3SBio Inc. records robust Q3

Jennifer Schonberger | Nov 14, 2007 12:53pm EST | Comment

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China-based biotechnology company 3SBio Inc. (Nasdaq: SSRX), after Tuesday’s close reported a strong third quarter, well ahead of analysts’ estimates, due to top-line growth in the company’s EPIAO and TPIAO products.

For the three months ended Sept. 30, the small cap reported revenue rose to 56.1 million yuan (US$7.5 million) from 35.6 million yuan in the same period last year. The current quarter revenue number came in ahead of the Thomson mean estimate of $6.6 million in revenues.

Revenues were primarily driven by continued growth in the company’s flagship EPO product, EPIAO, as well as the rapid sales growth in its TPO product, TPIAO.

Net revenues from EPIAO increased by 30.7% in the third quarter 2006 to $4.8 million in the third quarter 2007, resulting from increased EPIAO sales efforts focusing on the growing oncology market in China.

Additionally, net revenues from TPIAO increased 171.6% to $1.9 million in the third quarter 2007. The company’s TPIAO product line was the second largest contributor to revenue for the quarter. TPIAO accounted for 25.3% of total net revenues for the third quarter, compared with 14.6% in the third quarter 2006.

3SBio recorded net income of 24.1 million yuan (US$3.2 million), or $0.15 cents per ADS, compared with 9.6 million yuan, or $0.67 per ADS in the third quarter of 2006. The Thomson Financial mean estimate was for earnings of $0.12 per share. Net income was driven by an increase in interest income from the company’s enhanced cash position since its IPO.

The company also specified that its income tax expense increased by 59.8% to $0.3 million for the third quarter as a result of the company’s increased profitability. The effective tax rate was 8.4% for the third quarter 2007, lower than the 12.7% for the prior year period, because of more interest income earned from its enhanced cash position after its IPO that was not subject to tax.

As a result, net income increased by 151.4% to 24.1 million yuan (US$3.2 million) for the third quarter of 2007.

Shares of 3SBio (SSRX) gained $2.34, or 16.35%, to $16.74 at 12:40 p.m. ET. Shares of 3SBio have been trading in the range of $8.18 to $22.75 for the past 52 weeks.