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Thursday, 23 November 2017, 18:12 HKT/SGT
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Source: Lee's Pharmaceutical Holdings Limited
Lee's Pharm Announces 2017 Third Quarterly Results
The Group achieved double-digit growth rates across most product sales; Its revenue reached HK$749,760,000

HONG KONG, Nov 23, 2017 - (ACN Newswire) - Lee's Pharmaceutical Holdings Limited ("Lee's Pharm" or the "Group", Stock Code: 950), an integrated research-driven an market-oriented pharmaceutical group in China, today announced its unaudited consolidated quarterly financial results (the "Quarterly Results") for the nine months ended 30 September 2017 .

The Group has sustained its momentum in revenue growth into the third quarter and achieved double-digit growth rates across most product sales. In addition, overall gross margin of the Group has been stablised despite the in-house products have been facing continued rising production cost pressure and the licensed products have been enduring the appreciation in the value of the euro throughout the period. With the improved visibility on the Group's operating performance, the Group continues to stay focus on its research and development ("R&D") efforts with special attention to those near term opportunities in order to speed up the time to market of its new products.

Even with the effect of the depreciation of Renminbi of approximately 2.4% during the period, the Group's reported revenue for the third quarter of this year was HK$275,010,000, which represented positive quarter-on-quarter growth of 10.5% and quarter-over-quarter growth of 10.6%. The consecutive double-digit growth of quarterly revenue was driven by across-the-board improvement of product sales. The Group's major products such as Carnitene, Ferplex, Zanidip, Yallaferon and Livaracine in the third quarter (in Hong Kong Dollar) registered increase of 11.9%, 3.7%, 19.8%, 8.9% and 12.7%, respectively. For the nine months ended 30 September 2017, the Group's revenue reached HK$749,760,000 and increased mildly by 7.3%.

Sales of licensed-in products accounted for 54.1% (nine months ended 30 September 2016: 52.6%) of the Group's revenue while sales of proprietary products contributed 45.9% (nine months ended 30 September 2016: 47.4%) of the Group's revenue.

During the third quarter of this year, the Group's gross profit margin was 67.2%, decreased by 0.9 percentage points as compare to 68.1% achieved in the same quarter last year. The combined effects of increase in material purchase costs for the production of in-house products as well as increase in import costs of licensed-in products due to the appreciation of Euro continued to put pressure on the gross profit margin during the period under review.

Selling expenses to revenue ratio during the quarter was 21.4%, slightly increased by 0.3 percentage points as compared to 21.1% achieved in the same quarter last year. The selling expenses to revenue ratio for the nine months ended 30 September 2017 was 20.4%, decreased by 2.9 percentage points as compare to 23.3% attained in the same period last year. The streamlined structure and organisation of sales and marketing enhance efficiency and yield considerable cost savings to the Group, which in turn delivered cost savings to the Group. During the first nine months of the year, the R&D expenses was increased by 19.2% to HK$57,414,000, which represented 7.7% of revenue during the period under review. Reported net profit attributable to the equity shareholders of the Company for the period was HK$186,894,000, slightly decreased by 3.8% as compared to HK$194,229,000 in the same period last year.

Reported net profit attributable to the equity shareholders of the Company for the third quarter was HK$61,824,000, increased by 3.9% as compared to the underlying net profit attributable to the equity shareholders of the Company in the same quarter last year which adjusted principally for significant one-off items such as development upfront income and impairment of intangible assets.

Dr. Benjamin Li, Executive Director and Chief Executive Officer of the Group, said, "The Group's solid dose production facility in its Nansha manufacturing site is already in operation. Subsequent to the period end date, three batches of Sodium Phenylbutyrate and Azilsartan respectively have been successfully manufactured in October 2017.

The Group's commitment to R&D persisted in the quarter. Meanwhile, with over 50 projects in the pipeline, the Group must prioritise its resources and focus on the near term opportunities. Saved as Sodium Phenylbutyrate and Azilsartan, the Group also have the following near term projects.

In addition, Phase III clinical trial for advanced liver cancer using its oncolytic immunotherapy called Pexa-Vec (formerly JX-594), the PHOCUS study, has been approved (Approval No. 2017L04441) by the CFDA.

Phase Ib/IIa clinical study of Adapalene and Clindamycin combination hydrochloride gel for acne vulgaris (moderate to severe acne) has been completed and positive results therefrom which meet pre-specified endpoints has been attained. The study demonstrated that patients treated with 0.1% Adapalene + 1% Clindamycin showed the best results in the percent reduction in both lesion and inflamed lesion count. Phase III study is envisaged to initiate later this year. Near term products also included Trazodone which is used for anti-depression, and Apremilast which is used for Psoriasis and Psoriatic Arthritis.

In November 2017, the Group has acquired majority of shares in Windtree Therapeutics, Inc. (OTCQB: WINT) at a consideration of US$10 million, in which the major assets included certain products such as aerosolized KL4 surfactant therapies for respiratory diseases with near term potential. The transaction is expected to strengthen the Group's position in critical neonatal care, with the potential to expand also its acute pulmonary care portfolio. The investment marks an important milestone in the Group's development."

Dr. Benjamin Li, Executive Director and Chief Executive Officer of the Group, concluded, "The Group will continue to commit in these new drugs development to facilitate sustainable growth in the future. Looking forward, in view of the continual improvements to the rules and regulations of drug development in China, the Group remains cautiously optimistic about the medium and long term future of the industry and its prospect. The new products in the pipeline are assessed as having better market potential than the products currently selling, and thus the Group firmly believes that these potential new products will become the important thrusts for future revenue growth. As always, the Group will continue to commit higher percentage of total revenue to science-based innovation, leverage on its solid foundation of business operations and financial position, and to enhance shareholders' value and to provide the best return for the shareholders. "


Topic: Press release summary
Source: Lee's Pharmaceutical Holdings Limited

Sectors: Daily Finance, Healthcare & Pharm
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