3SBio Reports Higher Sales, Flat Earnings

3SBio Inc. (NSDQ: SSRX) announced that 2008 revenues rose 35% to 243 million RMB ($35.7 million). At the same time, following a trend seen in much of China biopharma, net income failed to keep pace with the increase in revenue. 3SBio said non-GAAP net income was 75 million RMB ($11 million) for the year, almost even with 2007’s results.

In Q4, revenues jumped 32% to 60 million RMB ($8.8 million), while non-GAAP net income declined 27% to 11 million RMB ($1.7 million). The company’s GAAP net loss for Q4 was 2.3 million RMB ($0.3 million). 3SBio did not attempt to explain the loss except to say that GAAP operating expenses jumped 68% higher during the fourth quarter.

For the full-year non-GAAP number, the company excluded a $1 million one-time upfront payment for a licensing deal with AMAG Pharma, share-based compensation costs, and investment losses.

3SBio reported 2008 sales of EPIAO, its injectable EPO product, grew 28% to 155 million RMB ($22.7 million). In a study, Amgen (NSDQ: AMGN) said EPIAO was the product that was most similar to its own Epogen out of 12 Asian products tested in a study. Sales of TPIAO, 3SBio’s recombinant human thrombopoietin (TPO) products, increased 57% in 2008 to 67.6 million RMB ($9.9 million).

Also on the upside, 3SBio reported it completed three Phase III trials, all of them on schedule, in 2008’s second half. Each has been submitted to the SFDA for approval. They are:

• a large 36,000 IU dosage formulation of EPIAO to treat chemotherapy-associated anemia, allowing a once-weekly treatment that would replace a three-times weekly regime;
• NuLeusin, a second generation genetically modified IL-2 to treat late-stage metastatic renal cell carcinoma, the first treatment of its kind available in China;
• a TPIAO label extension to treat idiopathic thrombocytopenic purpura (ITP) in China, the first of a series of indications being sought to increase the market for TPIAO.

During 2008, 3SBio in-licensed the China rights to Ferumoxytol, a new generation of IV Iron therapy, from AMAG Pharmaceutical. 3SBio will start SFDA registration trials for the product in 2009. The company also hopes to file a request to being clinical trials of NuPIAO, its second generation EPO product, in 2009.

3SBio issued guidance for 2009, saying it expects to book around $44 million in revenue during the year, an increase of 23% over 2008.

3SBio dropped 10% after releasing its report, falling 49 cents to $4.51. At this price, 3SBio has a market capitalization of $97 million, which is lower than the $111 million the company held in cash at the end of 2008. The company’s $11 million profit means it is selling at a price/earnings ratio of less than 9, though the number does not take into account any dilutive effect of additional shares.

Disclosure: none.