Sinovac Biotech China's Premiere Vaccine Maker
Breaking news was reported Friday as Sinovac wins Beijing Public Health Bureau's bid to supply seasonal flu vaccine Anflu(R) to Beijing citizens on August 28, 2009. China-based Sinovac is one of four companies that won supplier contracts for seasonal flu vaccines. Sinovac (SVA) is China's premiere vaccine maker that focuses on the research, development, manufacture and commercialization of vaccines that protect against human infectious diseases. Current Vaccines produced by Sinovac include vaccines for Hepatitis A and B, Influenza, and H5N1(Avian Flu) pandemic flu for government stockpiling.
This is reminescent of Novavax's (NVAX) bid to supply Spain's vaccine for H1N1 swine flu. On June 30th 2009 Spanish officials committed €60 million to develop vaccines and establish the country's first vaccine plant to be built in Granada. This news sent the stock up 31% up 0.78 to 3.28. News from that can be found here titled Novavax in multi-million Spanish deal on vaccines. Since this announcement Novavax's stock has climbed to Friday's high of 5.89 +0.24.
Sinovac is a flourishing stock that was trading around 1.50 in April and month by month has a steady climb to today's 6.32 trade value. Q2 2009 saw 20.02M in revenue compared to 6.57M in Q1 2009. Gross profit rose to 16.25M with Net Income of 5.81M and a market cap of 268.12M. Sinovac has 46.70 million in current cash. Total Assets were 116.81M with Total Liabilities of 61.45M. Total Debt rose considerably to 26.30M.
But what about the future of Sinovac? I think that this year's flu season will not reach pandemic state as predicted but a slightly elevated outbreak status. I could be wrong but schools and the public will eventually start taking precautions to stop the epidemic. It will get bad but not as bad as the news is making it out to be. However, I do see the financials of this company improving and it could easily be trading around the 10-12 range during this flu season. However, after that it might drop considerably until the next pandemic arrives.
I think it would be a smart play to place a limit order on SVA at a discounted price and see if it falls a bit before investing right away. A note of caution before investing, there are another 10 Chinese drug companies that will obtain the flu strain samples "NYMCX-179A" from the WHO. China has a total of 11 drug companies that can produce seasonal flu vaccines, but Sinovac Biotech Company is the only one that can make pandemic flu vaccines. They are producing 5 million doses right now and under Pandemic status can produce up to 20 million doses.
A nice look at their previous pipeline and sales data from 2006 can be found here from China Analyst. Recent positive news from their current clinical trial can be found on News-Medical.net from August 19, 2009. The clinical trial is active currently and the estimated completion is January 2010. A closer look at the trial can be found on ClinicalTrials.gov as it is in Phase IV and is seeking approval for Swine Flu H1N1 influenza vaccine.
Another article on Swine Flu was published on USA Today titled US: 160M doses of swine flu vaccine due in Oct. from July 23, 2009. The article discusses Swine Flu vaccines due in October and the rush to get them to the public. It also mentions the state of the Flu season in the Southern Hemisphere.
Disclosure: Long SVA