China Sky One Medical — Investor Presentation (February 2008)
31 slides from China Sky One Medical's investor presentation, Feb 21, 2008
Slide 1: China Sky One Medical Inc. Confidential Investment Presentation
China Sky One Medical Inc. (OTCBB:CSKI) Confidential Investment Presentation www.skyonemedical.com 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of the “safe- harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual resu
Slide 3: Overview
Overview Offering Summary Use of Proceeds Capitalization Table Company Overview Investment Highlights Market Overview Company History Product Overview Research & Development Distribution Platform Government Support Production Capacity Financial Highlights Acquisition Targets Management Profile 3
Slide 4: Offering Summary
Offering Summary Issuer: China Sky One Medical, Inc Symbol: CSKI/OTCBB Market Capitalization: $124.6 Million* Shares Outstanding: 12.1 Million Offering: Private Investment in Public Equities Securities Offered: Common Stock Amount : $30.0 Million Use of Proceeds: Acquisitions & Working Capital *Base
Slide 5: Use of Proceeds
Use of Proceeds Acquisitions Target 1: $ 8.0 Million Target 2: $10.0 Million Working Capital: $ 4.0 Million New Product Marketing: $ 8.0 Million Total $30.0 Million 5
Slide 6: Capitalization Table
Capitalization Table (Amounts in Millions) June 30, 2007 Cash $5.15 Debt $0.00 Shareholder Equity $20.98 Total Shares Outstanding 12.10 Warrants 1.64 (1) Options 0.16 (2) Fully Diluted 13.90 Shares held by insiders 52% Restricted Shares (3) 28% Free Float 20% (1) Warrants with a weighted average exe
Slide 7: Company Overview
Company Overview China Sky One Medical manufactures, markets and distributes proprietary over-the-counter Traditional Chinese Medicines (“TCM”) and biological diagnostic kits, and markets and distributes 3rd party manufactured products. China Sky One Medical Harbin, Heilongjiang, China 45,000 Square
Slide 8: Investment Highlights
Investment Highlights Highly favorable market conditions Pharmaceutical sales growth outpacing GDP growth Highly robust organic top line growth 2006: 157% 2007E: 137% Extensive distribution network 1,400 Sales Reps, 50 Distributors, >20 Countries Diverse portfolio of SFDA approved products 70+ OTC p
Slide 9: Market Overview
Market Overview Rapidly Growing Industry China’s total healthcare expenditures exceeded $100 Billion in 2005 Pharmaceutical spending outpacing GDP growth 00-04 CAGR: GDP:11.2%, Pharmaceutical spending:15.4% World’s fifth largest pharmaceutical market by 2010 World’s second largest healthcare market
Slide 10: Industry Overview
Industry Overview Traditional Chinese Medicine The TCM Market is a large and well established component of China’s healthcare industry and culture TCM Market reached $16.8 Billion in 2006 Mainstream form of medicine in China; roots reaching back thousands of years Plant-based medicine is a component
Slide 11: Favorable Industry Dynamics
Favorable Industry Dynamics Highly Fragmented Industry Over 1,200 TCM manufacturers Numerous privately-held companies with limited access to growth capital Combined sales of top three manufacturers account for only 5.5% of total market Rigorous Regulatory Policies Force Smaller Players to Consider M
Slide 12: History
History TDR adds CSKI debuts 8 clinical trials in process R&D and First Bio on OTCBB proprietary subsidiary Received more pipeline formed than $2.5 Million Two in grants from biological government Tian Di Ren TDR adds product Medicine Sales Kangxi biological lines formed: TCM and R&D launched subsid
Slide 13: Product Portfolio: Proprietary + 3rd Party Products
Product Portfolio: Proprietary + 3rd Party Products Diversified product portfolio consists of external use TCM, traditional Western medicine and rapid diagnostic kits. Company Manufactured Products: External use TCM: 28 TCM products of variable topical formulations, including sprays, ointments, crea
Slide 14: Product Portfolio: Key Products
Product Portfolio: Key Products % Sales Product Application 2007E Manufactured by Company Sumei Slim Patch TCM patch with Saponin as the main active ingredient to promote weight loss 19.0% Anti-Hypertension Patch TCM combines with modern trans- dermal theraputic system (TTS) to provide an effective
Slide 15: Product Portfolio: Key Products
Product Portfolio: Key Products Sales by Product Qianliming Nasal Drops: 25.6% CAGR Sulfasalazine Suppositories: 27.6% CAGR 20 Compound Camphor Cream: 26.2% CAGR Anti-Hypertension Patch: 11.7% CAGR Sumei Slim Patch: 106.6% CAGR 15 10 5 0 2006 2007 2008 2009 15
Slide 16: Product Portfolio: Rapid Diagnostic Kits
Product Portfolio: Rapid Diagnostic Kits Diagnostic Products Micro-Albumin Testing kit Assess kidney functions in diabetic patients AMI Testing Kit Assess myocardial infarction (heart attack) Early Pregnancy Test Diagnostic Product Pipeline 18 Rapid Diagnostic Kits in Development: Oncology kits (6)
Slide 17: Product Sales by Product Type
Product Sales Sales By Product Type 2007E 2006 $47.1MM $6.2MM $19.8MM $2.1MM (31.1%) (4.6%) $12.2MM (25.9%) $13.6MM $32.8MM (69.5%) (68.9%) 2008E* $87.3MM $10.8MM (12.4%) $16.3MM (18.7%) Manufactured by Company $60.2MM 3rd Party Products (69.0%) 17 Diagnostics Kits/Biologicals *2008E includes Acquis
Slide 18: Research & Development
Research & Development R&D Highlights: Recognized leader in monoclonal antibody preparation, human antibody and gene recombination drug studies Well established relationships with renowned universities including: Harbin Medical University Northeastern Agriculture University Jilin University Beijing
Slide 19: Extensive Distribution Network
Extensive Distribution Network…. 1,400 sales representatives 22 provincial offices 200 selling to pharmacies 125 city offices in China 1,200 selling from pharmacies Exports to more than 20 countries 50 distributors 3,000 pharmacies Harbin (HQ) Beijing Shanghai 19 Future Distribution Network Current
Slide 20: With Room for Growth
…..With Room for Growth 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 <15% Aggressive organic growth & acquisitions will allow CSKI to further pe
Slide 21: Strong Government Support
Strong Government Support $3.3 Million in Government Grants Received in 2007 September 2007: Chinese Ministry of Science and Technology Two year grant to develop six proprietary Early-Stage Cancer Diagnostic Kit projects $1.5 Million June 2007: Harbin City Government Annual R&D grant for the next th
Slide 22: Acquisition Strategy
Acquisition Strategy M&A Objectives Accelerate CSKI’s growth Capitalize on favorable market and industry dynamics Leverage CSKI’s extensive sales, marketing and distribution platform Expand and diversify CSKI’s product portfolio Acquisition Target Profiles Diversified, complimentary product portfoli
Slide 23: Acquisition Target 1
Acquisition Target 1 Target: “Heilongjiang” Acquisition Profile Purchase Price $ 8.0MM Diversified, complimentary product Revenue portfolio 2007 $ 4.0MM 75 SFDA approved products, 2008 $10.0MM including 2009 $16.0MM Cardiovascular medications Anti-gastroenteritis medications High manufacturing stand
Slide 24: Acquisition Target 2
Acquisition Target 2 Target: “Liaoning” Acquisition Profile Purchase Price $10.0MM Diversified, complimentary product Revenue portfolio 2007 $ 5.0MM 40 SFDA approved products, 2008 $ 7.0MM including Anti-flu medications 2009 $23.0MM Dermatologic medications Anti-hyperlipidemic medications High manuf
Slide 25: Expanded Distribution Platform Post Acquisitions
Expanded Distribution Platform Post Acquisitions (2009) 2007 21 Diagnostic Products 43 3rd Party 75 Products rd Products from acquisition 1 43 3 Party Products 28 TCM 3 Diagnostic 28 TCM 40 Products Products Products Products from acquisition 2 1,400 Sales Reps 2,000 Sales Reps 50 Distributors 100 D
Slide 26: Financial Highlights: Financial Performance & Projections
Financial Highlights Financial Performance & Projections YTD 2008E 2009E ($1,000s) 2005 2006 (1) 3Q07 2007E w/o Acq w/ Acq w/o Acq w/ Acq Revenue 7,712 19,882 36,595 47,153 70,000 87,000 110,000 149,000 Revenue Growth 157.8% 137.2% 48.5% 84.5% 57.1% 71.3% Gross Profit 5,498 14,819 28,491 36,657 54,6
Slide 27: Financial Highlights: Comparable Operating & Cash Cycle Analysis
Financial Highlights Comparable Company Operating & Cash Cycle Analysis CSKI LTM ending June 30, 2007 74 Day Operating Cycle (11) Day Cash Cycle *CSKI 1H 07 Cash Cycle (32) days Tongjitang China American China Chinese Medicine Oriental China Sky One Medicines Corporation Bioengineering Pharma Averag
Slide 28: Pharmaceutical Companies Market Multiples
Pharmaceutical Companies Pharmaceutical Companies > Market Multiples (in $ Millions, except per share data) 11/08/07 52 Week 52 Week Market Company Ticker Exchange Stock Price High Low Cap TEV China Based Healthcare Companies Tongjitang Chinese Medicines Co. TCM NYSE 8.96 12.88 7.50 299.47 196.52 Am
Slide 29: Pharmaceutical Companies' P/E Multiples
Pharmaceutical Companies’ P/E Multiples Earnings Per Share ($) Price / EPS Company FY 07 FY 08 FY 09 FY 07 FY 08 FY 09 China Based Healthcare Companies Tongjitang Chinese Medicines Co. 0.84 0.92 1.08 10.7x 9.7x 8.3x American Oriental Bioengineering Inc. 0.60 0.79 0.99 20.3x 15.6x 12.4x Simcere Pharm
Slide 30: Management Team
Management Team Yan-qing Liu CEO, Chairman and Director Over 15 years of experience in pharmaceutical sales and marketing, new drug research & development and enterprise management 8 years of experience as a reporter for the Family Health Newspaper Bachelor’s degree from Prophylactic Department of H
Slide 31: Investment Summary
Investment Summary Highly favorable market conditions Pharmaceutical sales growth outpacing GDP growth Highly robust organic top line growth 2006: 157% 2007E: 137% Extensive distribution network 1,400 Sales Reps, 50 Distributors, >20 Countries Diverse portfolio of SFDA approved products 70+ OTC prod
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