BEIJING, Nov. 22, 2017 /PRNewswire/ -- Sinovac Biotech
Ltd. (NASDAQ: SVA) ("Sinovac" or the "Company"), a
leading provider of biopharmaceutical products in China, announced today that it has filed its
2016 annual report on Form 20-F with the U.S. Securities and
Exchange Commission for the year ended December 31, 2016. The Company also reported its
unaudited financial results for the fourth quarter ended
December 31, 2016.
Fourth Quarter 2016 Financial highlights
- Quarterly sales from continuing operations were $31.4 million compared to $23.0 million in the prior year period, an
increase of 36.7%. Sales increased primarily due to revenue
generated by the Company's EV71 vaccine.
- Net income attributable to common shareholders was $4.4 million, or $0.08 per basic and diluted share, compared to
net income attributable to common shareholders of $0.2 million, or $0.00 per basic and diluted share, in the prior
year period.
Full Year 2016 Financial highlights
- Sales from continuing operations in 2016 were $72.4 million, an increase of 7.4% from
$67.4 million in 2015. The contribution of EV71 vaccine sales in
the second half of 2016 offset the negative impact of the Shandong
vaccine scandal that occurred in the first half of 2016.
- Net loss attributable to common shareholders was $0.6 million, or ($0.01) per basic and diluted share, in 2016
compared to net loss attributable to common shareholders of
$1.4 million, or ($0.03) per basic and diluted share in 2015.
Mr. Weidong Yin, Chairman,
President and CEO of Sinovac,
commented, "We are pleased with the commercial launch of our EV71
vaccine in 2016. The sales contribution from EV71 more than offset
the decline of sales in our hepatitis vaccines caused by the
Shandong incident in the first
half of 2016. Although the
incident caused profound change in the Chinese vaccine market, we
continued to make progress on our pipeline programs, and we believe
a strong vaccine product portfolio is important for our long-term
success. From 2016 to 2017, we conducted several clinical studies
on our pipeline products, including Sabin IPV, varicella, and PPV,
and obtained a license to
conduct clinical studies of the quadrivalent influenza
vaccine."
Business Highlights
Marketing and Sales
An incident involving the
improper distribution and sale of vaccines in Shandong province resulted in a new government regulation for vaccine
distribution and logistics. The new regulation required each
province to set up a centralized tendering platform, which had not
previously existed in many provinces. In 2016, the new policy
impacted nationwide sales of private-pay market vaccines as vaccine companies halted vaccine
delivery to wait for the interpretation of the new regulation by the Chinese government.In the fourth
quarter of 2016, sales started to slowly resume,due to the interpretation issued jointly by the
Ministry of Health and Chinese FDA allowing for a transitional
period with an expiration date of December
31, 2016.
Research and Development
Varicella - Sinovac obtained
clinical research approval for its proprietary Varicella vaccine
candidate from the CFDA in
September2015, and completed phase I clinical trials in 2016. In
August 2016, the double-blind,
randomized, placebo-controlled phase III clinical trial was
conducted at two sites across China's Henan
province to assess the efficacy of the vaccine candidate.
Approximately 6,000 healthy children from one to 12 years old
completed the one dose vaccination schedule prior to the chickenpox
epidemic season in China followed
by an active monitoring period.The phase III trial was completed in
2017 with preliminary phase III
data showing that Sinovac's varicella vaccine was 87.1% (95% CI:
69.7%, 94.5%) efficacious against chickenpox caused by Varicella-Zoster Virus(VZV). In parallel,
Sinovac conducted another clinical study that consisted of 1,197 volunteers from one to three years
old, which was designed to evaluate the consistency of three
consecutive lots of varicella vaccine manufactured by the Company.
The results indicated that the immunogenicity of the three vaccine
lots was consistent. We expect to file the production license
application with the CFDA before the end of 2017.
sIPV - In November 2015, the Company obtained clinical
trial licensing for its Sabin IPV. Phase I/II clinical trials were
completed in 2017. The phase I trial was a single center and
open-label study to evaluate safety among adults, children, and
infants. There were 108 healthy volunteers. The results showed that
the vaccine candidate had a good safety profile. The phase II
clinical trial was a double blind and controlled study to evaluate
safety and immunogenicity by comparing commercialized IPV and Sabin
IPV vaccine to Sinovac's vaccine candidates. The phase II trial
result showed no statistical difference between the safety of the
Company's vaccine candidates and the commercialized IPV and Sabin
IPV vaccine products. Furthermore, the results indicated that the
immunogenicity of the vaccine candidates is equivalent to or
superior to the controlled vaccine. In the third quarter of 2017, a
phase III trial was commenced, which is expected to be completed in
2018.
23 valent Pneumococcal Poly saccharide Vaccine - A double blind,
randomized, and controlled phase III clinical trial on the
23-PPV commenced on
April 1, 2015, to evaluate the
immunogenicity and safety of the vaccine candidate on a healthy
population over two years of age. The trial was conducted with
1,760 volunteers, including adults, seniors, and children. Blood
serum testing was carried out throughout 2016, and the trial was
completed in early 2017. The results showed that the immunogenicity
and safety of Sinovac's vaccine candidate were not inferior to the
controlled vaccine, a 23-PPV already commercialized in China. Furthermore, the vaccine candidate
could be used by the target age group to control and prevent
diseases caused by pneumonia. The application for production
license was submitted to CFDA in June2017.
Quadrivalent influenza vaccine (QIV) - We initiated the
development of a QIV in May 2013.
Following the completion of preclinical studies, the Company
applied for the clinical license from the CFDA. The approval to
conduct a human clinical trial was issued by the CFDA in
November 2016, and the trial is
expected to be initiated in the fourth quarter of 2017. In contrast
to the trivalent influenza vaccine, such as Sinovac's Anflu
product, which includes an influenza A H1N1 virus, an influenza A
H3N2 virus, and a B virus, the quadrivalent flu vaccine is designed
to protect against four different flu viruses: two influenza A
viruses and two influenza B viruses.Adding another B virus to the
vaccine is expected to provide broader protection against
circulating flu viruses because there are two very different
lineages of B viruses that both circulate during most seasons.
Unaudited Financial Results for Fourth Quarter 2016
|
|
2016Q4
|
% of
Sales
|
2015Q4
|
% of
Sales
|
(In $000 except
percentage data)
|
|
|
|
|
|
|
Hepatitis A --
Healive
|
|
8,648
|
27.6%
|
10,616
|
46.3%
|
Hepatitis
A&B -- Bilive
|
|
1,592
|
5.1%
|
4,644
|
20.2%
|
Hepatitis vaccines
subtotal
|
|
10,240
|
32.7%
|
15,260
|
66.5%
|
Influenza
vaccine
|
|
3,834
|
12.2%
|
3,529
|
15.4%
|
Enterovirus 71
vaccine
|
|
17,107
|
54.5%
|
-
|
-
|
Mumps
vaccine
|
|
188
|
0.6%
|
311
|
1.3%
|
Regular
sales
|
|
31,369
|
100.0%
|
19,100
|
83.2%
|
H5N1
|
|
(4)
|
0.0%
|
3,852
|
16.8%
|
Total
sales
|
|
31,365
|
100.0%
|
22,952
|
100.0%
|
Cost of
sales
|
|
8,325
|
26.5%
|
7,268
|
31.7%
|
Gross
profit
|
|
23,040
|
73.5%
|
15,684
|
68.3%
|
Quarterly sales from continuing operations were $31.4million compared to $23.0 million in the prior year period.
Sales increased primarily due to revenue generated by the Company's
EV71 vaccine.
Gross profit from continuing operations was $23.0 million compared to gross profit of
$15.7million in the prior year
period. The increase was primarily due to the contribution of EV71
vaccine sales in the fourth quarter of 2016. Gross margin was 73.5%
compared to 68.3% in the prior year period.
Selling, general and administrative expenses in the fourth
quarter of 2016 were $15.2 million
compared to $11.7 million in the same
period of 2015. The Company's selling, general and administrative
expenses increased with the higher level of sales activity. The
Company also incurred a cost of $0.6
million relating to the proposed privatization of
Sinovac.
R&D expenses in the fourth quarter of 2016 were $3.6 million
compared to $2.9 million in the same
period of 2015. The increase was mainly due to higher R&D
expenses on the varicella and sIPV vaccine projects in the fourth
quarter of 2016.
Income from continuing operations was $6.8 million
compared to $0.5 million in the prior
year period. In addition, the fourth quarter of 2015 included a
loss from discontinued operations of $0.1
million, whereas no such income or loss was incurred in the
fourth quarter of 2016.
Net income attributable to common shareholders was $4.4 million, or $0.08 per
basic and diluted share, compared to net income attributable to
common shareholders of $0.2 million,
or $0.00 per basic and diluted share,
in the prior year period.
Non-GAAP EBITDA was $12.5 million in the fourth quarter of 2016
compared to $4.4 million in the prior
year period. Non-GAAP net income from continuing operations in the
fourth quarter of 2016 was $8.8
million compared to $1.4 million
in the prior year period. Non-GAAP diluted earnings per share from
continuing operations in the fourth quarter of 2016 were $0.11compared to $0.02 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, 2016
|
|
2016
|
% of
Sales
|
2015
|
% of
Sales
|
(In $000 except
percentage data)
|
Hepatitis A -
Healive
|
|
20,044
|
27.7%
|
26,801
|
39.8%
|
Hepatitis
A&B - Bilive
|
|
552
|
0.7%
|
22,615
|
33.5%
|
Hepatitis vaccines
subtotal
|
|
20,596
|
28.4%
|
49,416
|
73.3%
|
Influenza
vaccine
|
|
9,829
|
13.6%
|
12,674
|
18.8%
|
Enterovirus 71
vaccine
|
|
35,140
|
48.5%
|
-
|
-
|
Mumps
vaccine
|
|
477
|
0.7%
|
1,472
|
2.2%
|
Regular
sales
|
|
66,042
|
91.2%
|
63,562
|
94.3%
|
H5N1
|
|
6,389
|
8.8%
|
3,852
|
5.7%
|
Total
sales
|
|
72,431
|
100.0%
|
67,414
|
100.0%
|
Cost of
sales
|
|
22,393
|
30.9%
|
18,408
|
27.3%
|
Gross
profit
|
|
50,038
|
69.1%
|
49,006
|
72.7%
|
Sales from continuing operations in 2016 were $72.4 million, an increase of 7.4% from
$67.4 million in 2015. The contribution of EV71 vaccine sales in
the second half of 2016 offset the negative impact of the Shandong
vaccine scandal that occurred in the first half of 2016.
Gross profit from continuing operations in 2016 was $50.0 million, an increase of 2.1% from
$49.0 million in 2015. Gross margin
was 69.1% compared to 72.7% in 2015. The decrease was mainly due to a higher
inventory provision provided for the hepatitis A&B and mumps
vaccines, higher idle capacity costs charged to cost of sales, and
negative gross profit for the
hepatitis A&B vaccine due to a higher sales returns
provision.
Selling, general and administrative expenses in 2016 were
$42.0 million compared to
$37.5 million in 2015. The Company's
selling, general and administrative expenses increased with the
higher level of sales activity, and the Company also incurred a
cost of $2.2 million relating to the
proposed privatization of Sinovac.
R&D expenses in 2016 were $12.6
million compared to $9.5
million in 2015. The increase was mainly due to higher
R&D expenses on the varicella and sIPV vaccines and the MMR
vaccine project.
Net loss from continuing operations was $3.1million in 2016 compared to a net loss of
$0.2 million in 2015.Net income from
discontinued operations was $2.3
million in 2016 compared to a net loss of $0.7 million in 2015.
Net loss attributable to common shareholders was $0.6 million, or ($0.01) per basic and diluted share, in 2016
compared to net loss attributable to common shareholders of
$1.4 million, or ($0.03) per basic and diluted share in 2015.
Non-GAAP EBITDA was $8.2 million in 2016 compared to
$11.2 million in 2015. Non-GAAP net
income from continuing operations in 2016 was $0.3 million compared to net income of $1.6
million in 2015. Non-GAAP diluted earnings per share from
continuing operations in 2016 were
$0.01compared to diluted earnings per
share of $0.01 in 2015.
Reconciliations of non-GAAP measures to the nearest comparable GAAP
measures are included at the end of this earnings announcement.
As of December 31, 2016, cash and
cash equivalents totaled $62.4
million compared to $63.8
million as of December 31,
2015. In 2016, net cash used in operating activities was
$15.5 million. Net cash used in
investing activities was $11.8 million, which was due to purchase of
equipment. Net cash provided by financing activities was
$27.8 million, including loan proceeds of
$45.5 million and loan repayment of
$24.9 million. As of December 31,
2016, the Company had $31.3
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. The Company will seek
new commercial bank loans to finance the commercialization of its
pipeline products and for other operational purposes when
appropriate.
The Restatement of Prior Year Financials
The consolidated financial statements and other financial
information contained in the annual report on Form20-F filed with
SEC reflect a restatement of the Company's consolidated financial
statements as of and for each of the years ended December 31, 2014 and 2015, and related
disclosures. In connection with
a transaction review for an internal investigation
in response to a media article
published and the allegations
in a research report that the Company's Chief Executive Officer was
involved in the bribery of the former Deputy Director General of
the Center for Drug Evaluation ("CDE") under the Chinese Food and Drug
Administration ("CFDA") and certain judgments based on bribery
charges issued by Chinese courts in four provinces against officials of the Chinese Center for
Disease Control (the "CDC"), that referenced eight of the Company's
former and current salespersons,
none of whom were charged with any wrong
doing, the Company corrected the
errors with respect
to (i) individual income tax withheld for non-routine
benefits for employees and (ii) the classification of entertainment
expenses and the related corporate income tax impact as
further described in the 2016 annual report filed with SEC. The
Company has rectified these errors
in the company's previously issued
financial statements. Accordingly,
the Company restated
its consolidated financial statements for the years
ended December31, 2014 and 2015.
Along with the restatement of the Company's consolidated
financial statements in connection with the errors discussed above,
the Company has recorded adjustments for certain previously
identified immaterial errors
related to the periods presented. When these financial statements
were originally issued, the Company assessed their impact and
concluded that they were not material to the Company's consolidated
financial statements for the years ended December 31, 2014 and 2015. However, in conjunction with
the restatement of the Company's consolidated financial statements
described above, the Company has determined that it would be
appropriate to make adjustments for such previously unrecorded
adjustments.
As the result of the restatement described above, the Company's
revenue increased by $0.1 million for
the year ended December 31, 2012, and
revenue for the years ended December 31,
2013, 2014, and 2015 were unchanged. Operating loss
decreased by $0.5 million for the
year ended December 31, 2012, and
operating income decreased by $0.5
million, $0.2 million, and
$28 thousand for the years ended
December 31, 2013, 2014, and 2015,
respectively. Net loss attributable to shareholders decreased by
$0.4 million for the year ended
December 31, 2012; net income
attributable to shareholders decreased by $0.3 million for the year ended December 31, 2013; and net loss attributable to
shareholders increased by $0.7
million and $0.3 million for
the years ended December 31, 2014 and
2015, respectively. Net loss per share attributable to shareholders
decreased by $0.01 for the year ended
December 31, 2012; earnings per share
attributable to shareholders remained unchanged for the year ended
December 31, 2013; and net loss per
share attributable to shareholders increased by $0.01 for the year ended December 31, 2014 and 2015. The Company's cash
and cash equivalent balance as of December
31, 2012, 2013 and 2015 were unchanged, and decreased by
$1.5 million as of December 31, 2014due to a reclassification as the
result of the restatement. Total liabilities as of December 31, 2012, 2013, 2014, and 2015 increased
by $0.3 million, $0.7 million, $1.7
million, and $2.2 million,
respectively.
Update on "Going Private" Proposals
On June 26, 2017, the Company
entered into an amalgamation agreement (the "Amalgamation
Agreement") with Sinovac (Cayman) Limited, ("Parent") and Sinovac
Amalgamation Sub Limited ("Amalgamation Sub"), a wholly owned
subsidiary of Parent. Pursuant to the Amalgamation Agreement,
Parent will acquire the Company for cash consideration equal to
$7.00 per common share. Subject to
the terms and conditions of the Amalgamation Agreement, at the
effective time of the amalgamation, Amalgamation Sub will be
amalgamated with and into the Company, with the Company continuing
as the surviving corporation and a wholly owned subsidiary of
Parent (the "Amalgamation"). Immediately following the consummation
of the transactions contemplated by the Amalgamation Agreement,
Parent will be beneficially owned by a consortium comprising Mr.
Weidong Yin, SAIF Partners IV L.P.,
C-Bridge Healthcare Fund II, L.P., Advantech Capital L.P., Vivo
Capital Fund VIII, L.P., and Vivo Capital Surplus Fund VIII,
L.P.
Our board of directors, acting upon the unanimous recommendation
of the special committee formed by the board of directors, or the
Special Committee, unanimously approved the Amalgamation Agreement
and the transactions contemplated by the Amalgamation Agreement,
including the Amalgamation, and resolved to recommend that the
Company's shareholders authorize and approve the Amalgamation
Agreement and the transactions contemplated by the Amalgamation
Agreement, including the Amalgamation.
The Amalgamation is subject to customary closing conditions,
including approval by an affirmative vote of holders of Shares
representing at least two-thirds of the Company's common shares
present and voting in person or by proxy as a single class at a
meeting of its shareholders, which will be convened to consider the
authorization and approval of the Amalgamation Agreement and the
transactions contemplated by the Amalgamation Agreement, including
the Amalgamation, and the other closing conditions specified in the
Amalgamation Agreement. If completed, the Amalgamation will result
in Sinovac Biotech Ltd. becoming a privately-held company, and the
Company's common shares will no longer be listed on NASDAQ.
On June 28, 2017, the Company
received a written proposal (the "Sinobioway Proposal") from a
consortium comprising (i) PKU V-Ming (Shanghai) Investment Holdings Co., Ltd., (ii)
Shandong Sinobioway Biomedicine Co., Ltd., (iii) CICC Qianhai
Development (Shenzhen) Fund
Management Co., Ltd., (iv) Beijing Sinobioway Group Co., Ltd., (v)
CITIC M&A Fund Management Co., Ltd., (vi) Heng Feng Investments
(International) Limited, and (vii) Fuerde Global Investment Limited
(collectively, the "Sinobioway Consortium"), pursuant to which the
Sinobioway Consortium proposed to acquire the Company for cash
consideration equal to $8.00 per
common share (the "Sinobioway Transaction").During the course of
the following three months, the Special Committee and its advisors
sought to clarify the terms of the Sinobioway Proposal, including
the financing of the Sinobioway Transaction, and the likelihood of
consummating the Sinobioway Transaction, with the Sinobioway
Consortium and its advisors. In late October, the Special Committee
determined, after consultation with its advisors, that negotiations
with respect to the Sinobioway Proposal were not permitted under
the Amalgamation Agreement based on the information provided by the
Sinobioway Consortium prior to such determination.
Updates on internal investigations
In December 2016, the Company's
audit committee engaged Latham & Watkins as independent counsel
to assist with an internal investigation regarding a media article
published and the allegations in a research report that the
Company's Chief Executive Officer was involved in the bribery of
the former Deputy Director General of the Center for Drug
Evaluation ("CDE") of the Chinese Food and Drug Administration
("CFDA"). In June 2017, the Company
became aware of certain judgments based on bribery charges issued
by Chinese courts in four provinces against various officials of
the Chinese Center for Disease Control (the "CDC"). While these
judgments appear to reflect an industry-wide investigation focused
on CDC officials, they also referenced eight of the Company's
former and current salespersons, together with sales personnel from
several other Chinese vaccine companies and distributors. These
judgments did not name, and no charges were brought against, the
Company or any of its directors, officers or employees as
defendants. The eight referenced employees cooperated with the
procuratorate. Upon becoming aware of these judgments, the
Company's audit committee expanded its internal investigation to
review matters related to these judgments and the Company's sales
practices and policies and further engaged Latham & Watkins to
continue the independent investigation with the expanded scope. The
internal investigation has been completed but could be subject to
further requests for the Company's cooperation with various
government agencies.
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. 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 visit the Company's website at
www.sinovac.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. 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 and adverse general
economic conditions in the United
States and internationally. 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 EBITDA, non-GAAP
net income from continuing operations and non-GAAP diluted EPS from
continuing operations. 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 EBITDA, non-GAAP net income from
continuing operations and non-GAAP diluted EPS from continuing
operations help identify underlying trends in its business that
could otherwise be distorted by the effect of certain income or
expenses that Sinovac includes in income from operations from
continuing operations, net income from continuing operations and
diluted EPS from continuing operations. Sinovac believes that
non-GAAP EBITDA, non-GAAP net income from continuing operations and
non-GAAP diluted EPS from continuing operations 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 EBITDA, non-GAAP net income from continuing operations and
non-GAAP diluted EPS from continuing operations should not be
considered in isolation or construed as an alternative to income
from operations from continuing operations, net income from
continuing operations, diluted EPS from continuing operations, 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 EBITDA represents income (loss) from continuing
operations, 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 from continuing operations represents
net income from continuing operations before share-based compensation expenses, and
foreign exchange gain or loss.
Non-GAAP diluted EPS from continuing operations
represents non-GAAP net income attributable to ordinary
shareholders from continuing operations 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.
Contact
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
SINOVAC BIOTECH
LTD.
|
Consolidated
Balance sheets
|
As of December 31,
2016 and December 31, 2015
|
(Expressed in
thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
Current
assets
|
|
|
|
(Restated)
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
62,434
|
$
|
63,834
|
Restricted
cash
|
|
3,007
|
|
1,626
|
Accounts receivable -
net
|
|
49,832
|
|
39,021
|
Inventories
|
|
14,102
|
|
18,655
|
Prepaid expenses and
deposits
|
|
1,372
|
|
958
|
Deferred tax
assets
|
|
3,492
|
|
2,603
|
Current assets held
for sale
|
|
-
|
|
1,797
|
Total current
assets
|
|
134,239
|
|
128,494
|
|
|
|
|
|
Property, plant and
equipment
|
|
66,882
|
|
63,913
|
Prepaid land lease
payments
|
|
8,697
|
|
9,574
|
Long-term
inventories
|
|
98
|
|
-
|
Long-term prepaid
expenses
|
|
23
|
|
25
|
Prepayment for
acquisition of equipment
|
|
964
|
|
328
|
Deferred tax
assets
|
|
452
|
|
593
|
Total
assets
|
|
211,355
|
|
202,927
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term bank loans
and current portion of long-term bank loans and other
debt
|
|
31,279
|
|
21,775
|
Loan from a
non-controlling shareholder
|
|
2,304
|
|
2,470
|
Accounts payable and
accrued liabilities
|
|
24,960
|
|
22,661
|
Income tax
payable
|
|
3,178
|
|
1,643
|
Deferred
revenue
|
|
2,766
|
|
8,144
|
Deferred government
grants
|
|
1,777
|
|
1,202
|
Current liabilities
held for sale
|
|
-
|
|
243
|
Total current
liabilities
|
|
66,264
|
|
58,138
|
|
|
|
|
|
Deferred government
grants
|
|
2,953
|
|
4,730
|
Long-term bank
loans
|
|
9,448
|
|
756
|
Deferred
revenue
|
|
89
|
|
-
|
Other non-current
liabilities
|
|
2,935
|
|
2,798
|
Total long-term
liabilities
|
|
15,425
|
|
8,284
|
|
|
|
|
|
Total
liabilities
|
|
81,689
|
|
66,422
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
Common
stock
|
|
57
|
|
57
|
Additional paid in
capital
|
|
112,668
|
|
109,944
|
Accumulated other
comprehensive income
|
|
168
|
|
8,182
|
Statutory surplus
reserves
|
|
14,788
|
|
13,450
|
Accumulated
deficit
|
|
(11,914)
|
|
(9,980)
|
Total
shareholders' equity
|
|
115,767
|
|
121,653
|
|
|
|
|
|
Non-controlling
interests
|
|
13,899
|
|
14,852
|
Total
equity
|
|
129,666
|
|
136,505
|
Total liabilities
and equity
|
$
|
211,355
|
$
|
202,927
|
SINOVAC BIOTECH
LTD.
|
Consolidated
Statements of Comprehensive Income (loss)
|
For the three and
twelve months ended December 31, 2016 and 2015
|
(Expressed in
thousands of U.S. Dollars, except for numbers of shares and per
share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December
31
|
|
Twelve
months ended
December 31
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Restated)
|
|
|
|
(Restated)
|
Sales
|
$
|
31,365
|
$
|
22,952
|
$
|
72,431
|
$
|
67,414
|
Cost of
sales
|
|
8,325
|
|
7,268
|
|
22,393
|
|
18,408
|
Gross
profit
|
|
23,040
|
|
15,684
|
|
50,038
|
|
49,006
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
15,236
|
|
11,701
|
|
41,980
|
|
37,481
|
Provision
(recovery) for doubtful accounts
|
|
358
|
|
(545)
|
|
1,412
|
|
(49)
|
Research and
development expenses
|
|
3,579
|
|
2,865
|
|
12,648
|
|
9,490
|
Loss on
disposal of property, plant and equipment
|
|
49
|
|
52
|
|
478
|
|
26
|
Government
grants recognized in income
|
|
(6,171)
|
|
(1,136)
|
|
(6,984)
|
|
(1,637)
|
Total
operating expenses
|
|
13,051
|
|
12,937
|
|
49,534
|
|
45,311
|
Operating
income
|
|
9,989
|
|
2,747
|
|
504
|
|
3,695
|
|
|
|
|
|
|
|
|
|
Interest and
financing expenses
|
|
(593)
|
|
(418)
|
|
(1,729)
|
|
(1,920)
|
Interest
income
|
|
139
|
|
206
|
|
731
|
|
1,155
|
Other income
(expenses)
|
|
(114)
|
|
(288)
|
|
100
|
|
(174)
|
Income
(loss) from continuing operationgs before income
taxes
|
|
9,421
|
|
2,247
|
|
(394)
|
|
2,756
|
Income tax
expense
|
|
(2,609)
|
|
(1,727)
|
|
(2,664)
|
|
(2,985)
|
Income
(loss) from continuing operations
|
|
6,812
|
|
520
|
|
(3,058)
|
|
(229)
|
Income
(loss) from discontinued operations, net of tax of
nil
|
|
-
|
|
(109)
|
|
2,338
|
|
(728)
|
Net Income
(loss)
|
|
6,812
|
|
411
|
|
(720)
|
|
(957)
|
Less: (Income)
loss attributable to the non-controlling interests
|
(2,363)
|
|
(249)
|
|
124
|
|
(459)
|
Net income
(loss) attributable to shareholders of Sinovac
|
|
4,449
|
|
162
|
|
(596)
|
|
(1,416)
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
6,812
|
|
520
|
|
(3,058)
|
|
(229)
|
Other
comprehensive loss from continuing operations, net of tax of
nil
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
(4,079)
|
|
(1,281)
|
|
(8,843)
|
|
(4,047)
|
Comprehensive income (loss) from continuing
operations
|
|
2,733
|
|
(761)
|
|
(11,901)
|
|
(4,276)
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations
|
|
-
|
|
(109)
|
|
2,338
|
|
(728)
|
Other
comprehensive income (loss) from discontinued operations, net of
tax of nil
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
-
|
|
(338)
|
|
-
|
|
(338)
|
Comprehensive income (loss) from
discontinued operations
|
|
-
|
|
(447)
|
|
2,338
|
|
(1,066)
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
2,733
|
|
(1,208)
|
|
(9,563)
|
|
(5,342)
|
Less:
comprehensive (income) loss attributable to non-controlling
interests
|
|
(1,875)
|
|
(14)
|
|
953
|
|
82
|
Comprehensive income (loss) attributable to
shareholders of Sinovac
|
$
|
858
|
$
|
(1,222)
|
$
|
(8,610)
|
$
|
(5,260)
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
0.08
|
|
0.00
|
|
(0.05)
|
|
(0.02)
|
Discontinued
operations
|
|
0.00
|
|
0.00
|
|
0.04
|
|
(0.01)
|
Basic net income
(loss) per share
|
|
0.08
|
|
0.00
|
|
(0.01)
|
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
0.08
|
|
0.00
|
|
(0.05)
|
|
(0.02)
|
Discontinued
operations
|
|
0.00
|
|
0.00
|
|
0.04
|
|
(0.01)
|
Diluted net income
(loss) per share
|
|
0.08
|
|
0.00
|
|
(0.01)
|
|
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares of common stock
outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
56,983,365
|
|
56,871,543
|
|
56,949,083
|
|
56,313,927
|
Diluted
|
|
57,017,663
|
|
56,975,872
|
|
56,949,083
|
|
56,313,927
|
|
|
|
|
|
|
|
|
|
SINOVAC BIOTECH
LTD.
|
Consolidated
Statements of Cash Flows
|
For the three and
twelve months ended December 31, 2016 and 2015
|
(Expressed in
thousands of U.S. Dollars)
|
|
Three months
ended
|
Twelve months
ended
|
|
|
December
31
|
|
December
31
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Restated)
|
|
|
|
(Restated)
|
Cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
6,812
|
|
520
|
|
(3,058)
|
|
(229)
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
- Deferred
income taxes
|
|
(609)
|
|
(567)
|
|
(1,007)
|
|
(333)
|
- Share-based
compensation
|
|
1,462
|
|
315
|
|
2,409
|
|
952
|
- Inventory
provision
|
|
3,176
|
|
1,321
|
|
6,377
|
|
1,820
|
- Provision
(recovery) for doubtful accounts
|
|
358
|
|
(545)
|
|
1,412
|
|
(49)
|
- Loss on
disposal and impairment of property, plant and equipment
|
|
49
|
|
52
|
|
478
|
|
26
|
- Government
grants recognized in income
|
|
(5,821)
|
|
(1,136)
|
|
(6,984)
|
|
(1,637)
|
- Depreciation
of property, plant and equipment and amortization of
licenses
|
966
|
|
1,305
|
|
5,063
|
|
6,258
|
- Amortization
of prepaid land lease payments
|
|
60
|
|
64
|
|
247
|
|
261
|
- Accretion
expenses
|
|
-
|
|
30
|
|
-
|
|
120
|
Changes
in:
|
|
|
|
|
|
|
|
|
- Accounts
receivable
|
|
(4,617)
|
|
7,480
|
|
(15,122)
|
|
41
|
-
Inventories
|
|
1,803
|
|
3,280
|
|
(3,025)
|
|
28
|
- Income tax
payable
|
|
2,551
|
|
1,373
|
|
1,720
|
|
576
|
- Prepaid
expenses and deposits
|
|
(194)
|
|
(176)
|
|
(436)
|
|
434
|
- Deferred
revenue
|
|
2,845
|
|
(2,523)
|
|
(4,959)
|
|
(3,639)
|
- Accounts
payable and accrued liabilities
|
|
(219)
|
|
3,895
|
|
2,739
|
|
(275)
|
- Other
non-current liablitites
|
|
339
|
|
750
|
|
339
|
|
756
|
- Restricted
cash
|
|
(2,843)
|
|
(1,677)
|
|
(1,557)
|
|
(1,677)
|
- Time
deposits
|
|
-
|
|
-
|
|
-
|
|
1,500
|
Net cash provided
by (used in) operating activities from continuing
operations
|
|
6,118
|
|
13,761
|
|
(15,364)
|
|
4,933
|
Net cash used in
operating activities from discontinued operations
|
|
-
|
|
(31)
|
|
(95)
|
|
(722)
|
Net cash provided
by (used in) operating activities
|
|
6,118
|
|
13,730
|
|
(15,459)
|
|
4,211
|
|
|
|
|
|
|
|
|
|
Cash flows
provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
- Proceeds from
bank loans
|
|
10,479
|
|
6,923
|
|
45,462
|
|
21,312
|
- Repayments of
bank loans
|
|
(3,568)
|
|
(9,572)
|
|
(24,850)
|
|
(46,786)
|
- Proceeds from
issuance of common stock, net of share issuance costs
|
133
|
|
181
|
|
315
|
|
732
|
- Proceeds from
shares subscribed
|
|
(24)
|
|
18
|
|
-
|
|
18
|
- Government
grant received
|
|
746
|
|
146
|
|
6,857
|
|
544
|
- Repayment of
loan from a non-controlling shareholder
|
|
-
|
|
(16)
|
|
-
|
|
(16)
|
Net cash provided
by (used in) financing activities
|
|
7,766
|
|
(2,320)
|
|
27,784
|
|
(24,196)
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities
|
|
|
|
|
|
|
|
|
- Proceeds from
disposal of equipment
|
|
26
|
|
81
|
|
26
|
|
81
|
- Acquisition
of property, plant and equipment
|
|
(4,432)
|
|
(2,024)
|
|
(12,654)
|
|
(5,299)
|
- Proceeds from
disposal of subsidiary
|
|
(14)
|
|
801
|
|
861
|
|
801
|
Net cash used in
investing activities from continuing operations
|
|
(4,420)
|
|
(1,142)
|
|
(11,767)
|
|
(4,417)
|
Net cash used in
investing activities from discontinued operations
|
-
|
|
-
|
|
(9)
|
|
(98)
|
Net cash used in
investing activities
|
|
(4,420)
|
|
(1,142)
|
|
(11,776)
|
|
(4,515)
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents, including cash
classified within current assets held for sale
|
|
(1,346)
|
|
(651)
|
|
(2,092)
|
|
(1,541)
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents, including cash classified
within current assets held for sale
|
|
8,118
|
|
9,617
|
|
(1,543)
|
|
(26,041)
|
Less: Net decrease in
cash classified within current assets for sale
|
|
-
|
|
(22)
|
|
(143)
|
|
(82)
|
Increase
(decrease) in cash and cash equivalents
|
|
8,118
|
|
9,639
|
|
(1,400)
|
|
(25,959)
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
54,316
|
|
54,195
|
|
63,834
|
|
89,793
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$
|
62,434
|
$
|
63,834
|
$
|
62,434
|
$
|
63,834
|
|
|
|
|
|
|
|
|
|
SINOVAC BIOTECH
LTD.
|
Reconciliations of
Non-GAAP measures to the nearest comparable GAAP
measures
|
For the three and
twelve months ended December 31, 2016 and 2015
|
(Expressed in
thousands of U.S. Dollars, except for numbers of shares and per
share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December
31
|
|
Twelve
months ended December 31
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Restated)
|
|
(Unaudited)
|
|
(Restated)
|
Income
(loss) from continuing operations
|
|
6,812
|
|
520
|
|
(3,058)
|
|
(229)
|
Adjustments:
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
1,462
|
|
315
|
|
2,409
|
|
952
|
Depreciation and amortization
|
|
1,026
|
|
1,369
|
|
5,310
|
|
6,519
|
Interest
and financing expenses, net of interest income
|
|
454
|
|
212
|
|
998
|
|
765
|
Net
other (income) expense
|
|
114
|
|
288
|
|
(100)
|
|
174
|
Income
tax expense
|
|
2,609
|
|
1,727
|
|
2,664
|
|
2,985
|
Non-GAAP
EBITDA
|
|
12,477
|
|
4,431
|
|
8,223
|
|
11,166
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
6,812
|
|
520
|
|
(3,058)
|
|
(229)
|
Add:
Foreign exchange loss
|
|
501
|
|
585
|
|
942
|
|
865
|
Add:
Share-based compensation
|
|
1,462
|
|
315
|
|
2,409
|
|
952
|
Non-GAAP net
income (loss) from continuing operations
|
|
8,775
|
|
1,420
|
|
293
|
|
1,588
|
|
|
|
|
|
|
|
|
|
Net Income
(loss) from continuing operaitons attributable to shareholders of
Sinovac
|
|
4,449
|
|
271
|
|
(2,934)
|
|
(688)
|
Add: Non-GAAP
adjustments to net income from continuing
operaitons
|
|
1,963
|
|
900
|
|
3,351
|
|
1,817
|
Non-GAAP net
income attributable to shareholders of Sinovac from continuing
operations for computing non-GAAP diluted earnings (loss) per
share
|
|
6,412
|
|
1,171
|
|
417
|
|
1,129
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares on a diluted basis
|
|
57,017,663
|
|
56,975,872
|
|
56,949,083
|
|
56,313,927
|
Diluted
earnings (loss) per share from continuing
operations
|
|
0.08
|
|
0.00
|
|
(0.05)
|
|
(0.02)
|
Add: Non-GAAP
adjustments to net income per share from continuing
operatons
|
|
0.03
|
|
0.02
|
|
0.06
|
|
0.03
|
Non-GAAP
Diluted earnings per share from continuing
operations
|
|
0.11
|
|
0.02
|
|
0.01
|
|
0.01
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/sinovac-files-2016-annual-report-on-form-20-f-and-reports-unaudited-fourth-quarter-2016-financial-results-300560961.html
SOURCE Sinovac Biotech Ltd.