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Corporate Presentation June 2009
Corporate PresentationJune 2009
2
Safe Harbor Statement
Certain of the statements made in the press release constitute forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward- looking terminology such as "believe," "expect," "may," "will,""should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
3
Investment Highlights
Strong revenue growth and increasing profits
Branded line of pharmaceuticals and externally applied TCM products for a variety of illnesses
Extensive distribution network in China covering 22 provinces and 125 municipalities; worldwide distribution to over 20 countries
Rapid expansion through organic growth as well as external acquisitions
Strong R&D pipeline including biological testing kits, cancer and stem cell research
Net Income ($ million)
2.2 4.3
15.3
28.938
2005 2006 2007 2008 2009E
CAGR: 135.9%
Revenue ($ million)
7.5 19.949.3
91.8
128
2005 2006 2007 2008 2009E
CAGR: 130.5%
4
December 31Fiscal Year End:
2.80P/B (mrq):
2.33P/S (ttm):
7.23P/E (ttm):
$2.03EPS (diluted-ttm):
$32.23MNet Income (ttm):
$104.24MRevenue (ttm):
16.6MShares Outstanding:
$243.3MMarket Cap:
$14.68Price (5/27/09)
CSKINASDAQ Global Market:
Data as of May 27, 2009
Equity Snapshot
5
Corporate Overview
Harbin TDR Medical Science and Technology(P.R. China)
• Slim Patch, Sprays, Ointments
Harbin First Bio-Engineering
• Primarily R&D (Endothelin 1) and
production
100%
100%
American CaliforniaPharmaceutical Group
(USA)
Harbin Tian Qing Biotech
Tissue and stem cell R&D
100%
Heilongjiang TianlongPharmaceutical
• R&D and production
• Acquired in Feb 2008
100%
Peng Lai Jin Chuang Pharmaceutical Co –
Portfolio of twenty oral TCM medicines
Acquired in July 2008
Heilongjiang HainaPharmaceutical Inc -
Good Supply Practice (GSP)
license
100% 100%
China Sky One Medical, Inc.
$3 million PIPEOctober 2006
$25 million PIPEJanuary 2008
Sept. 2008 Trading on NASDAQ
May 2008 Trading on AMEX
May 2006 Listed on OTCBB
1994 Founded in Harbin, China
6
Market Forecast
CAGR= 15.5%
The fifth largest pharmaceutical market in the world by 2010
Projected Pharmaceutical Sales in China ($ in Billions)
11.713.51
15.6118.03
20.8224.05
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010
Sources: IMS, Boston Consulting Group
7
In October 2008, the Chinese government has budgeted for RMB850bn over the next three years to make medical services and products more affordable and accessible.
To speed up the implementation of basic medical insurance systemTo reach more than 90% coverage for rural residents within the next three years.
To increase government subsidies to RMB120 per person per year
Health-care reimbursement and subsidy limits for the unemployed and farmers will increase to six times annual average income
The government supports innovative projects within the biomedical industry, including:
Biomedical engineering projects, such as oncology and cardiology diagnostic products
Modernizing TCM production
Developing indigenous biotechnology capabilities
Favorable Government Policies
8
Products - High quality products for external use
Sales network - Covers 90% of Chinese market, over 30 long-term agents in China, 4,500 retail stores, over 20 international agents
Strong brands - “Kang Xi” trademarks are well known external use products
Strong R&D – A robust pipeline of new products and exclusive regional license for stem cell research in Heilongjiang
Aggressive growth strategy – expanding manufacturing capabilities and more products from recent acquisitions
Competitive Advantages
9
Located in the Heilongjiang Bin Xi, Economic Development Zone
GMP-certified manufacturing facilities and state-of-the-art production equipment R&D center
92,000 m2 of land including 1,600 m2 for R&D center and lab
A top developer of biological diagnostics in China
GMP-Certified Manufacturing Facilities
10
Strategic Acquisitions
February 2008 Price: $8.3M
April 2008Price: $0.43M
June 2008Price: $7.2M
October 2008Price: $1.5M
Heilongjiang Tianlong
Pharmaceutical, Inc.
Heilongjiang Haina
Pharmaceutical Inc.
Peng Lai Jin Chuang Company
Proprietary Breast Drug from Harbin
Medical University
Jin Chuang Acquisition
A new pipeline of 20 internal use drugs Broadens CSKI’s existing product lineImproves manufacturing capabilities GMP certification
Tianlong Acquisition
Manufacturer of external use drugs with state-of-the-art equipment and R&D centerPortfolio of 69 approved drugs and 38 new drugs in pipelineQuickly expands CSKI’s existing product lineGood Manufacturing Practice (GMP) Certification
Proprietary Breast Drug
Intended to treat lobular hyperplasia in women, a type of mastitis that may lead to breast cancer Currently no drugs on the market in China dedicated to treating this diseaseFirst phase clinical trials have been completed
Haina Acquisition
Wholesaler of traditional Chinese medicine, bio-medicines, bio-products, medicinal devices, antibiotics and chemical medicinesQuickly expanding distribution channels Good Supply Practice (GSP) license
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2008 Sales Highlights
65%
16%
10%
6% 3%
Tian Di Ren Tian Long First Contract Sales Jin Chuang
Sales Breakdown by Business Subsidiary (FY08)
Note: China Sky One Medical has discontinued all contract sales as part of its strategic goals since the beginning of 2009.
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Product Highlights
China Sky One Medical develops, produces and sells branded pharmaceuticals including:
• nearly 90 existing products
• over 30 new products submitted for SFDA approval as of May 31, 2009
Sales Breakdown by Product Types (FY08)
39%
25%
12%
10%
3%2.0%
3.0%6%
Patch (5)
Ointment (20)
Spay (19)
Diagnostic Kit (3)
Cleaning Liquid (9)
Tablet, Capsule, Granule, Syrup (13)
Suppositary, Injection, Liniment,Aerosol, Drops (21)Contract Sales (7)
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Top Selling Products in 2008
Product % of Sales Use
Sumei Slim Patch 22 Weight loss
Hemorrhoids Magnetic Ointment 11 Hemorrhoids
Compound Camphor Cream 10 Dermatitis
Pain Relief Patch 8 Pain Relief
Anti-Hypertension Patch 7 Hypertension
Microalbuminuria Diagnostic Kit 6 To Diagnose Kidney Disease
H-FABP Diagnostic Kit 3To Diagnose Early Acute Myocardial
Infarction
Total 67
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Domestic Clinical Diagnostic Kit
5%
66%
8%
10%5% 6% Hepatitis A
Hepatitis B
Hepatitis C
HIV
Syphilis
Others
Diagnostic Kit Market in China
RMB 3-4bn in China, 1/14 of the total market worldwide
429 approved domestic clinical diagnostic kits, 57 approved foreign products
Few categories of products, mainly focused on hepatitis and venereal disease
Source: China SFDA
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Testing Kits
Three products on sale
Cardiac Arrest Early Examination Kit
Kidney Disease Testing Kit
Early Pregnancy Test Kit
Market these products in multiple countries
Applying for ISO and CE Certification
New biological products under development
AIDS early examination kit
Carcinoma Cervix early examination kit
Breast cancer early examination kit
Liver cancer early examination kit
Sudden Cardiac Death (SCD) Early Examination Kit
Rectal cancer early examination kit
Stomach cancer early examination kit
New Endostatin
Multi-tumor marker protein chip assay kit
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Outstanding R&D Capabilities
R&D Center and Lab at TDR (1,600m2, Harbin)
25 internal R&D staff
Conducts research on TCM products, external-use diagnostic products, gene-recombinant drugs, monoclonal antibodies, vaccines, cord blood stem cell bank
Partnership with: Harbin Medical University - a gene medicine laboratoryNorth East Agricultural University - a cell laboratoryJilin University - a monoclonal antibody laboratoryTaiwan Golden Biotechnology Corp - a biomedicine developer
Intellectual property:Owns seven patents including packing design and product ingredients patents
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Cord Blood Stem Cell Bank
Exclusive right and license to conduct tissue and stem
cell bank R&D activities in Heilongjiang Province as
well as other area in northeast China
The first stage of new facilities construction is to be
completed in late 2009
Donors will pay a sizable initial fee and an annual maintenance fee for each year of
storage. They may, in turn, be able to use the stored stem cells to fight various
diseases, immune deficiencies and genetic disorders
To generate revenue in 2010
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Strong Product Pipeline
Key Products Number of ProductsStage
Fibrauretnire Suppositories, Ciclopirox Ointment, AIDS early detection kit15~20In Clinical Trials
Nasal Aqua, Methionine Vitamin B1 for Injection , DoxofyllineInjection, Sodium Ferulate for Injection, TinidazoleSuppositories etc.
>20Under Research
Povidone-Iodine Suppository, Ciclopirox Ointment , CiclopiroxOlamine Vaginal Suppositories , Omeprazole Sodium for Injection, Ozagrel Sodium for Injection, etc.
>30Pending SFDA Final Approval
Scar Patch, Anti-smoking patch, Eye Patch, Coronary Heart Disease Patch, Ofloxacin Suppositories, Calcium Folinate for Injection, etc.
19 in 20087 in 2009
Recently Received SFDA Approval
Patches, Sprays, Aerosols, Ointments, Suppositories, Lotions, Diagnostic Kits, Drops, Injections, Gels, Solutions, Granules, Capsules, Syrups
85~90On Sale
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Extensive Distribution Network
Domestic –
Covers 22 provinces and 125 municipalities in China
Ships directly to 4,500 retail stores
1,300 sales reps – 1,100 stationed in pharmacies
International –
Exports to over 20 countries and regions: Australia, Malaysia, Germany,
Denmark, Hong Kong, Taiwan, and the US, via independent distributors
Engaged over 20 international agents
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While CSKI’s distribution platform is extensive, there’s still a lot of runway remaining:
Retail Pharmacies China has more than 24,000 retail pharmacies Currently, CSKI’s retail pharmacy penetration is <20% Aggressive organic growth & acquisitions will allow CSKI to further penetrate the retail pharmacy market
Hospitals China has more than 2,400 hospitals Currently, CSKI’s hospital presence is <5% CSKI’s R&D initiatives on biological diagnostic products will lead to an increasing penetration of hospitals
CSKI has demonstrated an ability to aggressively grow its sales and distribution platform, and to leverage its platform to successfully introduce new products
Potential for Growth
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Develop new drugs with large market potentials
Increase marketing campaigns to reinforce brand awareness and drive sales growth
Expand distribution rights to diversify revenues
Form strategic partnerships to explore new markets and bring down marketing expenses
Acquire new drugs and companies that contribute to overall profitability and enhance product portfolio
Expand sales overseas through international distributors
Attract and retain the best industry talent in R&D, operations and corporate management
Growth Strategies
Sustainable Growth
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Growing Revenues
7.5
19.9
49.3
91.8
128.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2005 2006 2007 2008 2009E
CAGR = 130.5%
($ in Millions)
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Increasing Earnings
4.3
15.3
28.9
2.2
38.0
$0.19$0.05
$1.87
$1.15
0
5
10
15
20
25
30
35
40
45
2005 2006 2007 2008 2009E$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Net Income ($ in Millions) Earnings Per Share - diluted
*Restated. Includes $1.9 million in recapitalized expenses and $1.2 million in non-cash share based compensation expenses
*
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Strong Financial Condition
31-December2008
31-March 2009
Cash and cash equivalents $40.3 $48.8
Accounts receivable, net 15.0 14.1
Inventories 0.5 1.3
Current assets 64.3 72.8
Total assets 101.3 109.2
Current liabilities 6.3 6.9
Total stockholders' equity 94.9 102.3
($ in millions)
Year ended December 31
2008
Twelve Months ended March 31,
2009
Cash flow from operations 27.5 30.8
Cash flow from investing activities (23.1) (22.1)
Cash flow from financing activities 25.4 1.2
($ in millions)
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Experienced Management Team
Yan-qing Liu, Chairman, CEO, President
Director of TDRGeneral Manager of Harbin First Bio-Engineering Company Ltd. Bachelor’s: Harbin Medicine UniversityEMBA from Tsing Hua University
Stanley Hao, CFO
Chief Financial Officer and Director of TDRMBA from the University of Phoenix
Xiao-yan Han, VP and Director
General Manager of TDRVice Director of Harbin First Bio-Engineering Company Ltd. MBA from Harbin Industrial University
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CSKI Stock Performance vs. Halter Index & Russell 2000
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Track record of strong organic revenue growth and increasing profitability
Well recognized brands for external use products and powerful sales network
Robust new product pipeline – 30+ products awaiting SFDA approval
Collaborative research and development partnerships with universities
Successful acquisitions accelerate growth and broaden product line
Experienced management team with knowledge and vision
Investment Summary
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Contacts
Sell-Side Analysts:Ms. Ping Luo, Global Hunter Securities, LLC*Mr. Ryan Irvine, KeyStone Financial Publishing Corp*
*China Sky One Medical, Inc. is followed the analysts listed above. Please note that any opinions, estimates, or forecasts regarding China Sky One Medical’s performance made by these analysts are theirs alone and do not represent opinions, forecasts, or predictions of China Sky One Medical or its management. China Sky One Medical does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
Legal Counsel:Mr. Jeffrey RindeEmail:[email protected]. Eric C. MendelsonEmail:[email protected] Rome LLPThe Chrysler Building 405 Lexington AvenueNew York, NY 10174-0208Tel: 212.885.5159Fax: 917.332.3859
Independent Auditor:Michael Kayser, CPAMoore Stephens, P.C. 703 Third AvenueNew York, NY 10022Tel: +1-212-835-5100E-Mail:: [email protected]
Investor Relations:Mr. Crocker Coulson, PresidentCCG Investor Relations1325 Avenue of the Americas, Suite 2800New York, NY 10019Tel: +1- 646 213-1915 Fax: 310 651-9658 E-Mail: [email protected]
China Sky One Medical, Inc.Mr. Stanley Hao, Chief Financial OfficerTel: +86-451-5399-4069E-Mail: [email protected]://skyonemedical.com
