EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

BMP Sunstone Reports Third Quarter 2010 Financial Results

3Q10 Revenue Increases 33.4% Year Over Year to $44.9 Million

Adjusted EBITDA of $961,000 in the Third Quarter and $9.9 Million in the First Nine Months of 2010

PLYMOUTH MEETING, PA., November 9, 2010 (PR Newswire Asia) – BMP Sunstone Corporation (NASDAQ: BJGP) (“BMP Sunstone” or the “Company”) today announced financial results for the third quarter ended September 30, 2010.

 

   

Revenue increased 33.4% to $44.9 million from $33.6 million in the prior year period.

 

   

Gross profit rose to $16.3 million from $15.7 million in the third quarter of 2009. Gross margin was 36.3%, compared to 46.6% in the prior year period.

 

   

Operating income was $69,000, compared to $1.0 million in the prior year period.

 

   

Adjusted EBITDA was $961,000 compared to $2.6 million in the third quarter of 2009.

 

   

Adjusted EBITDA in the first nine months of 2010 was $9.9 million compared to $9.0 million in the first nine months of 2009.

 

   

Non-GAAP net income in the first nine months of 2010 was $5.1 million, compared to $4.6 million in the prior year period.

Third Quarter 2010 Financial Results

Revenue in the third quarter of 2010 increased 33.4% to $44.9 million from $33.6 million in the third quarter of 2009. Revenue from manufacturing was $19.7 million, up 15.2% from the prior year period, reflecting continued demand for the Company’s leading products and continued benefits from the sales force reorganization completed earlier in the year. Revenue from licensed products increased 10.0% year over year to $2.3 million, primarily due to expansion of hospital coverage. Revenue from distribution was $22.9 million, up 58.2% on a year over year basis, driven by a strategic initiative to increase Wanwei’s product sales.

David Gao, Chief Executive Officer of BMP Sunstone, stated, “We are pleased with our performance in the third quarter. We actively increased our activity at our distribution business in an effort to meet potential revenue requirements by the Beijing local government, in order to be qualified for hospital bidding. In addition, given the seasonality of the cold and flu season which is a principal driver of Sunstone sales, we increased our investment in advertising and marketing. Going into the last quarter of 2010, we are seeing healthy demand for our leading Sunstone products and we believe our revenue mix contributions will normalize within the next several months.”

Gross profit in the third quarter of 2010 increased to $16.3 million from $15.7 million in the third quarter of 2009. Gross margin was 36.3%, compared to 46.6% in the prior year period. The decrease in gross margin reflects the strong revenue contribution from distribution, which carries lower gross margins than our manufacturing business, as the Company deliberately grew the Wanwei business. This effort also resulted in lower gross margins in the distribution business on a sequential basis.

The Company’s operating income was $69,000 in the third quarter of 2010, compared to $1.0 million in the third quarter of 2009. Operating expenses in the third quarter of 2010 included a dividend transfer tax payment of $0.8 million related to Sunstone. The Company also increased its advertising and marketing expenditure by $1.0 million from the prior year period as the Company positioned itself for a seasonally strong fourth quarter at Sunstone. Operating expenses also include approximately $1.0 million of purchase accounting adjustments related to prior acquisitions, as well as approximately $466,000 of stock compensation expense, which reflects fewer options granted to senior management and board members on a year over year basis. Excluding purchase accounting adjustments and stock compensation, non-GAAP operating income was $1.5 million, compared to $2.5 million in the prior year period.

Adjusted EBITDA was $961,000 in the third quarter of 2010, compared to $2.6 million in the third quarter of 2009. On a nine months basis, as discussed below, adjusted EBITDA increased to $9.9 million in 2010 from $9.0 million in the first nine months of 2009.


Non-GAAP net income was $299,000, or $0.01 per diluted share, compared to $1.3 million, or $0.03 per diluted share, in

the third quarter of 2009. On a GAAP basis, the Company reported a net loss of $1.3 million, or $0.03 per diluted share, compared to a net loss of $208,000, or $0.01 per diluted share, in the third quarter of 2009. The earnings per share calculation is based on 51.3 million diluted shares outstanding, compared to 50.8 million diluted shares outstanding in the prior year period.

Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three month periods ended September 30, 2010 and 2009.

Balance Sheet

Including notes receivable of $17.8 million, total cash and cash equivalents were $35.7 million as of September 30, 2010. Notes receivables from customers for the settlement of trade receivable balances are guaranteed by established banks in China and have maturities of six months or less. The Company paid down roughly $4.8 million of bank debt during the quarter.

Financial Results for the Nine Months Ended September 30, 2010

For the nine months ended September 30, 2010, revenue increased 18.4% to $124.7 million from $105.4 million in the first nine months of 2009. During this same time period, gross profit increased 10.3% to $55.9 million from $50.7 million. Income from operations increased 24.1% to $5.4 million, compared to $4.4 million in the first nine months of 2009. Adjusted EBITDA increased to $9.9 million in the first nine months of 2010, up from $9.0 million in the prior year period. Non-GAAP net income increased to $5.1 million, or $0.10 per diluted share from $4.6 million, or $0.10 per diluted share, in the prior year period. On a GAAP basis, net loss was $30,000, or ($0.00) per share, compared to a net loss of $3.9 million, or ($0.10) per share, in the first nine months of 2009. The EPS calculation is based on 51.1 million diluted shares outstanding, compared to 48.2 million diluted shares outstanding in the prior year period.

Full Year 2010 Financial Guidance

The Company continues to expect revenue to reach between $160 million and $170 million in fiscal 2010. Additionally, during fiscal 2010, the Company continues to expect adjusted EBITDA to reach between $16 million and $17 million and non-GAAP net income to reach between $9 million and $10 million.

Recent Events

On October 28, 2010 BMP Sunstone and sanofi-aventis (EURONEXT: SAN and NYSE: SNY) announced that they have entered into a definitive agreement under which sanofi-aventis is to acquire all outstanding shares of BMP Sunstone for cash consideration of USD 10 per share, or a total of approximately USD 520.6 million on a fully diluted basis. The acquisition is to be structured as a merger of BMP Sunstone and a wholly-owned subsidiary of sanofi-aventis. Under the terms of the merger agreement, completion of the transaction is subject to approval at the BMP Sunstone stockholder meeting, as well as the receipt of certain regulatory approvals in China and other customary conditions. Stockholders controlling 23% of BMP Sunstone’s shares on a fully diluted basis have committed to vote in favour of the transaction.

Additionally, during the third quarter of 2010, BMP Sunstone signed an equity transfer agreement with Sunstone Shengda (Zhangjiakou) Pharmaceutical Co., Ltd. (“Sunstone Shengda”) to increase its ownership position to 75% from 50% previously held. The all-cash transaction was funded entirely from Sunstone’s existing cash flow. The Company believes that ownership of Sunstone Shengda, a leading manufacturer of pediatric pharmaceuticals in China, complements its efforts to strengthen its pharmaceutical production capacity, optimally allocate resources, and reinforce the Company’s competitive position.

Conference Call

The Company will hold a conference call at 5:00 pm ET on November 9, 2010 to discuss its results. Listeners may access the call by dialing 1-866-788-0538 or 1-857-350-1676 for international callers, access code: 82782645. A webcast will be available through the Company’s website at www.bmpsunstone.com. A replay of the call will be accessible through November 16, 2010 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 15522468.

About BMP Sunstone Corporation

BMP Sunstone Corporation is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone the Company manufactures leading pediatric and women’s health products, including two of China’s most recognized brands, “Hao Wawa” and “Confort,” sold in pharmacies throughout the country. The Company also markets a portfolio of products under exclusive multi-year


licenses into China, primarily focused on women’s health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone’s main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit www.bmpsunstone.com.

Safe Harbor Statement

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning, the Company’s expected financial performance in fiscal 2010 and the Company’s expectations for its business units in fiscal year 2010. These statements are subject to uncertainties and risks including, but not limited to, the impact from the Company’s recent organizational changes, changes in the Company’s sales, marketing and distribution plans, changes in the Company’s operating performance, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company’s products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Contact

Fred M. Powell

Chief Financial Officer

610-940-1675

fpowell@bmpsunstone.com

or

ICR, LLC

(Investor Relations)

Ashley M. Ammon 646-277-1227

or Christine Duan 203-682-8200


BMP Sunstone Corporation and Subsidiaries

Condensed Consolidated Statements of Operation

($ amounts, except per share amounts in thousands)

 

     For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
     2010     2009     2010     2009  

Revenues:

        

Third parties

   $ 44,858      $ 33,358      $ 124,737      $ 101,001   

Related parties

     —          268        —          4,370   
                                

Total Revenues

     44,858        33,626        124,737        105,371   

Cost of Goods Sold

     28,583        17,950        68,795        54,643   
                                

Gross Profit

     16,275        15,676        55,942        50,728   
                                

Sales and Marketing Expenses

     11,136        9,811        35,074        33,622   

General and Administrative Expenses

     5,070        4,825        15,470        12,755   
                                

Total Operating Expenses

     16,206        14,636        50,544        46,377   
                                

Profit From Operations

     69        1,040        5,398        4,351   
                                

Other Income (Expense):

        

Interest Income

     46        52        146        159   

Interest Expense

     (894     (895     (3,241     (3,369

Debt Issuance Cost Amortization

     (115     (101     (350     (326

Equity Method Investment Income

     —          107        —          189   

Loss on Early Extinguishment of Debt

     —          —          —          (4,573

Gain on Derivatives

     —          —          —          1,204   
                                

Total Other Expense

     (963     (837     (3,445     (6,716
                                

Profit (Loss) Before Provision For Income Taxes

     (894     203        1,953        (2,365

Provision For Income Taxes

     398        430        1,983        1,583   
                                

Net Profit (Loss)

   $ (1,292   $ (227   $ (30   $ (3,948

Less: Net Profit Attributable to the Noncontrolling Interest

     30        19        53        35   
                                

Net Profit (Loss) Attributable to BMP Sunstone Corporation

   $ (1,262   $ (208   $ 23      $ (3,913
                                

Basic and Fully-Diluted Profit (Loss) Per Share Attributable to BMP Sunstone

   $ (0.03   $ (0.01   $ (0.00   $ (0.10
                                

Basic Weighted-average Shares Outstanding

     42,146        41,559        42,085        41,291   
                                

Fully Diluted Weighted-average Shares Outstanding

     51,343        50,831        51,126        48,184   
                                


BMP Sunstone Corporation and Subsidiaries

Condensed Consolidated Statements of Operation

($ amounts, except per share amounts in thousands)

Non GAAP

 

     For the Three Months ended September 30,     For the Nine Months ended September 30,  
     2010     2009     2010     2009  

Revenues:

        

Third parties

   $ 44,858      $ 33,358        124,737      $ 101,002   

Related parties

     —          268        —          4,370   
                                

Total Revenues

     44,858        33,626        124,737        105,372   

Cost of Goods Sold

     28,416        17,835        68,300        54,299   
                                

Gross Profit

     16,442        15,791        56,437        51,073   
                                

Sales and Marketing Expenses

     10,314        9,058        32,621        31,390   

General and Administrative Expenses

     4,584        4,206        13,604        10,890   
                                

Total Operating Expenses

     14,898        13,264        46,225        42,280   
                                

Profit From Operations

     1,544        2,527        10,212        8,793   
                                

Other Income (Expense):

        

Interest Income

     17        9        57        79   

Interest Expense

     (894     (895     (3,211     (2,920

Equity Method Investment Income

     —          107        —          189   
                                

Total Other Expense

     (877     (779     (3,154     (2,652
                                

Profit Before Provision For Income Taxes

     667        1,748        7,058        6,141   

Provision For Income Taxes

     398        430        1,982        1,583   
                                

Net Profit

   $ 269      $ 1,318        5,076      $ 4,558   

Less: Net Profit Attributable to the Noncontrolling Interest

     30        19        53        35   
                                

Net Profit Attributable to BMP Sunstone Corporation

     299        1,337        5,129        4,593   
                                
Basic and Fully-Diluted Profit Per Share Attributable to BMP Sunstone    $ 0.01      $ 0.03        0.10      $ 0.10   

Basic Weighted-average Shares Outstanding

     42,146        41,559        42,085        41,291   

Fully Diluted Weighted-average Shares Outstanding

     51,343        50,831        51,126        48,184   


BMP Sunstone Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

($ amounts in thousands)

 

     September 30,
2010
    December 31,
2009
 

Assets

    

Current Assets:

    

Cash and Cash Equivalents

   $ 16,769      $ 21,544   

Restricted Cash

     1,125        1,125   

Notes Receivable

     17,781        17,541   

Accounts Receivable, net of allowance for doubtful accounts of $874 and $481

     51,623        37,752   

Inventory, net of allowance for obsolescence of $165 and $98

     10,207        9,811   

Receivable from Alliance Unichem

     —          7,550   

Other Receivables

     3,492        3,648   

VAT Receivable

     962        1,093   

Prepaid Expenses and Other Current Assets

     7,393        6,322   
                

Total Current Assets

   $ 109,352        106,386   

Property and Equipment, net

     31,695        30,967   

Investment in Shengda

     —          2,950   

Investments at Cost

     373        146   

Goodwill

     71,438        70,033   

Other Assets

     143        405   

Land Use Rights, net of accumulated amortization

     3,011        2,860   

Intangible Assets, net of accumulated amortization

     39,636        38,508   
                

Total Assets

   $ 255,648      $ 252,255   
                

Liabilities and Equity

    

Current Liabilities:

    

Notes Payable and Bank Borrowings

   $ 25,323      $ 6,406   

Accounts Payable

     26,800        24,465   

Due to Related Parties

     1,336        1,437   

Deferred Revenues

     130        208   

Accrued Expenses

     22,954        18,478   
                

Total Current Liabilities

     76,543        50,994   
                

Long-Term Debt, including debt premium

     6,718        36,749   

Deferred Taxes

     8,848        9,097   
                

Total Liabilities

     92,109        96,840   
                

Commitment and Contingencies

     —          —     

Equity:

    

Common Stock, $.001 Par Value; 75,000,000 and 50,000,000 Shares; 42,145,320 and 41,931,987 Shares Issued and Outstanding as of June 30, 2010 and December 31, 2009, respectively

     42        42   

Additional Paid in Capital

     172,076        168,772   

Common Stock Warrants

     8,621        8,621   

Accumulated Deficit

     (32,923     (32,946

Accumulated Other Comprehensive Income

     12,908        9,486   
                

Total BMP Sunstone Corporation Stockholders’ Equity

     160,724        153,975   

Non controlling Interest

     2,815        1,440   
                

Total Liabilities and Equity

   $ 255,648      $ 252,255   
                


 

BMP Sunstone Corporation and Subsidiaries

Non GAAP Reconciliations

($ amounts, except per share in thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2010     2009     2010     2009  

GAAP Gross Profit

   $ 16,275      $ 15,676        55,942      $ 50,728   

Amortization Related to Acquisition

     167        115        495        345   
                                

Non GAAP Gross Profit

   $ 16,442      $ 15,791      $ 56,437      $ 51,073   
                                
     Three Months Ended September 30,     Nine Months Ended September 30,  
              
     2010     2009     2010     2009  

GAAP Operating Income

   $ 69      $ 1,040        5,398      $ 4,351   

Stock Based Compensation

     466        600        1,807        1,784   

Amortization Related to Acquisitions

     1,009        887        3,007        2,658   
                                

Non GAAP Operating Income

   $ 1,544      $ 2,527      $ 10,212      $ 8,793   
                                
     Three Months Ended September 30,     Nine Months Ended September 30,  
              
(all amounts in $000)    2010     2009     2010     2009  

GAAP Net Income (Loss)

   $ (1,262   $ (208     23      $ (3,913

GAAP Basic and Fully Diluted EPS

   $ (0.03   $ (0.01     (0.00   $ (0.10

Stock Based Compensation

     466        600        1,807        1,784   

Debt Discount and Premium Amortization and Issuance Cost

     86        58        292        695   

Amortization Related to Acquisitions

     1,009        887        3,007        2,658   

Loss on Early Extinguishment of Debt

     —          —          —          4,573   

Gain (Loss) on Derivatives

     —          —          —          (1,204
                                

Non GAAP Net Income

   $ 299      $ 1,337      $ 5,129      $ 4,593   
                                

Non GAAP EPS

   $ 0.01      $ 0.03      $ 0.10      $ 0.10   
                                


BMP Sunstone Corporation and Subsidiaries

Adjusted EBITDA Reconciliation

($ amounts in thousands)

 

     For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
(all amounts in $000)    2010     2009     2010      2009  

Net Income (Loss)

   $ (1,262   $ (208   $ 23       $ (3,913

Net Income Reconciliation to Adjusted EBITDA:

         

Interest expense, net

     (848     879        1,536         2,841   

Taxes

     1,174        430        2,759         1,583   

Depreciation

     802        592        2,318         1,745   

Amortization of intangibles and fair value of inventory increase

     1,009        887        3,007         2,658   

Loss on Early Extinguishment of Debt

     —          —          —           4,573   

Gain on derivatives

     —          —          —           (1,204

Amortization of debt discount and debt issuance costs

     86        59        261         695   
                                 

ADJUSTED EBITDA

   $ 961      $ 2,639      $ 9,904       $ 8,978