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China Biologic Products, Inc. (NASDAQ:CBPO) received permission from the SFDA to begin a clinical trial of its new Human Coagulation Factor VIII product [FVIII], a coagulation treatment for hemophilia and mass hemorrhaging. China Biologic focuses on plasma-based products. Because plasma has been in short supply in China, prices for all plasma-based products have been high, and China Biologic’s financial fortunes have risen.

China Biologic is one of four China suppliers of Cryoprecipitate, the key raw material for FVIII. The company has been supplying Cryoprecipitate to Green Cross China, which Green Cross China uses to produce FVIII. The company signed the contract with Green Cross China in February 2008 and expected it to bring in $430,000 in revenues per year. From the start, China Biologic’s longer-term plan was to work toward producing FVIII on its own. The SFDA approval allows the company to run clinical trials for 200 IU and 300 IU doses of FVIII.

China Biologic expects to receive results by mid-2009 and to begin production in early 2010, if the clinical study is successful.

Chao Ming Zhao, the company’s CEO, said FVIII will be a high-margin product because it can be produced from plasma that would otherwise be discarded.

In the last twelve months, China Biologic reported net income of $8.4 million (non-GAAP) on revenues of $35.7 million. In the first half of 2008, revenues climbed 20% to nearly $20 million.

China Biologic collects almost 10% of the total amount of plasma in China from its seven collecting stations. In part, the company’s increasing percentage is a result of more stringent regulation that has had the effect of reducing total collection in China from 5000 tons in 2005 to 2700 tons in 2007. While the company is attempting to increase the amount of plasma it collects each year, it is sworking to enlarge its portfolio of plasma-based products and to extend its geographical reach inside China. At present, 42% of its sales are in Shandong province. China Biologic is increasing marketing efforts in Jiangsu, Zhejiang, Henan and northeastern China.

At its current price of $2.25 per share, China Biologic has a trailing 12-months Price/Earnings ratio of 6 and a market capitalization of $50 million. The company ended the second quarter with $8.8 million in cash.

Disclosure: none.

Source: China Biologic to Test New Plasma Product