3SBio Inc (SSRX)

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3SBio Inc. Announces Unaudited Third Quarter 2009 Results
Third quarter revenue grew 35.8% year-over-year to RMB92.6 million (US$13.6 million); Operating income grew 37.8% year-over-year to RMB28.5 million (US$4.2 million); Company reiterates FY2009 revenue guidance

Press Release
Source: 3SBio Inc.
On 5:58 pm EST, Thursday November 12, 2009

Companies:3sbio Inc.
SHENYANG, China, Nov. 12 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. (Nasdaq: SSRX - News; "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 third quarter ended September 30, 2009.

Third Quarter 2009 Financial Highlights:

-- Total net revenues increased by 35.8% over the third quarter of 2008 to
RMB92.6 million (US$13.6 million).
-- Operating income increased by 37.8% over the third quarter of 2008 to
RMB28.5 million (US$4.2 million) on a GAAP basis, and increased by
34.7% over the third quarter of 2008 to RMB29.8 million (US$4.4
million) on a non-GAAP basis.
-- Net income increased by 1343.5% over the third quarter of 2008 to
RMB26.9 million (US$3.9 million) on a GAAP basis, and increased by
25.6% over the third quarter of 2008 to RMB28.2 million (US$4.1
million) on a non-GAAP basis.
-- Net income per American Depositary Share ("ADS") for the third quarter
of 2009 was RMB1.25 (US$0.18) compared with RMB0.09 (US$0.01) for the
third quarter of 2008 on a GAAP basis, and RMB1.31 (US$0.19) for the
third quarter of 2009 compared with RMB1.03 (US$0.15) for the third
quarter of 2008 on a non-GAAP basis.

First Nine Months 2009 Financial Highlights:

-- Total net revenues in the first nine months of 2009 increased by 32.5%
to RMB242.6 million (US$35.5 million) compared to RMB183.2 million
(US$27.0 million) in the first nine months of 2008.
-- Operating income increased by 48.6% over the first nine months of 2008
to RMB74.5 million (US$10.9 million) on a GAAP basis, and increased by
44.3% to RMB77.5 million (US$11.4 million) on a non-GAAP basis.
-- Net income increased by 70.2% over the first nine months of 2008 to
RMB69.8 million (US$10.2 million) on a GAAP basis, and increased by
19.0% over the first nine months of 2008 to RMB75.8 million (US$11.1
million) on a non-GAAP basis.
-- Net income per ADS on a fully-diluted basis for the first nine months
of 2009 was RMB3.24 (US$0.47) compared with RMB1.89 (US$0.28) for the
first nine months of 2008 on a GAAP basis, and RMB3.52 (US$0.52)
compared with RMB2.93 (US$0.43) for the first nine months of 2008 on a
non-GAAP basis.

Third Quarter 2009 Business Highlights

-- EPIAO, the Company's flagship injectable recombinant human
erythropoietin ("EPO") product, demonstrated strong growth with net
revenue from EPIAO in the third quarter of 2009 rising 32.6% to RMB56.6
million (US$8.3 million) compared to RMB42.7 million (US$6.3 million)
in the third quarter of 2008.
-- Net revenues for TPIAO, the Company's novel recombinant human
thrombopoietin ("TPO") product, increased by 41.3% to RMB27.9 million
(US$4.1 million) in the third quarter of 2009, compared to RMB19.7
million (US$2.9 million) in the third quarter of 2008.
-- Construction of the new EPIAO and TPIAO manufacturing plant in Shenyang
remains on schedule for completion this year in preparation for
validation and certification next year.
-- Dr. Jing Lou, chief executive officer of 3SBio, commented:
"Overall, the business is performing as expected with a strong set of
results this quarter and we reiterate our full-year guidance of
US$43-45 million. Construction of our new plant remains on schedule and
we look forward to moving to validation and certification next year. We
continued to develop our product pipeline and will update the market
when we have reached significant milestones in the approval process."


Three months ended September 30, 2009 Unaudited Financial Results

Net revenues. Net revenues increased by 35.8% to RMB92.6 million (US$13.6 million) for the third quarter of 2009 from RMB68.2 million (US$10.0 million) for the same period in 2008. This increase was largely due to continued strength from EPIAO and TPIAO products, which increased by 32.6% and 41.3%, respectively, over the same period in 2008. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for 30.1% of total net revenues. Export sales declined by 6.4% to RMB2.3 million (US$0.3 million), and revenues from our in-licensed IV Iron Sucrose supplement rose 113.7% to RMB3.7 million (US$0.5 million).

Gross profit. As a result of continued sales growth from key products, GAAP gross profit for the third quarter of 2009 increased by 38.3% to RMB86.1 million (US$12.6 million) from RMB62.2 million (US$9.2 million) for the same period in 2008. GAAP gross margin increased by 1.7% to 93.0% for the third quarter of 2009 from 91.3% for the same period in 2008.

Operating expenses. GAAP operating expenses were RMB57.6 million (US$8.4 million) for the third quarter of 2009, an increase of 38.6% from GAAP operating expenses of RMB41.5 million (US$6.1 million) for the same period in 2008. Non-GAAP operating expenses were RMB56.4 million (US$8.3 million) for the third quarter of 2009, an increase of 40.3% from non-GAAP operating expenses of RMB40.2 million (US$5.9 million) for the same period in 2008. The increase in operating expenses was largely driven by higher R&D expenses, particularly at the early stage of the pipeline.


-- Research and development ("R&D") costs. GAAP R&D costs for the third
quarter of 2009 were RMB7.6 million (US$1.1 million), or 8.2% of net
revenue, compared to RMB4.2 million (US$0.6 million), or 6.2% of net
revenue for the same period in 2008.

-- Sales, marketing and distribution expense. GAAP sales, marketing and
distribution expenses for the third quarter of 2009 were RMB41.6
million (US$6.1 million), or 44.9% of net revenue, compared to RMB29.3
million (US$4.3 million), or 42.9% of net revenue, for the same period
in 2008. The increase was primarily attributable to higher sales
activities in general and continued investment in building the TPIAO
and EPIAO brands.

-- General and administrative expenses. GAAP general and administrative
expenses for the third quarter of 2009 were RMB8.4 million (US$1.2
million), representing an increase of 4.6% from general and
administrative expenses of RMB8.0 million (US$1.2 million) for the same
period in 2008. This marked a decline to 9.1% of net revenue for the
third quarter of 2009, compared to 11.8% of net revenue for the third
quarter of 2008.

Operating income. GAAP operating income was RMB28.5 million (US$4.2 million) for the third quarter of 2009, an increase of 37.8% from operating income of RMB20.7 million (US$3.1 million) for the same period in 2008. Non-GAAP operating income for the third quarter of 2009 grew by 34.7% to RMB29.8 million (US$4.4 million), compared to RMB22.1 million (US$3.3 million) in the third quarter of 2008.

GAAP operating margin for the third quarter of 2009 was 30.8% as compared to 30.4% for the same period in 2008. Non-GAAP operating margin was 32.2% for the third quarter of 2009, as compared to 32.4% in the same period in 2008.

Interest income. The Company recorded net interest income of RMB2.6 million (US$0.4 million) for the third quarter of 2009, compared to RMB5.5 million (US$0.8 million) for the same period in 2008.

Net income. GAAP net income was RMB26.9 million (US$3.9 million) for the third quarter of 2009, 1343.5% higher than net income of RMB1.9 million (US$0.3 million) for the same period in 2008. GAAP net income per ADS on a fully-diluted basis for the third quarter of 2009 increased to RMB1.25 (US$0.18) from RMB0.09 (US$0.01) for the same period in 2008. GAAP net margin for the third quarter of 2009 was 29.1% as compared to 2.7% for the same period in 2008.

Non-GAAP net income for the third quarter of 2009 was RMB28.2 million (US$4.1 million), 25.6% higher than non-GAAP net income of RMB22.4 million (US$3.3 million) for the same period in 2008. Non-GAAP net income per ADS on a fully diluted basis for the third quarter of 2009 increased to RMB1.31 (US$0.19) from RMB1.03 (US$0.15) for the same period in 2008. Non-GAAP net margin for the third quarter of 2009 was 30.4% as compared to 32.9% for the same period in 2008.

Nine months ended September 30, 2009 Unaudited Financial Results

Net revenues. Net revenues for the first nine months of 2009 increased by 32.5% to RMB242.6 million (US$35.5 million), from RMB183.2 million (US$27.0 million) for the same period in 2008. The increase was primarily attributable to increased sales from our EPIAO and TPIAO products, underpinned by continued strong demand in the oncology and nephrology markets.

Net revenues from EPIAO for the first nine months of 2009 increased by 30.6% to RMB150.5 million (US$22.1 million) from RMB115.2 million (US$17.0 million) for same period in 2008. Net revenues from TPIAO in the first nine months of 2009 increased by 34.4% to RMB68.8 million (US$10.1 million) from RMB51.2 million (US$7.5 million) for the same period in 2008. In addition, revenue from our export business was RMB9.1 million (US$1.3 million), representing an increase of 27.9% over the first nine months of 2008, while revenue from our in-licensed IV Iron Sucrose supplement was RMB8.7 million (US$1.3 million), representing an increase of 67.7% over the first nine months of 2008.

Gross profit. GAAP gross profit for the first nine months of 2009 increased by 33.9% to RMB223.7 million (US$32.8 million) from RMB167.1 million (US$24.6 million) for the same period in 2008. GAAP gross margin increased by 1.0% to 92.2% for the first nine month months of 2009 from 91.2% for the same period in 2008.

Operating income. For the first nine months ended September 30, 2009, GAAP operating income increased by 48.6% to RMB74.5 million (US$10.9 million), compared to RMB50.1 million (US$7.4 million) for the same period in 2008. Non- GAAP operating income increased by 44.3% to RMB77.5 million (US$11.4 million), compared to RMB53.7 million (US$7.9 million) for the same period in 2008.

GAAP operating margin for the first nine months ended September 30, 2009 was 30.7% as compared to 27.3% for the nine months ended September 30, 2008. Non-GAAP operating margin was 31.9% for the nine months ended September 30, 2009, as compared to 29.3% in the same period in 2008.

Net income. GAAP net income for the first nine months of 2009 increased by 70.2% to RMB69.8 million (US$10.2 million) compared with RMB41.0 million (US$6.0 million) for the same period in 2008. GAAP net margin for the first nine months ended September 30, 2009 was 28.8% as compared to 22.4% for the same period in 2008. GAAP net income per ADS on a fully diluted basis for the first nine months of 2009 increased to RMB3.24 (US$0.47) from RMB1.89 (US$0.28) for the same period in 2008.

Non-GAAP net income for the first nine months of 2009 increased by 19.0% to RMB75.8 million (US$11.1 million) compared with RMB63.7 million (US$9.4 million) for the same period in 2008. Non-GAAP net margin for the first nine months ended September 30, 2009 was 31.2% as compared to 34.8% for the same period in 2008. Non-GAAP net income per ADS for the first nine months of 2009 increased to RMB3.52 (US$0.52) from RMB2.93 (US$0.43) for the same period in 2008.

Cash and cash equivalents / Time deposits. 3SBio had positive operating cash flows of RMB61.6 million (US$9.0 million) for the first nine months of 2009, and as of September 30, 2009 retained a strong balance sheet with cash, cash equivalents and time deposits of RMB731.5 million (US$107.2 million), a 0.2% decrease from RMB733.0 million (US$107.4 million) as of December 31, 2008.

2009 Full Year Guidance

Based on current market conditions and visibility provided during the third quarter, the Company reiterates its total net revenue target for the full year of 2009 of between US$43 million to US$45 million, resulting in a year-over-year increase of approximately 21% to 26%.

Conference Call

3SBio's senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 9:00 pm (Beijing/Hong Kong) on November 13, 2009 to discuss its 2009 third quarter financial results and recent business activity. The conference call may be accessed using the dial-in numbers below:


Conference ID: 38479039

Local dial-in:
China - landline 800-819-0121
China - mobile [phone]

International toll-free dial-in:
Hong Kong 800930346
United Kingdom 080-8234-6646
United States 1-866-519-4004
International toll dial-in: 65-6735-7955

Replay- Conference ID: 38479039
A telephone replay will be available two hours after the call until
November 20, 2009, at:
International dial-in: [phone]
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/yf93ntk . A replay of the webcast will be available within one hour after the conclusion of the call.