3SBio's first-quarter 2010 total net revenues up 40.5%

3SBio Inc. (Nasdaq: SSRX) ("3SBio" or "the Company"), a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, today announced its unaudited financial results for the first quarter ended March 31, 2010.

First Quarter 2010 Financial Highlights:

• Total net revenues increased by 40.5% over the first quarter of 2009 to RMB96.4 million (US$14.1 million).
• EPIAO, the Company's flagship injectable recombinant human erythropoietin (EPO) product, demonstrated strong growth with net revenue in the first quarter of 2010 rising 33.3% to RMB57.2 million (US$8.4 million), compared to RMB42.9 million (US$6.3 million) in the first quarter of 2009.
• Net revenues for TPIAO, the Company's novel recombinant human thrombopoietin (TPO) product, increased by 60.3% to RMB30.0 million (US$4.4 million) in the first quarter of 2010, compared to RMB18.7 million (US$2.7 million) in the first quarter of 2009.
• Operating income was RMB28.2 million (US$4.1 million), compared to operating income of RMB20.1 million (US$2.9 million) in the first quarter of 2009.
• Net income was RMB26.7 million (US$3.9 million), compared to net income of RMB15.9 million (US$2.3 million) in the first quarter of 2009.
• Net income per ADS was RMB1.22 (US$0.18) compared to net income per ADS of RMB0.74 (US$0.11) for the first quarter of 2009.
• Cash, cash equivalents and time deposits were RMB736.6 million (US$107.9 million) at March 31, 2010 compared to RMB740.5 million (including restricted cash of RMB 9.3 million) at December 31, 2009.  

First Quarter 2010 Business Highlights

• An application for a registration trial for Feraheme was submitted to the State Food and Drug Administration (SFDA). Feraheme is a new generation IV iron therapy licensed through a strategic partnership with AMAG Pharmaceuticals.
• A collaboration and license agreement was signed with Panacor Bioscience to develop and commercialize Nephoxil®, a differentiated iron-based phosphate binder used for the treatment for hyperphosphatemia in CKD patients.  
• A strategic alliance was formed with Ascentage Pharma Group Corporation Ltd. to research, develop and commercialize best-in-class targeted cancer therapeutics focusing on programmed cell death, or apoptosis. The alliance represents 3SBio's key strategic initiative to develop a novel pipeline in cancer therapeutics.
• An application was submitted to the SFDA to conduct Phase I clinical trials for NuPIAO, the Company's second generation EPO product.

Dr. Jing Lou, chief executive officer of 3SBio, commented:  "Overall, we remain on track to achieve our key sales, manufacturing and product development objectives for 2010. Our core products, EPIAO and TPIAO, performed well in the first quarter and we have increased our full year net revenues guidance from US$56-58 million to US$56-60 million. We continue to consistently execute our sales and marketing strategy and build on 3SBio's strong branding among physicians and patients. In line with our long-term growth objectives, the recently announced strategic partnerships with Panacor Bioscience and Ascentage Pharma will strengthen 3SBio's early and mid-stage pipeline and further solidify our leading position in China's nephrology and oncology markets."

Three Months Ended March 31, 2010 Unaudited Financial Results

Net revenues. Net revenues increased by 40.5% to RMB96.4 million (US$14.1 million) for the first quarter of 2010 from RMB68.6 million (US$10.0 million) for the same period in 2009. This increase was largely due to continued strong sales of EPIAO and TPIAO which grew by 33.3% and 60.3%, respectively, over the same period in 2009. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for an all-time high of 31.1% of total net revenues. Export sales declined by 8.3% year-on-year to RMB3.1 million (US$0.4 million), and revenues from Iron Sucrose rose 101.3% year-on-year to RMB4.1 million (US$0.6 million).

Gross profit.  As a result of continued sales growth from key products, gross profit for the first quarter of 2010 increased by 41.4% to RMB88.5 million (US$13.0 million) from RMB62.6 million (US$9.2 million) for the same period in 2009. Gross margins rose 0.5% to 91.8% for the first quarter of 2010 from 91.3% for the same period in 2009.

Operating expenses. Operating expenses were RMB60.3 million (US$8.8 million) for the first quarter of 2010, representing an increase of 41.9% from RMB42.5 million (US$6.2 million) for the same period in 2009.

• Research and development ("R&D") costs.  R&D costs for the first quarter of 2010 were RMB4.7 million (US$0.7 million), or 4.9% of net revenues, compared to RMB2.5 million (US$0.4 million), or 3.6% of net revenues, for the same period in 2009.
• Sales, marketing and distribution expenses.  Sales, marketing and distribution expenses for the first quarter of 2010 were RMB42.6 million (US$6.2 million), or 44.2% of net revenues, compared to RMB32.9 million (US$4.8 million), or 48.0% of net revenues, for the same period in 2009.
• General and administrative expenses. General and administrative expenses for the first quarter of 2010 were RMB13.1 million (US$1.9 million), or 13.5% of net revenues, compared to RMB7.1 million (US$1.0 million), or 10.3% of net revenues for the same period in 2009.

Operating income.  Operating income was RMB28.2 million (US$4.1 million) for the first quarter of 2010, a 40.4% increase from operating income of RMB20.1 million (US$2.9 million) for the same period in 2009. Operating margin for the first quarter of 2010 was 29.3%, unchanged from the same period in 2009.

Interest income. Net interest income was RMB3.1 million (US$0.5 million) for the first quarter of 2010, compared to RMB4.1million (US$0.6 million) for the same period in 2009.

Net income. Net income was RMB26.7 million (US$3.9 million) for the first quarter of 2010, a 67.8% increase over net income of RMB15.9 million (US$2.3 million) for the same period in 2009.  Net income per ADS for the first quarter of 2010 increased to RMB1.22 (US$0.18) compared to RMB0.74 (US$0.11) for the same period in 2009. Net margin for the first quarter of 2010 was 27.7%, a 4.5% increase over net margin of 23.2% for the same period in 2009.  

Non-GAAP net income was RMB26.7 million (US$3.9 million) for the first quarter of 2010, a 29.9% increase over non-GAAP net income of RMB20.5 million (US$3.0 million) for the same period in 2009.  Non-GAAP net income per ADS for the first quarter of 2010 increased to RMB1.22 (US$0.18) compared to RMB0.95 (US$0.14) for the same period in 2009. Non-GAAP net margin for the first quarter of 2010 was 27.7%, a 2.2% decline from non-GAAP net margin of 29.9% for the same period in 2009.

2010 Net Revenues Guidance

We have raised our full year net revenues guidance from US$56-58 million to US$56-60 million, due to the strong first quarter sales performance.