SVA Sinovac Biotech Ltd

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2014

--------------

 

Commission File Number: 001-32371

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SINOVAC BIOTECH LTD.

 

No. 39 Shangdi Xi Road

Haidian District

Beijing 100085, People’s Republic of China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F x     Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	SINOVAC BIOTECH LTD.
	By:		/s/ Weidong Yin
	Name:		Weidong Yin
	Title:		Chairman and Chief Executive Officer

 

Date: August 19, 2014

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

Exhibit 99.1

 

Sinovac Reports Unaudited Second Quarter Financial Results

 

-- Conference call scheduled for Friday, August 15, 2014 at 8:00 AM ET --

 

BEIJING, Aug.14, 2014 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter and half year financial results for the period ended June 30, 2014.

 

Second Quarter 2014 Financial Highlights

 

(compared to the second quarter 2013)

 

·

Quarterly sales were $12.1 million, a decrease of 30.7% from $17.5 million in the prior year period. Sales for the first six months were $25.6 million, a decrease of 6.8% YoY from $27.5 million.

 

·

Gross profit was $9.1 million, a decrease of 33.3% from $13.6 million in the prior year period.

 

·

Gross margin was 75.0%, compared to 77.9% in the prior year period.

 

·

Net loss attributable to common stockholders was $2.2 million, or $(0.04) per basic and diluted share, compared to net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the second quarter of 2013.

 

Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "While sales were impacted during the second quarter by short-term challenges from the external market environment, we are continuing to grow our sales channels and make strong progress in the development of our pipeline vaccines."

 

"In July, we received the first tranche of our RMB 60 million government grant to build a dedicated facility for the production of the EV71 vaccine, which is currently under review by the Center for Drug Evaluation. During the second quarter, we received our clinical trial license for the pneumococcal polysaccharide vaccine (PPV) from the CFDA and expect to begin trials later this year."

 

"Although we experienced decreased sales in the second quarter, we remain confident in our ability to execute our proven sales and marketing strategies, and continue to develop new vaccines that are both effective and safe. We expect these initiatives to meaningfully contribute to our performance as market conditions improve." Mr. Yin concluded.

 

Second Quarter 2014 Business Highlights

 

Sales Update

 

Public Tenders Sinovac has been selected by the Beijing Health Bureau as the sole supplier of inactivated hepatitis A vaccine in pre-filled syringe dosage to the Expanded Program of Immunization (EPI) for Beijing. The tender is valued at approximately RMB 16 million. The vaccines purchased by the Beijing Health Bureau will be used for the period from 2014 to 2016. The Company expects to begin delivery in the coming months.

 

Additionally, Sinovac has also been selected by the Beijing Centers for Disease Control and Prevention to be a supplier of the seasonal influenza vaccine to the citizens of Beijing for 2014. The Company expects to begin delivery in the third quarter of 2014.

 

International Sales to Mexico Sinovac obtained its commercialization license for Anflu in Mexico late last year. In early July, the Company delivered its first order of 150,000 doses of Anflu to Mexico, as it continues its efforts in international market expansions.

 

R&D Update

 

PPV The Company received clinical trial approval for its PPV in May. Sinovac has selected a site for the clinical trial and its draft proposal is currently under expert review. The Company expects clinical trials to begin by the end of 2014, following approval by an ethics committee.

 

Other Operation Updates

 

Government Grant In April, Sinovac received approval for a RMB 60 million government grant from China's Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, and National Health and Family Planning Commission for construction of the Company's dedicated EV71 vaccine production facility. Sinovac received the first RMB 20 million of the grant in July. The remainder will be provided once construction and approval criteria are met.

 

VAT Rate Reduction The value added tax (VAT) rate applied to the sales of Sinovac's vaccine products has been reduced to 3% from 6%, as authorized by the Ministry of Finance and State Administration of Taxation of China. The reduced VAT rate was effective July 1, 2014, and therefore did not impact second quarter results. Going forward, the reduced VAT rate will contribute to an improvement in the profitability of the Company's vaccines in Chinese market.

 

Unaudited Financial Results for Second Quarter 2014

 

(In USD'000 except percentage data)		2014 Q2				% of Sales				2013 Q2				% of Sales
Hepatitis A – Healive			5,113				42.3	%			7,021				40.2	%
Hepatitis A&B – Bilive			6,439				53.3	%			9,586				54.9	%
Hepatitis vaccines			11,552				95.6	%			16,607				95.1	%
Influenza vaccine			-				-				48				0.3	%
Animal vaccine			18				0.1	%			65				0.4	%
Mumps vaccine			520				4.3	%			732				4.2	%
Regular sales			12,090				100.0	%			17,452				100.0	%
H5N1			-				-				-				-
Total sales			12,090				100.0	%			17,452				100.0	%
Cost of goods sold			3,025				25.0	%			3,861				22.1	%
Gross profit			9,065				75.0	%			13,591				77.9	%

 

 

In the second quarter 2014, total sales were $12.1 million, a decrease of 30.7% from $17.5 million during the same period in 2013. This decrease was primarily due to softer demand in the private vaccine market. China's CDCs have been also more conservative in their vaccination programs. Nevertheless, the Company achieved record sales in the second quarter of 2013, which resulted in a higher basis for year-over-year comparison.

 

Gross profit was $9.1 million in the second quarter 2014, compared to $13.6 million in the prior year period. Gross margin decreased to 75.0% from 77.9% in the prior year period. The slight decrease in gross margin is attributable to idle capacity in the Company's influenza facility during the second quarter, which was charged to cost of goods sold.

 

Selling, general and administrative expenses for the second quarter 2014 were $8.6 million, compared to $8.8 million in the same period of 2013.

 

R&D expenses for the second quarter of 2014 were $3.3 million, a $1.2 million increase over the same period in 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates, including sIPV, EV71, PPV, and varicella vaccine.

 

Net loss attributable to common stockholders for the second quarter of 2014 was $2.2 million, or $ (0.04) per basic and diluted share, compared to a net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the same period last year.

 

Unaudited Financial Results for First Half of 2014

 

(In USD'000 except percentage data)		2014 H1				% of Sales				2013 H1				% of Sales
Hepatitis A – Healive			11,552				45.1	%			13,199				48.0	%
Hepatitis A&B – Bilive			12,437				48.5	%			12,581				45.7	%
Hepatitis vaccines			23,989				93.6	%			25,780				93.7	%
Influenza vaccine			61				0.2	%			330				1.2	%
Animal vaccine			44				0.2	%			78				0.3	%
Mumps vaccine			1,440				5.6	%			1,316				4.8	%
Regular sales			25,534				99.6	%			27,504				100.0	%
H5N1			102				0.4	%			-				-
Total sales			25,636				100.0	%			27,504				100.0	%
Cost of goods sold			6,303				24.6	%			6,853				24.9	%
Gross profit			19,333				75.4	%			20,651				75.1	%

 

Total sales for the first half of 2014 were $25.6 million, a decrease of 6.8% from $27.5 million in the same period of 2013. Sales for the first half of 2014 were impacted by decreased sales of the Company's hepatitis A vaccine, Healive, as a result of the challenging environment in the private-pay market.

 

Gross profit for the first half of 2014 was $19.3 million, a decrease of 6.4% from $20.7 million in the same period of 2013. Gross margin was 75.4% in the first half of 2014, compared to 75.1% in the same period of 2013.

 

Selling, general and administrative expenses for the first half of 2014 were $16.4 million, compared to $15.9 million for the same period of 2013.

 

R&D expenses in the first half of 2014 were $5.0 million, compared to $3.9 million in the same period of 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates.  

 

Net loss attributable to stockholders in the first half of 2014 was $2.2 million or $(0.04) per basic and diluted share, compared to a net loss of $0.7 million, or $(0.01) per basic and diluted share, in the same period of 2013.

 

As of June 30, 2014, cash and cash equivalents totaled $89.6 million, compared to $107.2 million as of December 31, 2013. Net cash used in operating activities was $11.4 million during the first half of 2014. Net cash used in investing activities was $5.7 million, which was primarily used for payment of property, plant and equipment for the Company's Changping facility. Net cash provided by financing activities was $0.9 million during the first half of 2014, including loan proceeds of $8.9 million and loan repayment of $8.5 million. As of June 30, 2014, the Company had $36.0 million of bank loans due within one year. Sinovac's cash and cash equivalents position of $89.6 million is sufficient to meet both these loan repayment obligations as well as the Company's operational requirements.

 

Conference Call Details

 

Sinovac will host a conference call on Friday, August 15, 2014 at 8:00 a.m. ET (August 15, 2014 at 8:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments.  To access the conference call, please dial 1-877-407-9039 (USA) or 1-201-689-8470 (International).  A replay of the call will be available from 11:00 a.m. ET on August 15, 2014 through August 29, 2014. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13587706.

 

A live audio webcast of the call will also be available on the Investor Relations section of the Company's website at www.sinovac.com. A webcast replay will be available on the Company's website for 30 days following the call, beginning August 15, 2014.

 

About Sinovac

 

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing, and commercialization of vaccines that protect against human infectious diseases. Sinovac's product portfolio includes vaccines against hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), mumps and canine rabies. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government stockpiling program. Sinovac has filed a new drug application with the China Food & Drug Administration for its proprietary enterovirus 71 vaccine, having been proven effective in preventing hand, foot and mouth disease in infants and children during its Phase III clinical trial. The Company is currently developing a number of new products including a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine. Sinovac primarily sells its vaccines in China, while also exploring growth opportunities in international markets. The Company has exported select vaccines to Mexico, Mongolia, Nepal, and the Philippines, and was recently granted a license to commercialize its hepatitis A vaccine in Chile. For more information, please visit the Company's website at www.Sinovac.com .

 

 

Contact

 

Sinovac Biotech Ltd. 

Helen Yang / Chris Lee 

Tel: +86-10-8279-9659 / 9696 

Fax: +86-10-6296-6910 

Email: ir@sinovac.com

 

ICR Inc. 

Bill Zima

U.S: 1-646-308-1707

Email: william.zima@icrinc.com

 

 

SINOVAC BIOTECH LTD.

Consolidated Balance sheets

As of June 30, 2014 and December 31, 2013

(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

Current assets		December 31,2013				June 30, 2014
						(Unaudited)
Cash and cash equivalents			107,242				89,634
Accounts receivable			31,927				34,733
Inventories			14,329				19,780
Prepaid expenses and deposits			1,150				1,294
Deferred tax assets			2,602				1,981
Total current assets			157,250				147,422
Property, plant and equipment			67,963				64,646
Prepaid land lease payments			10,948				10,545
Long-term inventories			2,781				3,893
Long-term prepaid expenses			154				72
Prepayment for acquisition of equipment			708				3,169
Deferred tax assets			117				305
Licenses			772				553
Total   assets			240,693				230,605
Current liabilities
Bank loans and current portion of long-term debt			16,217				35,975
Loan from a non-controlling shareholder			3,324				3,243
Accounts payable and accrued liabilities			28,037				24,384
Income tax payable			246				240
Deferred revenue			875				306
Deferred government grants			458				449
Total current liabilities			49,157				64,597
Deferred government grants			4,746				4,588
Long-term debt			32,146				11,651
Deferred revenue			11,005				10,639
Total long term liabilities			47,897				26,878
Total liabilities			97,054				91,475
Commitments and contingencies
Equity
Preferred stock			-				-
Common stock			56				56
Additional paid-in capital			107,393				107,868
Accumulated other comprehensive income			14,141				12,039
Statutory surplus reserves			11,808				11,808
Accumulated deficit			(4,714	)			(6,958	)
Total stockholders' equity			128,684				124,813
Non-controlling interests			14,955				14,317
Total equity			143,639				139,130
Total liabilities and equity			240,693				230,605

 

 

SINOVAC BIOTECH LTD.

Consolidated Statements of Comprehensive Income (loss)

For the three and six months ended June 30, 2013 and 2014

(Unaudited)

(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)      

 

		Three months ended June 30								Six months ended June 30
		2013				2014				2013				2014
Sales			17,452				12,090				27,504				25,636
Cost of sales			3,861				3,025				6,853				6,303
Gross profit			13,591				9,065				20,651				19,333
Selling, general and administrative expenses			8,786				8,589				15,891				16,381
Provision for doubtful accounts			604				132				886				294
Research and development expenses			2,042				3,265				3,889				4,967
Loss (income) on disposal and Impairment of property, plant and equipment			-				29				(2	)			29
Total operating expenses			11,432				12,015				20,664				21,671
Operating income (loss)			2,159				(2,950	)			(13	)			(2,338	)
Interest and financing expenses			(770	)			(832	)			(1,433	)			(1,582	)
Interest income			583				765				1,024				1,545
Other income (expenses) - net			(54	)			71				7				217
Income (loss) before income taxes and non-controlling interests			1,918				(2,946	)			(415	)			(2,158	)
Income tax benefit (expense)			(4	)			(76	)			(37	)			(423	)
Net Income (loss)			1,914				(3,022	)			(452	)			(2,581	)
Less: (Income) loss attributable to the non-controlling interests			(595	)			774				(237	)			337
Net Income (loss) attributable to stockholders of Sinovac			1,319				(2,248	)			(689	)			(2,244	)
Other comprehensive income (loss), net of tax of nil
Foreign currency translation adjustments			1,119				(319	)			1,353				(2,403	)
Total comprehensive income (loss)			3,033				(3,341	)			901				(4,984	)
Less: comprehensive (income) loss attributable to non-controlling interests			(707	)			738				(378	)			638
Comprehensive income (loss) attributable to stockholders of Sinovac			2,326				(2,603	)			523				(4,346	)
Weighted average number of shares of
Basic			55,056,191				55,663,566				54,995,674				55,625,509
Diluted			55,522,748				55,663,566				54,995,674				55,625,509
Earning per share
Basic			0.02				(0.04	)			(0.01	)			(0.04	)
Diluted			0.02				(0.04	)			(0.01	)			(0.04	)

 

 

SINOVAC BIOTECH LTD.

Consolidated Statements of Cash Flows

For the three and six months ended June 30, 2013 and 2014

(Unaudited)

(Expressed in thousands of U.S. Dollars)

 

		Three months ended								Six months ended
		June 30								June 30
		2013				2014				2013				2014
Cash flows provided by (used in) operating activities
Net income (loss)		$	1,914			$	(3,022	)		$	(452	)		$	(2,581	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
- deferred income taxes			(17	)			58				(15	)			369
- stock-based compensation			62				71				138				143
- inventory provision			768				321				768				542
- provision for doubtful accounts			604				132				886				294
- impairment of equipment and loss on disposal			-				29				(3	)			29
- depreciation of property, plant and equipment and amortization of licenses			1,718				1,903				3,348				4,534
- amortization of the prepaid land lease payments			69				65				138				132
- accretion expenses			34				28				52				55
Changes in:
- accounts receivable			(4,511	)			1,327				(8,288	)			(3,654	)
- inventories			(3,582	)			(4,905	)			(6,657	)			(7,784	)
- prepaid expenses and deposits			399				234				256				(348	)
- deferred revenue			(162	)			33				(1,229	)			(685	)
- accounts payable and accrued liabilities			(593	)			(1,889	)			1,754				(2,459	)
Net cash used in operating activities			(3,297	)			(5,615	)			(9,304	)			(11,413	)
Cash flows provided by (used in) financing activities
- Loan proceeds			3,305				3,182				10,785				8,917
- Loan repayments			(162	)			(6,084	)			(162	)			(8,542	)
- Proceeds from issuance of common stock,
net of share issuance costs			406				147				417				252
- Proceeds from shares subscribed			8				31				8				80
- Government grants received			220				185				524				185
Net cash provided (used in) by financing activities			3,777				(2,539	)			11,572				892
Cash flows used in investing activities
- Acquisition of property, plant and equipment			(508	)			(3,479	)			(2,232	)			(5,683	)
Net cash used in investing activities			(508	)			(3,479	)			(2,232	)			(5,683	)
Exchange gain (loss) on cash and cash equivalents			512				(385	)			769				(1,404	)
Increase (decrease) in cash and cash equivalents			484				(12,018	)			805				(17,608	)
Cash and cash equivalents, beginning of year			91,562				101,652				91,241				107,242
Cash and cash equivalents, end of year		$	92,046			$	89,634			$	92,046			$	89,634