3SBio Inc. Announces Unaudited First Quarter 2012 Results Net revenues grew 24.5% year-on-year to RMB147.2 million (US$23.4 million)

Reiterates 2012 net revenues guidance of US$99-US$108 million

SHENYANG, China, May 13, 2012  /PRNewswire-Asia/ -- 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, 2012.

First Quarter 2012 Financial Highlights:

  • Total net revenues increased by 24.5% over the first quarter of 2011 to RMB147.2 million (US$23.4 million), compared to RMB118.2 million (US$18.1 million) in the first quarter of 2011.
  • Operating income was RMB35.5 million (US$5.6 million), compared to operating income of RMB25.3 million (US$3.9 million) in the first quarter of 2011.
  • Net income was RMB32.6 million (US$5.2 million), compared to net income of RMB22.2 million (US$3.4 million) in the first quarter of 2011.
  • Net income per American Depositary Share ("ADS") on a fully-diluted basis was RMB1.44 (US$0.23) compared to net income per ADS on a fully-diluted basis of RMB0.99 (US$0.15) for the first quarter of 2011.
  • Cash, cash equivalents, restricted cash and time deposits were RMB790.8 million (US$125.6 million), including restricted cash of RMB0.7 million.

First Quarter 2012 Business Highlights

Operations

  • EPIAO, the Company's flagship injectable recombinant human erythropoietin (EPO) product, demonstrated strong growth with net revenue in the first quarter of 2012 rising 21.7% to RMB83.7 million (US$13.3 million), compared to RMB68.8 million (US$10.5 million) in the first quarter of 2011.  
  • Net revenues for TPIAO, the Company's novel recombinant human thrombopoietin (TPO) product, increased by 23.3% to RMB46.5 million (US$7.4 million) in the first quarter of 2012, compared to RMB37.7 million (US$5.8 million) in the first quarter of 2011.
  • Net revenues for Iron Sucrose Supplement increased by 40.6% to RMB6.8 million (US$1.1 million) in the first quarter of 2012, compared to RMB4.9 million (US$0.7 million) in the first quarter of 2011.  
  • Net export revenues increased by 80.3% to RMB7.6 million (US$1.2 million), compared to RMB4.2 million (US$0.6 million) in the first quarter of 2011. 

Regulatory

  • We continue to interact with the SFDA on pending submissions, including Feraheme registration trial, China arm of the global multi-center trial for voclosporin and phase 1 trial for NuPIAO, our second generation EPO product.  

Partnerships and Business Development

  • As announced on March 9, 2012, we have entered into a strategic collaboration with DaVita Inc., to operate dialysis centers in Northeastern China, as well as a nationwide supply agreement for EPIAO.   

Dr. Jing Lou, chief executive officer of 3SBio, commented: 

"We are on budget for the first quarter and reiterate our full year guidance of US$99-108 million. While we are concerned about government-mandated price cuts, we are confident that our economies of scale, recognized product quality and reputation for innovative research and development will enable us to continue to adapt to China's evolving health care reforms. We continue to focus on the implementation of the our business objectives for 2012, including continued focus on developing our pipeline products, new business initiatives in the dialysis service segment, seeking international partners to develop Uricase-PEG 20, and leveraging our world-class manufacturing capability to obtain approvals in countries where we can be among the first to introduce quality biosimilars at competitive prices."

Three Months Ended March 31, 2012 Unaudited Financial Results

Net revenues. Net revenues increased by 24.5% to RMB147.2 million (US$23.4 million) for the first quarter of 2012 from RMB118.2 million (US$18.1 million) for the same period in 2011. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 21.7% and 23.3%, respectively, over the same period in 2011. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for 31.6% of total net revenues. Export sales increased by 80.3% year-on-year to RMB7.6 million (US$1.2 million), and revenues from Iron Sucrose rose 40.6% year-on-year to RMB6.8 million (US$1.1 million).

Gross profit. As a result of continued sales growth from key products, gross profit for the first quarter of 2012 increased by 28.7% to RMB132.5 million (US$21.0 million) from RMB102.9 million (US$15.7 million) for the same period in 2011. Gross margins increased by 2.9% to 90.0% for the first quarter of 2012 from 87.1% for the same period in 2011 and 89.4% for the fourth quarter of 2011. The increase was partly due to improved manufacturing productivity of the new plant.

Operating expenses. Operating expenses were RMB97.0 million (US$15.4 million) for the first quarter of 2012, representing an increase of 25.0% from RMB77.6 million (US$11.9 million) for the same period in 2011.

  • Research and development ("R&D") costs.  R&D costs for the first quarter of 2012 were RMB10.8 million (US$1.7 million), or 7.3% of net revenues, compared to RMB7.8 million (US$1.2 million), or 6.6% of net revenues, for the same period in 2011. The increase is attributable to increased labor costs, clinical trials and testing expenses related to NuPIAO and Uricase-PEG 20.
  • Sales, marketing and distribution expenses.  Sales, marketing and distribution expenses for the first quarter of 2012 were RMB69.7 million (US$11.1 million), or 47.3% of net revenues, compared to RMB55.4 million (US$8.5 million), or 46.8% of net revenues, for the same period in 2011. The increase is mainly attributable to increased sales efforts and marketing activities, including the expansion of our sales & marketing team from 417 as of March 31, 2011 to 497 as of March 31, 2012.
  • General and administrative expenses. General and administrative expenses for the first quarter of 2012 were RMB16.8 million (US$2.7 million), or 11.4% of net revenues, compared to RMB15.6 million (US$2.4 million), or 13.2% of net revenues for the same period in 2011.  The decrease in general and administrative expenses as a percentage of net revenues is mainly due to improved economies of scale.

Operating income.  Operating income was RMB35.5 million (US$5.6 million) for the first quarter of 2012, a 40.2% increase from operating income of RMB25.3 million (US$3.9 million) for the same period in 2011. Operating margin for the first quarter of 2012 was 24.2%, a 2.8% increase from operating margin of 21.4% for the same period in 2011. The improved operating margin is primarily due to improved gross margins and stable administrative overheads. 

Interest income. Net interest income was RMB5.4 million (US$0.9 million) for the first quarter of 2012, compared to RMB3.6 million (US$0.6 million) for the same period in 2011.

Net income. Net income was RMB32.6 million (US$5.2 million) for the first quarter of 2012, a 47.1% increase over net income of RMB22.2 million (US$3.4 million) for the same period in 2011. Net income per ADS on a fully-diluted basis for the first quarter of 2012 increased to RMB1.44 (US$0.23) compared to RMB0.99 (US$0.15) for the same period in 2011. Net margin for the first quarter of 2012 was 22.2%, a 3.5% increase over net margin of 18.7% for the same period in 2011. 

Cash Balances. Cash, cash equivalents and time deposits were RMB790.8 million (US$125.6 million, including restricted cash of RMB0.7 million), compared to RMB711.4 million (US$108.6 million, including restricted cash of RMB0.7 million) at March 31, 2011.


Conference Call

3SBio's senior management will host a conference call on Monday, May 14, 2012 8:00pm (China Standard Time), 8:00am (US Eastern)  5:00am (US Pacific) to discuss its unaudited first quarter 2012 results and recent business activity. The conference call may be accessed using the dial-in numbers below:

Conference ID: 73956752

Local dial-in:
China landline: 800-819-0121
China mobile: 400-620-8038
Hong Kong : 852-2475-0994
United States: 718-354-1231

International toll-free dial-in:
Hong Kong:  800930346
United States:  1-866-519-4004
United Kingdom:  080-8234-6646

International toll dial-in: 65 6723 9381

Replay- Conference ID: 73956752
A telephone replay will be available two hours after the call until May 22, 2012 at:
International:  61-2-8235-5000
United States: 1-866-214-5335

Webcast
A live webcast of the conference will be available on the investor relations section of 3SBio's website at www.3sbio.com and at http://www.media-server.com/m/p/i9xa65b6.

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 RMB6.2975 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2012 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.  A rate of 6.5483 was used for comparative purposes as of March 31, 2011, 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 800 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.

Cautionary Statement concerning Forward Looking Statements

Certain statements in the disclosures of 3SBio, Inc. (the "Company" or "3SBio") for the first quarter of 2012 ("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 the Company with respect to the first quarter and the year of 2012.

These forward-looking statements address activities, events, conditions, or developments that we currently expect or anticipate to occur in the future, and may include, but may not be limited to, discussions and statements regarding: full year revenue target, business growth and prospects, product pricing trends, operation plans and objectives, market size or patient number or illness prevalence estimates, product development prospects, future pipeline progress, regulatory review, certification and approval prospects,  impact of the government policies and regulations, partnerships or collaborations and the outcome thereof, capital expense estimate, 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 thereof.

Forward-looking statements are based on management's current assumptions, beliefs, expectations, and projections, in light of the information currently available, and actual results, performances, or achievements could differ materially from those implied or expressed by the forward-looking statements.  Among the factors that could cause actual results to differ from what the Company currently anticipates may include: regulatory actions such as adverse drug pricing adjustments, competition from other domestic and foreign pharmaceutical companies; risks and uncertainties related to cooperation, joint venture, and partnerships, including deal consummation risks; changes in China's healthcare insurance system; Chinese government policies and regulations; the segment market growth for our  products; market acceptance of our products; hospital or patient demand for our products; progress of our clinical trials; receipt and timing of regulatory approvals for new products and indications; our ability to enhance production, sales and distribution network and other aspects of operation; our ability to effectively protect intellectual property; changes in the healthcare industry 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, please refer to the Company'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, 2011.

All the statements in the Disclosures speak as of the date of the initial release, even if subsequently made available on the 3SBio website or otherwise.  3SBio undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, subsequent events or otherwise, after the date of this press release.

Investor Contacts


Bo Tan

Tom Folinsbee

Chief Financial Officer

Director of Investor Relations

3SBio Inc.

3SBio Inc.

Tel: + 86 24 2581-1820

Tel: + 852 8191-6991

ir@3SBio.com

ir@3SBio.com

 

3SBio Inc.
Unaudited quarterly consolidated balance sheets
(expressed in thousands)


December 31,

2011


March 31,

2012


March 31,

2012


RMB


RMB


US$

Assets



(unaudited)


(unaudited)







Current assets












Cash and cash equivalents

245,813


278,576


44,236

Restricted cash

665


666


106

Time deposits with financial institutions

499,201


481,565


76,469

Accounts receivable, less allowance for doubtful accounts:






December 31, 2011 – RMB2,542; March 31, 2012 – RMB2,227 (US$354)

113,949


108,235


17,187

Notes receivable

47,243


54,494


8,653

Inventories

27,604


29,773


4,728

Prepaid expenses and other receivables

26,672


24,849


3,946

Available-for-sale securities

22,830


22,281


3,538

Prepaid to related parties

6,000


4,500


715

Deferred tax assets

2,750


2,190


348







Total current assets

992,727


1,007,129


159,926







Time deposits with financial institutions

20,000


30,000


4,764

Available-for-sale securities

10,848


11,058


1,756

Investment in non-consolidated affiliates

2,245


1,415


225

Property, plant and equipment, net

198,053


204,954


32,545

Prepaid  land use rights

17,448


17,310


2,749

Prepayment and noncurrent deposits

16,801


15,243


2,420

Intangible assets, net

49,615


51,316


8,149

Long term receivables, less allowance for doubtful accounts:






December 31, 2011 – RMB 818; March 31, 2012 – RMB818 (US$130)

3,111


2,919


464

Deferred tax assets

262


313


50







Total assets

1,311,110


1,341,657


213,048







Liabilities and shareholders' equity












Current liabilities












Accounts payable

6,218


5,656


898

Deferred grant income

374


374


59

Accrued expenses and other payables

48,389


46,551


7,393

Income tax payable

8,894


4,267


678







Total current liabilities

63,875


56,848


9,028







Deferred grant income

2,029


1,935


307







Total liabilities

65,904


58,783


9,335







Shareholders' equity












Share capital - ordinary shares US$0.0001 par value, 500,000,000 shares

authorized, 154,473,159 and 154,551,780 issued and outstanding as of

December 31, 2011 and March 31, 2012, respectively

124


124


20

Additional paid-in capital

973,218


978,444


155,370

Accumulated other comprehensive loss

(126,290)


(126,532)


(20,091)

Retained earnings

387,317


419,910


66,679







To   Total shareholders' equity attributable to 3SBio Inc.

1,234,369


1,271,946


201,978

Non-controlling interest

10,837


10,928


1,735

Total shareholders' equity

1,245,206


1,282,874


203,713







Total liabilities and shareholders' equity

1,311,110


1,341,657


213,048

 

3SBio Inc.
Unaudited quarterly consolidated statements of income
(expressed in thousands, except per share, per ADS and other share and ADS data)

 


 

For the Three Months Ended


 

For the Three Months Ended


March 31, 2011


March 31, 2012


RMB


US$


RMB


US$


(unaudited)


(unaudited)


(unaudited)


(unaudited)

Net Revenues:








EPIAO

68,801


10,507


83,719


13,294

TPIAO

37,719


5,760


46,501


7,384

Intefen

1,205


184


968


154

Inleusin

608


93


399


63

Iron sucrose

4,857


742


6,829


1,084

Export

4,238


647


7,639


1,213

Others

807


123


1,096


174









Total net revenues

118,235


18,056


147,151


23,366

Cost of revenues

(15,300)


(2,336)


(14,658)


(2,328)









Gross profit

102,935


15,720


132,493


21,038









Operating expenses








Research and development costs

(  7,750)


(1,184)


( 10,811)


(1,717)

Sales, marketing and distribution expenses

(55,360)


(8,454)


(69,667)


(11,063)

General and administrative expenses

(15,624)


(2,386)


(16,842)


(2,674)

Grant income

1,094


167


297


47









Operating income

25,295


3,863


35,470


5,631









Interest income

3,622


553


5,384


855

Share of  loss in  non-consolidated affiliates

(506)


(77)


(830)


(132)

Other income, net

106


16


123


20

Total other income, net

3,222


492


4,677


743









Income before income tax expense

28,517


4,355


40,147


6,374

Income tax expense

(6,355)


(970)


(7,463)


(1,185)

Net  income

22,162


3,385


32,684


5,189

Less: net income attributable to non-controlling interest

-


-


(91)


(14)

Net  income attributable to 3SBio Inc.

22,162


3,385


32,593


5,175









Net income attributable to 3SBio Inc. per share:








Basic

0.15


0.02


0.21


0.03

Diluted

0.14


0.02


0.21


0.03

Basic weighted average number of shares outstanding

152,706,964


152,706,964


154,523,610


154,523,610

Diluted weighted average number of shares outstanding

156,974,480


156,974,480


158,119,322


158,119,322









Net income attributable to 3SBio Inc. per ADS:








Basic

1.02


0.16


1.48


0.23

Diluted

0.99


0.15


1.44


0.23

Basic weighted average number of ADSs outstanding

21,815,281


21,815,281


22,074,801


22,074,801

Diluted weighted average number of ADSs outstanding

22,424,926


22,424,926


22,588,474


22,588,474

 

SOURCE 3SBio Inc.



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