Kun Run Biotechnology, Inc. Announces Third Quarter 2009 Results

HAIKOU, China, Nov. 13 /PRNewswire-Asia-FirstCall/ -- Kun Run Biotechnology, Inc. (the "Company" or "Kun Run") (OTC Bulletin Board: KURU), a leading bio-pharmaceutical company in China that focuses on manufacturing and sales of peptides and peptide-based drugs, today announced its financial results for the third quarter ended September 30, 2009.

    Third Quarter 2009 Highlights
    -- Revenues increased 65% from the third quarter of 2008 to a quarterly
       revenue of $4.0 million
    -- Gross profit was $2.8 million, compared to $1.8 million in the third
       quarter of 2008
    -- Operating income was $2.4 million, an increase of 114% from $1.1
       million in the third quarter of 2008
    -- Net income increased 137%, compared to $2.0 million in the third
       quarter of 2008, or $0.08 per basic and fully diluted share.

Third Quarter 2009 Results

Net revenue was $4.0 million for the quarter ended September 30, 2009, up 65% from $2.4 million in the third quarter of 2008. This increase was mainly attributable to the increase in sales of our products. For the three months ended September 30, 2009, the sales of TP-5 products were $1.95 million, accounting for 48% of total sales, increased by $745,256, or 62% from $1.20 million in the same period of 2008. Thymosin Alpha 1 for injection gradually became our best selling product since its superior curative effects and strong market acceptance, contributing $1,326,439 in revenue (33% of total sales) for the three months ended September 30, 2009, representing a 57% increase from the same period of 2008. Meanwhile, DDAVP generated $508,063, or 12% of total sales for the three months ended September 30, 2009, an increase of 158% from $196,902 for the same period in 2008.

Gross profit for the quarter was $2.8 million, a 62% increase from $1.8 million in the third quarter of 2008. Gross margin was 70% in the third quarter of 2009.

Operating expenses in the third quarter of 2009 were $446,106, down 30% from $637,324 in the third quarter of 2008. This decrease was primarily due to the reduction of provision for doubtful debts and reduced research and development costs.

Operating income was $2.4 million, or 59% of revenue, an increase of 114% from $1.1 million, or 46% of revenue, in the third quarter of 2008.

Net income was $2.0 million, or $0.08 per share (basic and diluted), compared to a net income of $865,524, or $0.04 per share (basic and diluted), in the third quarter of 2008.

Nine months Ended September 30, 2009 Results

Net revenue was $10.1 million in the quarter ended September 30, 2009, up 30% from $7.8 million in the quarter ended September 30, 2008. Gross profit margin was 71%, which remained relatively unchanged as compared to the same period in 2008.

Operating income was $6.0 million, or 59% of revenue. Net income was $5.1 million or $0.20 per basic and fully diluted share, up 48% from $3.4 million, or $0.14 per fully diluted share in the nine-month period of 2008.

Financial Condition

As of September 30, 2009, the Company had $230,539 in cash and cash equivalents. Kun Run generated $2.9 million in cash flow from operations in the first nine months of 2009, compared to $4.3 in the first nine months of 2008. Shareholders' equity stood at $24.0 million, with a debt to equity ratio of 0.55 at the end of September 30, 2009.

Mr. Ye Xiaoqun, Chief Executive Officer of Kun Run Biotechnology commented, "I am satisfied with our third quarter performance, as we achieved record revenue and solid profits. During the past nine months, Kun Run has demonstrated success in developing and commercializing peptide medicine in the China market and has built reputable brand awareness with superior quality. With the extra capacity added by the newly operated facility, we have strengthened and diversified our product portfolio in China to support the market growth. We are committed to a profitable growth strategy."

About Kun Run Biotechnology, Inc.

Kun Run Biotechnology Ltd., together with its subsidiaries, engages in manufacture and sale of polypeptide medicines. It uses solid phase peptide synthesis (SPPS) and advanced purifying technology to produce various therapeutic polypeptide drugs, of which is 'TP-5' most known for efficiently regulating humans' immune systems in order to defend and cure malignant diseases. The company maintains two state-of-art manufacturing plants and possesses one of the largest peptide synthesizing capacities across Asia.

Safe Harbor Statement

Certain statements set forth in this press release constitute 'forward-looking statements.' Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to introduce, manufacture and distribute new drugs. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers and product obsolescence. More information about the potential factors that could affect the Company's business and financial results are included in the Company's filings, available via the United States Securities and Exchange Commission.

    FINANCIAL TABLES FOLLOW

    Kun Run Biotechnology, Inc. and Subsidiaries
    Consolidated Balance Sheets
    (In United States dollars)

                                                   September 30,   December 31,
                                                        2009          2008
                                                    (Unaudited)     (Audited)
    ASSETS
      Current assets
        Cash and cash equivalents                     $230,539      $433,599
        Trade receivables, net                       5,031,103     4,732,750
        Bills receivable                               613,222       117,360
        Other receivables, prepayments
         and deposits                                3,005,675       985,683
        Receivables from disposal of
         properties                                         --     2,061,793
        Inventories - Note 5                         1,504,722       689,415
        Amounts due from related companies           5,356,149     5,595,307
        Deferred taxes                                      --         8,362

    Total current assets                            15,741,410    14,624,269
      Intangible assets                                 92,417       111,004
      Property, plant and equipment, net             9,248,453     9,685,374
      Land use rights                                3,723,541     3,775,540
      Deposit for acquisition of
       property, plant and equipment                   518,347       445,691
      Deposit paid to a related company for
       acquisition of an intangible asset            7,921,800            --

    TOTAL ASSETS                                   $37,245,968   $28,641,878



                                                  September 30,   December 31,
                                                        2009          2008
                                                    (Unaudited)     (Audited)
    LIABILITIES AND STOCKHOLDERS' EQUITY

    LIABILITIES
      Current liabilities
        Trade payables                                $473,100      $966,937
        Other payables and accrued expenses          2,819,643     1,672,500
        Dividend payable to Zhonghe's former/
         existing noncontrolling stockholders            7,209         7,209
        Income tax payable                             645,481       655,019
        Amount due to a related company                     --           936
        Secured borrowings                           8,985,375            --

      Total current liabilities                     12,930,808     3,302,601
      Deferred taxes                                    27,097         8,255
      Secured borrowings                               330,075     6,528,150

    TOTAL LIABILITIES                               13,287,980     9,839,006

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY
      Preferred stock: par value of $0.001
       per share, authorized 10,000,000 shares
       in 2009 and 2008; none issued and
       outstanding                                          --            --
      Common stock: par value of $0.001 per
       share, authorized 100,000,000 shares,
       issued and outstanding 25,000,000 shares
       in 2009 and 25,000,000 shares in 2008            25,000        25,000
      Additional paid-in capital                     8,969,033     8,969,033
      Statutory and other reserves                   2,820,850     2,820,850
      Accumulated other comprehensive
       income                                        1,607,518     1,601,345
      Retained earnings                             10,321,098     5,217,499

    TOTAL KUN RUN BIOTECHNOLOGY, INC.
     STOCKHOLDERS' EQUITY                           23,743,499    18,633,727

    NONCONTROLLING INTEREST                            214,489       169,145

    TOTAL EQUITY                                    23,957,988    18,802,872

    TOTAL LIABILITIES AND EQUITY                   $37,245,968   $28,641,878



    Kun Run Biotechnology, Inc. and Subsidiaries
    Consolidated Statements of Operations (Unaudited)
    (In United States dollars)

                             Three months ended        Nine months ended
                                September 30,            September 30,
                                 (Unaudited)              (Unaudited)
                              2009         2008         2009          2008

    Sales revenue         $4,048,877   $2,449,618  $10,139,543    $7,799,687
    Cost of sales          1,211,070      693,242    2,976,593     2,247,912

    Gross profit           2,837,807    1,756,376    7,162,950     5,551,775

    Operating expenses
      Administrative
       expenses              285,889      257,968      678,314       742,823
      Research and
       developments costs     90,335      107,896      189,647       234,136
      Selling expenses        69,882      271,460      287,425       555,540
                             446,106      637,324    1,155,386     1,532,499

    Income from
     operations            2,391,701    1,119,052    6,007,564     4,019,276
      Interest income         49,466          374      116,426         1,516
      Other income           116,682       63,312      315,926       165,908
      Government subsidy
       income                 32,768          104       40,093         9,729
      Finance costs         (170,622)    (140,690)    (428,440)     (415,311)

    Income before income
     taxes and
     noncontrolling
     interest              2,419,995    1,042,152    6,051,569     3,781,118
    Income taxes            (353,654)    (168,803)    (902,662)     (300,383)

    Net income before
     noncontrolling
     interest              2,066,341      873,349    5,148,907     3,480,735
    Net income
     attributable to
     noncontrolling
     interest                (18,103)      (7,825)     (45,308)      (30,783)

    Net income
     attributable
     to Kun Run
     Biotechnology,
     Inc. common
     stockholders         $2,048,238     $865,524   $5,103,599    $3,449,952

    Net income before
     noncontrolling
     interest             $2,066,341     $873,349   $5,148,907    $3,480,735
    Other comprehensive
     income
      Foreign currency
       translation
       adjustments            31,310       27,386        6,209       774,841

    Comprehensive income   2,097,651      900,735    5,155,116     4,255,576
    Comprehensive income
     attributable to
     noncontrolling
     interest                (18,376)      (7,798)     (45,344)      (31,413)

    Comprehensive income
     attributable to Kun
     Run Biotechnology,
     Inc. common
     stockholders         $2,079,275     $892,937   $5,109,772    $4,224,163
    Earnings per share
     attributable to
     Kun Run
     Biotechnology,
     Inc. common
     stockholders:
      basic and diluted        $0.08        $0.04        $0.20         $0.14

    Weighted average
     number of shares
     outstanding:
      basic and diluted   25,000,000   24,372,284   25,000,000    24,291,058


    For more information, please contact:

     Kunhe Investment Management Beijing Co., Ltd,
     Sunne Tang
     Tel:   +86-10-8591-1911
     Email: sunne@khinvest.com

SOURCE Kun Run Biotechnology, Inc.