 influenza (swine flu), and mumps.
Healive, the hepatitis A vaccine manufactured by the Company has passed
the assessment under WHO Prequalification procedures in 2017. The EV71
vaccine, an innovative vaccine developed by Sinovac against hand foot
and mouth disease caused by EV71, was commercialized in China in 2016.
In 2009, Sinovac was the first company worldwide to receive approval for
its H1N1 influenza vaccine, which it has supplied to the Chinese
Government’s vaccination campaign and stockpiling program. The Company
is also the only supplier of the H5N1 pandemic influenza vaccine to the
government stockpiling program. The Company is developing a number of
new products including a Sabin-strain inactivated polio vaccine,
pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and
varicella vaccine. Sinovac primarily sells its vaccines in China, while
also exploring growth opportunities in international markets. The
Company has exported select vaccines to over 10 countries in Asia and
South America. For more information please see the Company’s website at www.sinovacbio.com.

Safe Harbor Statement

This press release contains “forward-looking statements” within the
meaning of the United States federal securities laws. Such statements
involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or
achievements to differ materially from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. Factors that might cause such a difference
include our inability to compete successfully in the competitive and
rapidly changing marketplace in which we operate, failure to retain key
employees, cancellation or delay of projects, failure to satisfy
regulatory and other requirements, disapproval or delay in approval of
new products by regulatory bodies, disruptions to our operations, the
results of any pending litigation, potential litigation relating to our
shareholder rights plan, any halt in trading of the Company’s
securities, and adverse general economic conditions in China, the United
States and elsewhere. These risks and other factors include those listed
under “Risk Factors” and elsewhere in our Annual Report on Form 20-F as
filed with the Securities and Exchange Commission. In some cases, you
can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” “continue,” or the
negative of these terms or other comparable terminology. Although we
believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. The Company assumes no obligation
to update the forward-looking information contained in this release.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared
and presented in accordance with GAAP, Sinovac uses the following
non-GAAP financial measures: non-GAAP adjusted EBITDA, non-GAAP net
income and non-GAAP diluted EPS. For more information on these non-GAAP
financial measures, please refer to the table captioned “Reconciliations
of non-GAAP Measures to the Nearest Comparable GAAP Measures” in this
results announcement.

Sinovac believes that non-GAAP adjusted EBITDA, non-GAAP net income and
non-GAAP diluted EPS help identify underlying trends in its business
that could otherwise be distorted by the effect of certain income or
expenses that Sinovac includes net income and diluted EPS. Sinovac
believes that non-GAAP adjusted EBITDA, non-GAAP net income and non-GAAP
diluted EPS provide useful information about its core operating results,
enhance the overall understanding of its past performance and future
prospects and allow for greater visibility with respect to key metrics
used by our management in its financial and operational
decision-making. Non-GAAP adjusted EBITDA, non-GAAP net income and
non-GAAP diluted EPS should not be considered in isolation or construed
as an alternative to income from operations, net income, diluted EPS, or
any other measure of performance or as an indicator of Sinovac’s
operating performance. These non-GAAP financial measures presented here
may not be comparable to similarly titled measures presented by other
companies. Other companies may calculate similarly titled measures
differently, limiting their usefulness as comparative measures to our
data.

Non-GAAP adjusted EBITDA represents net income and excludes
interest and financing expenses, interest income, net other income
(expenses) and income tax benefit (expenses), and certain non-cash
expenses, consisting of share-based compensation expenses, amortization
and depreciation that Sinovac does not believe are reflective of the
core operating performance during the periods presented.

Non-GAAP net income represents net income before share-based
compensation expenses, and foreign exchange gain or loss.

Non-GAAP diluted EPS represents non-GAAP net income attributable
to common shareholders divided by the weighted average number of shares
outstanding during the periods on a diluted basis, including accounting
for the effect of the assumed conversion of options.

SINOVAC BIOTECH LTD.
Consolidated Balance sheets
As of December 31, 2018 and December 31, 2017
(Expressed in thousands of U.S. Dollars)
December 31, 2018 December 31, 2017
Current assets
Cash and cash equivalents $ 158,170 $ 114,415
Short-term investment 18,908 –
Restricted cash – 1,549
Accounts receivable – net 74,464 66,205
Income tax receivable 2,999 –
Inventories 25,091 19,618
Prepaid expenses and deposits 4,543 2,101
Total current assets 284,175 203,888
Property, plant and equipment – net 70,920 76,430
Prepaid land lease payments 8,304 9,028
Long-term inventories 90 –
Long-term prepaid expenses to a related party 23 25
Prepayment for acquisition of equipment 470 528
Deferred tax assets 5,798 9,320
Total assets 369,780 299,219
Current liabilities
Short-term bank loans 3,321 18,152
Accounts payable and accrued liabilities 49,991 59,418
Income tax payable – 8,862
Deferred revenue 2,907 4,073
Deferred government grants 1,986 2,038
Total current liabilities 58,205 92,543
Deferred government grants 5,961 4,474
Long-term bank loans 3,890 14,849
Deferred revenue 90 –
Loan from a non-controlling shareholder 6,705 7,070
Other non-current liabilities 3,001 3,143
Total long-term liabilities 19,647 29,536
Total liabilities 77,852 122,079
Commitments and contingencies
Equity
Preferred stock – –
Common stock 71 57
Additional paid-in capital 204,998 115,339
Accumulated other comprehensive income (loss) (2,099) 7,075
Statutory surplus reserves 26,643 19,549
Accumulated earnings 23,820 9,132
Total shareholders’ equity 253,433 151,152
Non-controlling interests 38,495 25,988
Total equity 291,928 177,140
Total liabilities and equity $ 369,780 $ 299,219
SINOVAC BIOTECH LTD.
Consolidated Statements of Comprehensive Income
For the six months and twelve months ended December 31, 2018 and
2017
(Expressed in thousands of U.S. Dollars, except for numbers of
shares and per share data)
Six months ended December 31 Twelve months ended December 31
2018 2017 2018 2017
(Unaudited) (Unaudited)
Sales $ 107,160 $ 107,438 $ 229,650 $ 174,346
Cost of sales 11,386 12,505 24,723 20,240
Gross profit 95,774 94,933 204,927 154,106
Selling, general and administrative expenses 69,177 50,646 137,003 87,365
Provision (recovery) for doubtful accounts (1,756) 407 820 934
Research and development expenses 11,836 11,710 21,910 20,489
Loss on disposal and impairment of property, plant and equipment 57 29 75 42
Government grants recognized in income (150) (137) (197) (141)
Total operating expenses 79,164 62,655 159,611 108,689
Operating income 16,610 32,278 45,316 45,417
Interest and financing expenses (420) (747) (1,070) (1,569)
Interest income 1,089 719 2,016 1,183
Other income (expenses) 175 (91) 321 13
Income before income taxes 17,454 32,159 46,583 45,044
Income tax expense (3,912) (11,299) (10,472) (8,339)
Net Income 13,542 20,860 36,111 36,705
Less: Income attributable to non-controlling interests (5,845) (5,906) (14,329) (10,898)
Net income attributable to shareholders of Sinovac 7,697 14,954 21,782 25,807
Net income 13,542 20,860 36,111 36,705
Other comprehensive income (loss), net of tax of nil
Foreign currency translation adjustments (5,569) 4,581 (10,996) 8,098
Comprehensive income 7,973 25,441 25,115 44,803
Less: comprehensive income attributable to non-controlling interests (4,741) (6,752) (12,507) (12,089)
Comprehensive income attributable to shareholders of Sinovac $ 3,232 $ 18,689 12,608 $ 32,714
Earnings per share
Basic net income per share 0.11 0.26 0.34 0.45
Diluted net income per share 0.11 0.26 0.34 0.45
Weighted average number of shares of common stock outstanding
Basic 70,993,470 57,052,268 64,727,146 57,033,816
Diluted 71,257,734 57,250,279 64,977,554 57,101,191
SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flows
For the six and twelve months ended December 31, 2018 and 2017
(Expressed in thousands of U.S. Dollars)
Six months ended

Twelve months ended
December 31 December 31
2018 2017 2018 2017
(Unaudited) (Unaudited)
Cash flows provided by operating activities
Net income 13,542 20,860 36,111 36,705
Adjustments to reconcile net income to net cash provided by
operating activities:
– Deferred income taxes 4,609 (2,743) 3,146 (4,921)
– Share-based compensation 1,474 495 4,305 979
– Inventory provision 53 957 2,529 1,231
– Provision (recovery) for doubtful accounts (1,756) 407 820 934
– Loss on disposal and impairment of property, plant and equipment 57 29 75 42
– Depreciation of property, plant and equipment and amortization of
licenses		 2,398 2,515 4,887 4,638
– Amortization of prepaid land lease payments 120 126 249 243
– Government grants recognized in income (150) (137) (197) (141)
Changes in:
– Accounts receivable 26,196 17,223 (13,082) (13,482)
– Inventories (3,992) (1,933) (9,412) (5,531)
– Income tax payable (6,410) 9,237 (11,844) 4,948
– Prepaid expenses and deposits (2,188) (1,062) (2,613) (622)
– Deferred revenue 3,014 3,460 (892) 987

– Accounts payable and accrued liabilities

 (16,149) 7,934 (6,167) 33,416

– Other non-current liabilities

 28 330 28 330
Net cash provided by operating activities 20,846 57,698 7,943 59,756
Cash flows provided by (used in) financing activities
– Proceeds from bank loans 5,498 17,465 18,898 28,636
– Repayments of bank loans (20,095) (20,760) (43,886) (38,708)
– Proceeds from issuance of common stock, net of share issuance costs 83,673 1,229 85,304 1,264
– Proceeds from shares subscribed 64 428 64 428
– Government grants received 2,995 2,506 3,800 2,598
– Loan from a non-controlling shareholder – 4,440 – 4,440
Net cash provided by (used in) financing activities 72,135 5,308 64,180 (1,342)
Cash flows used in investing activities
– Purchase of short-term investments (19,670) – (19,670) –
– Proceeds from disposal of equipment 22 19 22 19
– Acquisition of property, plant and equipment (2,754) (5,147) (5,613) (11,915)
Net cash used in investing activities (22,402) (5,128) (25,261) (11,896)
Effect of exchange rate changes on cash and cash equivalents and
restricted cash		 (519) 3,107 (4,656) 4,005
Increase in cash and cash equivalents and restricted cash 70,060 60,985 42,206 50,523
Cash and cash equivalents and restricted cash, beginning of period 88,110 54,979 115,964 65,441
Cash and cash equivalents and restricted cash, end of period 158,170 115,964 158,170 $ 115,964
SINOVAC BIOTECH LTD.
Reconciliations of Non-GAAP measures to the nearest comparable
GAAP measures
For the six and twelve months ended December 31, 2018 and 2017
(Expressed in thousands of U.S. Dollars, except for numbers of
shares and per share data)
Six months ended December 31 Twelve months ended December 31
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income 13,542 20,860 36,111 36,705
Adjustments:
Share-based compensation 1,474 495 4,305 979
Depreciation and amortization 2,518 2,641 5,136 4,881
Interest and financing expenses, net of interest income (669) 28 (946) 386
Net other (income) expense (175) 91 (321) (13)
Income tax expense 3,912 11,299 10,472 8,339
Non-GAAP adjusted EBITDA 20,602 35,414 54,757 51,277
Net income 13,542 20,860 36,111 36,705
Add: Foreign exchange (gain) loss 853 (1,188) (559) (1,323)
Add: Share-based compensation 1,474 495 4,305 979
Non-GAAP net income 15,869 20,167 39,857 36,361
Net Income attributable to shareholders of Sinovac 7,697 14,954 21,782 25,807
Add: Non-GAAP adjustments to net income 1,345 (693) 2,764 (344)

Non-GAAP net income attributable to shareholders of Sinovac
for
computing non-GAAP diluted earnings (loss) per share

 9,042 14,261 24,546 25,463
Weighted average number of shares on a diluted basis 71,257,734 57,250,279 64,977,554 57,101,191
Diluted earnings per share 0.11 0.26 0.34 0.45
Add: Non-GAAP adjustments to net income per share 0.02 (0.01) 0.04 (0.01)
Non-GAAP Diluted earnings per share 0.13 0.25 0.38 0.44

Contacts

Sinovac Biotech Ltd.
Helen Yang
Tel: +86-10-8279-9871
Fax:
+86-10-6296-6910
Email: ir@sinovac.com

ICR Inc.
Bill Zima
U.S: 1-646-308-1707
Email: william.zima@icrinc.com

Exit mobile version