Net revenues grew 22.7% year-on-year to RMB118.2 million (US$18.1 million)
Reiterates 2011 net revenues guidance of US$76-US$82 million
Submitted application to conduct clinical trials of voclosporin in China
Seeking regulatory approval for EPIAO in selected PICS markets
SHENYANG, China, May 12, 2011 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. (NASDAQ: SSRX) ("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 first quarter ended March 31, 2011.
First Quarter 2011 Financial Highlights:
First Quarter 2011 Business Highlights
Operations
Regulatory
Partnerships and Business Development
Dr. Jing Lou, chief executive officer of 3SBio, commented: "We remain on track to achieve our key objectives for 2011 and reiterate our full year guidance of 20-30% top line growth. We launched our marketing and educational campaign in key cities for the recently approved TPIAO for ITP indication. We also submitted an application to the SFDA to conduct clinical trials for voclosporin. We are now working with a partner to obtain regulatory approval for EPIAO in Malaysia. If successful, it will be one of the first biosimilar EPO products to be approved in Malaysia, one of the 39 members of the Pharmaceutical Inspection Cooperation Scheme ("PIC/S"). Our export sales efforts continue to focus on forming strong marketing partnerships and seeking regulatory approval in those developed markets where our new state-of-the-art production facility, low production costs and recognized product quality provide us with a commercial edge over our international competitors."
Three Months Ended March 31, 2011 Unaudited Financial Results
Net revenues. Net revenues increased by 22.7% to RMB118.2 million (US$18.1 million) for the first quarter of 2011 from RMB96.4 million (US$14.1 million) for the same period in 2010. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 20.3% and 25.8%, respectively, over the same period in 2010. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for an all-time high of 31.9% of total net revenues. Export sales increased by 38.7% year-on-year to RMB4.2 million (US$0.6 million), and revenues from Iron Sucrose rose 17.9% year-on-year to RMB4.9 million (US$0.7 million).
Gross profit. As a result of continued sales growth from key products, gross profit for the first quarter of 2011 increased by 15.9% to RMB102.9 million (US$15.7 million) from RMB88.8 million (US$13.0 million) for the same period in 2010. Gross margins declined 5.0% to 87.1% for the first quarter of 2011 from 92.1% for the same period in 2010. The decline was mainly attributable to new plant depreciation and increased material, labor and energy costs.
Operating expenses.Operating expenses were RMB78.7 million (US$12.0 million) for the first quarter of 2011, representing an increase of 30.0% from RMB60.6 million (US$8.9 million) for the same period in 2010.
Operating income. Operating income was RMB24.2 million (US$3.7 million) for the first quarter of 2011, a 14.3% decrease from operating income of RMB28.2 million (US$4.1 million) for the same period in 2010. Operating margin for the first quarter of 2011 was 20.5%, an 8.8% decline from operating margin of 29.3% for the same period in 2010. The decline in operating margin in primarily due to increased depreciation expenses related to the new plant and increased labor costs.
Interest income. Net interest income was RMB3.6 million (US$0.6 million) for the first quarter of 2011, compared to RMB3.1 million (US$0.5 million) for the same period in 2010.
Net income.Net income was RMB22.2 million (US$3.4 million) for the first quarter of 2011, a 16.8% decrease over net income of RMB26.7 million (US$3.9 million) for the same period in 2010. Net income per ADS on a fully-diluted basis for the first quarter of 2011 decreased to RMB0.99 (US$0.15) compared to RMB1.22 (US$0.18) for the same period in 2010. Net margin for the first quarter of 2011 was 18.7%, a 9.0% decrease over net margin of 27.7% for the same period in 2010.
Conference Call
3SBio's senior management will host a conference call at 5:00am (US Pacific) / 8:00am (US Eastern) / 8:00pm (Beijing) on Thursday, May 12, 2011 to discuss its first quarter 2011 unaudited financial results and recent business activity. The conference call may be accessed using the dial-in numbers below:
Conference ID: 64963899 |
Local dial-in: |
China landline 800-819-0121 |
China mobile 400-620-8038 |
Hong Kong 852-2475-0994 |
International toll-free dial-in: |
Hong Kong 800930346 |
United Kingdom 080-8234-6646 |
United States 1-866-519-4004 |
International toll dial-in: 65 6723 9381 |
Replay- Conference ID: 64963899 |
A telephone replay will be available two hours after the call until May 19, 2011 at:
International dial-in: | 61-2-8235-5000 |
United States dial-in: | 1-866-214-5335 |
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/3SBio2011Q1.
A replay of the webcast will be available within one hour after the conclusion of the call.
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 the Company's annual report on Form 20-F for the year ending December 31, 2011. 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 RMB6.5483 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2011 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. A rate of 6.8258 was used for comparative purposes as of March 31, 2010, which was the noon buying rate for US dollars on that date for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York.
About 3SBio Inc.
3SBio is a leading, fully integrated, profitable biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China. Its focus is on addressing large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious diseases. With headquarters and GMP-certified manufacturing facilities in Shenyang, PRC, 3SBio employs over 700 people. Shares trade in the form of American Depositary Shares (ADSs) on the NASDAQ stock market under the ticker symbol "SSRX". Please see www.3SBio.com for more information.
Safe Harbor Statement
Certain statements in the disclosures of 3SBio, Inc. ("3SBio") with respect to the fiscal year 2011 and the first quarter ("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 3SBio with respect to the fiscal year 2011 and the first quarter.
These forward-looking statements address activities, events, conditions, or developments that we currently expect may occur in the future, and include, but may not be limited to, discussions and statements regarding revenue guidance, business objectives, dialysis treatment growth, market size as indicated by addressable patients number or disease prevalence rate, product development, clinical trial progress, regulatory approval process, results of collaborations, acquisitions and licensing, exports and new markets expansion, impact of government policies and regulations, production capacity, capital expense, investment portfolio management, and future operations and 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, and actual results 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 3SBio currently anticipates may include: government actions and measures; the ability of 3SBio or any source it relies on to estimate or forecast accurately; competition from other domestic and foreign pharmaceutical companies; the market growth for pharmaceutical products in China; market acceptance of 3SBio products; hospital or patient demand for our products; the completion and results of 3SBio's ongoing clinical trials; receipt and timing of regulatory approvals for 3SBio's new products and indications; risks associated with collaborations, licensing, and acquisitions; regulatory and other requirements in new markets; risks in seeking international certification and approvals; 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 and in the health insurance system in China; 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 3SBio'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, 2009.
All the statements in the Disclosures speak as of the date of the initial release, even if subsequently made available on our website or otherwise. 3SBio undertakes no obligation to update or revise these statements after the date of release, whether as a result of new information, subsequent events or otherwise, except as required by law.
Investor Contacts
Bo Tan |
Chief Financial Officer |
3SBio Inc. |
Tel: + 86 24 2581-1820 |
ir@3SBio.com |
Tom Folinsbee |
Director of Investor Relations |
3SBio Inc. |
Tel: + 852 8191-6991 |
3SBio Inc. Unaudited consolidated balance sheets (expressed in thousands) |
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December 31 2010 |
March31 2011 |
March31 2011 |
|||
RMB | RMB | US$ | |||
Assets | (unaudited) | (unaudited) | (unaudited) | ||
Current assets | |||||
Cash and cash equivalents | 153,250 | 182,026 | 27,797 | ||
Restricted cash | 1,662 | 663 | 101 | ||
Time deposits with financial institutions | 378,405 | 408,734 | 62,418 | ||
Accounts receivable, less allowance for doubtful accounts: | |||||
December 31, 2010 – RMB2,663; March 31, 2011 – RMB2,585(US$395) | 78,500 | 91,237 | 13,933 | ||
Notes receivable | 55,646 | 42,597 | 6,505 | ||
Inventories | 21,718 | 19,119 | 2,920 | ||
Prepaid expenses and other receivables | 39,390 | 15,977 | 2,440 | ||
Available-for-sale securities | 50,667 | 46,603 | 7,117 | ||
Prepaid to related parties | 12,000 | 12,000 | 1,833 | ||
Deferred tax assets | 2,198 | 2,319 | 354 | ||
Total current assets | 793,436 | 821,275 | 125,418 | ||
Time deposits with financial institutions | 120,000 | 120,000 | 18,325 | ||
Available-for-sale securities | 12,697 | 12,652 | 1,932 | ||
Investment in non-consolidated affiliates | 3,835 | 3,329 | 508 | ||
Property, plant and equipment, net | 199,456 | 197,823 | 30,210 | ||
Lease prepayments | 8,188 | 8,099 | 1,237 | ||
Non-current deposits | 1,555 | 2,366 | 361 | ||
Intangible assets, net | 44,299 | 43,297 | 6,612 | ||
Long term receivables, less allowance for doubtful accounts: | |||||
December 31, 2010 - RMB 858; March 31, 2011 - RMB818 (US$125) | 2,558 | 3,066 | 468 | ||
Deferred tax assets | 373 | 355 | 54 | ||
Total assets | 1,186,397 | 1,212,262 | 185,125 | ||
Liabilities and shareholders' equity | |||||
Current liabilities | |||||
Accounts payable | 5,030 | 3,255 | 497 | ||
Deferred grant income | 1,374 | 374 | 57 | ||
Accrued expenses and other payables | 39,552 | 42,709 | 6,522 | ||
Income tax payable | 1,986 | 6,314 | 964 | ||
Total current liabilities | 47,942 | 52,652 | 8,040 | ||
Deferred grant income | 2,402 | 2,310 | 353 | ||
Total liabilities | 50,344 | 54,962 | 8,393 | ||
Shareholders' equity | |||||
Share capital - ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 152,654,148 and 152,741,051 issued and outstanding as of December 31, 2010 and March 31, 2011, respectively | 123 | 123 | 19 | ||
Additional paid-in capital | 946,717 | 951,432 | 145,295 | ||
Accumulated other comprehensive loss | (89,531) | (95,161) | (14,534) | ||
Retained earnings | 278,744 | 300,906 | 45,952 | ||
To Total shareholders' equity | 1,136,053 | 1,157,300 | 176,732 | ||
Total liabilities and shareholders' equity | 1,186,397 | 1,212,262 | 185,125 | ||
3SBio Inc. Unaudited quarterly consolidated statements of income (expressed in thousands, except per share , per ADS and other share and ADS data) |
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|
For the Three Months Ended | For the Three Months Ended | |||
March 31,2010 | March 31,2011 | ||||
RMB | US$ | RMB | US$ | ||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
Net Revenues: | |||||
EPIAO | 57,212 | 8,382 | 68,801 | 10,507 | |
TPIAO | 29,985 | 4,393 | 37,719 | 5,760 | |
Intefen | 1,337 | 196 | 1,205 | 184 | |
Inleusin | 533 | 78 | 608 | 93 | |
Iron sucrose | 4,118 | 603 | 4,857 | 742 | |
Export | 3,056 | 448 | 4,238 | 647 | |
Others | 135 | 20 | 807 | 123 | |
Total net revenues | 96,376 | 14,120 | 118,235 | 18,056 | |
Cost of revenues | (7,595) | (1,113) | (15,300) | (2,336) | |
Gross profit | 88,781 | 13,007 | 102,935 | 15,720 | |
Operating expenses | |||||
Research and development costs | (4,682) | (686) | (7,750) | (1,184) | |
Sales, marketing and distribution expenses | (42,816) | (6,273) | (55,360) | (8,454) | |
General and administrative expenses | (13,057) | (1,913) | (15,624) | (2,386) | |
Total operating expenses | (60,555) | (8,872) | (78,734) | (12,024) | |
Operating income | 28,226 | 4,135 | 24,201 | 3,696 | |
Interest income | 3,142 | 460 | 3,622 | 553 | |
Grant income | 94 | 14 | 1,094 | 167 | |
Loss from investment in non-consolidated affiliates | - | - | (506) | (77) | |
Other income, net | 151 | 22 | 106 | 16 | |
Total other income, net | 3,387 | 496 | 4,316 | 659 | |
Income before income tax expense | 31,613 | 4,631 | 28,517 | 4,355 | |
Income tax expense | (4,962) | (727) | (6,355) | (970) | |
Net income | 26,651 | 3,904 | 22,162 | 3,385 | |
Net income per share: | |||||
Basic | 0.17 | 0.03 | 0.15 | 0.02 | |
Diluted | 0.17 | 0.03 | 0.14 | 0.02 | |
Basic weighted average number of shares outstanding | 150,727,665 | 150,727,665 | 152,706,964 | 152,706,964 | |
Diluted weighted average number of shares outstanding | 153,515,059 | 153,515,059 | 156,974,480 | 156,974,480 | |
Net income per ADS: | |||||
Basic | 1.22 | 0.18 | 1.02 | 0.16 | |
Diluted | 1.22 | 0.18 | 0.99 | 0.15 | |
Basic weighted average number of ADSs outstanding | 21,532,524 | 21,532,524 | 21,815,281 | 21,815,281 | |
Diluted weighted average number of ADSs outstanding | 21,930,723 | 21,930,723 | 22,424,926 | 22,424,926 | |