Kun Run Biotechnology's fiscal 2009 fourth-quarter revenues decrease 19%

Kun Run Biotechnology, Inc. (the "Company" or "Kun Run") (OTC Bulletin Board: KURU), a leading bio-pharmaceutical company in China that focuses on manufacturing and sales of peptides and peptide-based drugs, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2009.

Fourth Quarter 2009 Financial Highlights -- Revenues decreased 19% from the fourth quarter of 2008 to quarterly revenue of $3.1 million -- Gross profit was $2.1 million, compared to $2.7 million in the fourth quarter of 2008 -- Operating income was $1.6 million, an increase of 116% from $0.7 million in the fourth quarter of 2008 -- Net income decreased 45%, compared to $2.5 million in the fourth quarter of 2008, or $0.06 per basic and fully diluted share. Fiscal Year 2009 Financial Highlights -- Revenues increased 14% from 2008 to annual revenue of $13.2 million -- Gross profit was $9.3 million, compared to $8.2 million in 2008 -- Operating income was $7.6 million, an increase of 60% from $4.8 million in 2008 -- Net income increased 9%, compared to $6.0 million in 2008, or $0.26 per basic and fully diluted share.

Fourth Quarter 2009 Financial Results

Net revenue was $3.1 million for the quarter ended December 31, 2009, down 19% from $3.8 million in the fourth quarter of 2008. The special demand for our TP-5 products during the 2008 Beijing Olympic Games are included in the fourth quarter 2008 results. For the three months ended December 31, 2009, the sales of TP-5 products were $1.0 million, accounting for 34% of total sales compared to $2.2 million, or 56% in the same period of 2008. Thymosin Alpha 1 for injection continued as our best selling product, contributing $1.3 million in revenue (42% of total sales) for the three months ended December 31, 2009, representing a 26% increase from the same period of 2008. Meanwhile, DDAVP generated $453,932 or 15% of total sales for the three months ended December 31, 2009, an increase of 28% from $355,829 for the same period in 2008.

Gross profit for the quarter was $2.1 million, a 21% decrease from $2.7 million in the fourth quarter of 2008. Gross margin was 68% in the fourth quarter of 2009.

Operating expenses in the fourth quarter of 2009 were $0.5 million, down 75% from $1.9 million in the fourth quarter of 2009. This decrease was primarily due to fourth quarter 2008 included a Make Good Provision expense not incurred in 2009. The Make Good Provision is related to an agreement that was entered into to secure the Company's commitment to achieve 2008 Guaranteed After-Tax Net Income.

Operating income was $1.6 million, or 52% of revenue, an increase of 116% from $0.7 million, or 20% of revenue, in the fourth quarter of 2008.

Net income was $1.4 million, or $0.06 per share (basic and diluted), compared to a net income of $2.5 million, or $0.10 per share (basic and diluted), in the fourth quarter of 2008.

Fiscal Year Ended December 31, 2009 Results

Net revenue was $13.2 million in the year ended December 31, 2009, up 14% from $11.6 million in 2008. This increase was mainly attributable to the increase in sales of our Thymosin Alpha 1 for injection and DDAVP products. For the year ended December 31, 2009, the sales of TP-5 products were $5.7 million, accounting for 43% of total sales, compared to $6.2 million, or 53% in 2008. Thymosin Alpha 1 for injection, our best selling product, contributed $4.8 million in revenue (36% of total sales) for the year ended December 31, 2009, representing a 48% increase from the same period of 2008. Additionally, DDAVP generated $1.6 million, or 13% of total sales for 2009, an increase of 45% from $1.1 million for the same period in 2008.

Gross profit for the year was $9.3 million, a 13% increase from $8.2 million in 2008. Gross profit margin was 70%, which was slightly lower compared to the same period in 2008.

Operating income was $7.6 million, or 58% of revenue, an increase of 60% from $4.8 million, or 41% of revenue, in 2008. Net income was $6.5 million or $0.26 per basic and fully diluted share, up 9% from $6.0 million, or $0.24 per fully diluted share in 2008.

Financial Condition

As of December 31, 2009, the Company had $0.8 million in cash and cash equivalents. Kun Run generated $7.0 million in cash flow from operations in 2009, compared to $5.8 in 2008. Shareholders' equity stood at $25.1 million, with a debt to equity ratio of 0.46 at the end of December 31, 2009.

Mr. Ye Xiaoqun, Chief Executive Officer of Kun Run Biotechnology stated, "we are pleased with our 2009 results, and with the coming launch of new drugs are excited about the opportunity for Kun Run in 2010.