3SBio's Q3 Hurt by Lehman Bankruptcy

3SBio Inc. (SSRX) announced a $2.7 million writedown as a consequence of the U.S. financial crisis. The company invested in $3 million of Floating Rate Notes due January 21, 2009 that are subject to the credit of Lehman Brothers. As a consequence of the Lehman Brothers bankruptcy, the notes have been given a value of $300,000. The notes were credit default swaps issued by UBS AG, and they are linked to credit of Lehman Brothers Holdings Inc.

3SBio said that the rest of its 58.7 million RMB ($8.6 million) bond portfolio is in good shape. It also noted a $99.5 million cash balance at the end of the third quarter.

3SBio made the announcement as part of its preliminary Q3 unaudited results. The company said its Q3 revenues climbed 22% to 68.2 million RMB ($10.0 million). However, because of the charge, net income dropped to 1.9 million RMB ($0.3 million), or $0.01 per ADS. In last year’s Q3, 3SBio reported revenues of $7.5 million and net income of $3.2 million. 3SBio cautioned that this year’s numbers, being preliminary, are subject to revision.

The company reiterated its full-year 2008 revenue guidance of $34 to $35 million.
3SBio slipped 24 cents lower to $6 in Monday’s trading. It has traded in a range between $5.16 and $20 over the past 12 months.

Disclosure: none.