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Sinovac Biotech Ltd. (NSDQ: SVA), the Beijing biopharma whose flu vaccines suddenly became very profitable in the second half of last year, released its 2009 financial results this week. Revenues for the fourth quarter almost tripled, rising 194% to $36.4 million, and sales for the full year rose 81% to $84.2 million. Net income for 2009 climbed 149% to $20 million or 46 cents per share, fully diluted.

The company’s 2009 did not start off well. In its Q1, Sinovac said revenues fell 26% to $6.6 million. But that was before the swine flu scare surfaced in mid-summer. At that point, Sinovac’s fortunes turned around dramatically.

In 2009, sales of the company’s H1N1 vaccine, Panflu.1, were $29.7 million against no sales of the product a year earlier. Seasonal flu vaccines revenues rose to $15 million last year from $4 million in 2008. Those items masked a decline in some of Sinovac’s other products, including its traditional mainstay, the hepatitis B vaccine, Healive. The company said Healive is transitioning from the private to the public market, as China becomes more serious about public health.

The problem for Sinovac is that 2010 will probably see a decline in sales as demand for pandemic flu vaccine slacks off. The company issued 2010 guidance calling for a 10% to 20% increase in non-H1N1 flu vaccine revenues, about $63 million. That represents a $20 million drop from 2009.

The situation for Panflu.1, its pandemic flu vaccine, is more complicated. The government has already purchased 2.15 million of an 11 million dose order. The remaining vaccine will be stockpiled in a company warehouse. If it is not used during the next year, it will be thrown away a year from now, after its use-by date passes. It will be paid for at the time. Sinovac is expecting to include revenues for the warehoused vaccine in 2011.

Sinovac ended 2009 with $75 million in cash. In February, it completed a secondary offering that raised another $62 million. In the analysts’ conference call, the company revealed it plans to spend $80 million in capital expenditures over the next three years:

  • $50 million for its newly purchased Changping facility in Beijing that will produce vaccines for flu and enterovirus 71 (EV 71), which causes hand, foot, and mouth disease; the facility will have capacity to produce 40 million doses and will support Sinovac’s international sales initiative;
  • $22 million dollars for the capital contribution to the Sinovac Dalian JV, which will develop and produce human vaccines, such as rabies, chickenpox, mumps and rubella;
  • $3 million for Tangshan facility to produce an animal rabies vaccine; and
  • $5 million for Beijing headquarters.

The company has a very active R&D program underway. It says it has 50 scientists working on eight major R&D projects. Sinovac filed an application to begin clinical trials of the human EV 71 vaccine in December of 2009.

Disclosure: none.

Source: Sinovac Provides Color to Strong 2009 Results