Sinovac Reports Fourth Quarter and Full Year 2007 Financial Results
Mr. Weidong Yin, Chairman, President and CEO, stated, ''2007 was a recordyear for Sinovac from a commercialization and a clinical developmentstandpoint. Exceeding our internal projections for year-over-year salesgrowth, our 2007 sales increased 118%, due to higher than anticipated sales ofour lead products, Healive(R), our inactivated hepatitis A vaccine, andAnflu(R), our seasonal influenza vaccine, based on the proactive efforts ofour sales organization across China. In addition, we entered a promotionagreement with GSK China for our seasonal influenza vaccine, Anflu(R), andsuccessfully launched a marketing campaign that yielded sales in the secondhalf of the year. We advanced the clinical development of our pandemicinfluenza vaccine formulations. We successfully completed the Phase II trialof our whole viron vaccine in 2007 that led to the submission with the SFDAduring the first quarter of 2008. Most recently during the first quarter of2008, the Phase I trial for the split inactivated vaccine was completed.''
Mr. Weidong Yin, Chairman, President and CEO, continued, ''The fourthquarter results marked our third sequential profitable quarter. Our quarterlysales reflected the continued demand for our lead product, Healive(R), ourinactivated hepatitis A vaccine. Healive(R) was recently selected by theBeijing Centers for Disease Control and Prevention for the hepatitis Avaccination program.''
Full Year 2007
For twelve months ended December 2007, sales increased 118% to $33.5million, compared to $15.4 million for 2006. The growth was attributable tostrong sales of the Company's inactivated hepatitis A vaccine, Healive(R), andongoing marketing initiatives in support of the Company's seasonal influenzavaccine, Anflu(R).
Gross profit for 2007 was $27.0 million, with a gross margin of 80.6%,compared to $11.1 million and 72.4%, respectively, for 2006. The higher grossmargin resulted from the increased economies of scale and lower average unitcosts associated with Healive(R) production and reflected normalized Anflu(R)production expenses.
Total operating expenses for the full year 2007 increased to $13.6million, compared to $10.7 million in the same period of 2006. Selling,general and administrative (''SG&A'') expenses for 2007 were $12.0 million,compared to $9.8 million for 2006. The year-over-year increase in SG&Aexpenses reflected increased selling expense that is in line with the increasein sales, offset by decreased bad debt provision due to improvement inaccounts receivable collection, decreased lower stock-based compensation andreduced consulting fees.
Aggregated research and development expenses for the full year 2007 were$1.8 million, compared to $1.2 million for 2006. The Company's net R&Dexpenses were $965,000 for 2007, compared to $325,000 for 2006. The R&Dexpenses recognized as a reduction to government grants were $844,000 for2007, compared to $845,000 for 2006.
Operating income was $13.5 million for the full year 2007, compared to$440,000 for 2006. The year-over-year increase in operating income reflectedthe significant increase in vaccine sales.
Net income for the twelve months ended December 31, 2007 was $7.7 million,or $0.19 per diluted share, compared to a net loss of $696,000, or $0.02 perdiluted share, for 2006. Net income for 2007 included $478,000 of interest andfinancing expenses, $2.0 million of income taxes, and $3.6 million of minorityinterest. Net income for 2006 included $319,000 of interest and financingexpenses, $101,000 of income taxes, and $1.0 million of minority interest.
As of December 31, 2007, Sinovac's cash and cash equivalents totaled $17.1million,
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