Infection Prevention Updates
Some Hoped A New Oral Vaccine Would Solve All The Polio Campaign's Problems. Reality Is Settling In
When a new and hoped-to-be safer oral polio vaccine started to make its way into use in March 2021, there was huge optimism that this long-needed tool would help the polio eradication campaign quell a growing problem that was — and is still — complicating efforts to stamp out polio forever.
Two years later, expectations surrounding the new vaccine, known as novel oral polio vaccine type 2, or nOPV2 for short, are moderating a bit. It has since become clear it is a safe and effective tool, one that is much less likely to give rise to the aforementioned problem, in which live viruses used in an earlier type of oral vaccine overcame genetic changes made to weaken them, and in the process acquired the capacity to on rare occasions paralyze children.
But more than 600 million doses into nOPV2's rollout, it has also become apparent that the polio program's No. 1 problem — the failure to vaccinate a sufficient proportion of children against the disease — will not be magically solved by changing the tool in use, a number of experts say. In fact, this tool may raise the bar slightly for the people trying to stop outbreaks caused by those vaccine viruses, because it may require a higher percentage of children to be vaccinated in order to get the job done.
"Eradication, it was never about the vaccines. It's all about coverage — getting the vaccine into the mouths of children," said Roland Sutter, a consultant who has worked for decades on polio eradication. "And that's still, I would say, the biggest problem for the [polio eradication] initiative, is to really get high coverage in … the most difficult areas."
STAT spoke to a number of longtime polio campaign players in the wake of the publication in recent weeks and months of studies that pointed to some shortcomings of the new vaccine. They all said at this point there is overwhelming evidence that nOPV2 is much safer than the oral polio vaccine it replaced, though hints are emerging that it may not be quite as effective as the type 2 oral vaccine that polio vaccine legend Albert Sabin developed in the late 1950s.
But they also stressed nOPV2 is not a panacea, and suggested it is important for the polio program and the countries still struggling to stop the spread of wild polio or vaccine viruses to be realistic about what the new oral vaccine can do.
Mark Pallansch, who retired from the Centers for Disease Control and Prevention in August 2021, suggested a coming down to earth of expectations about nOPV2 would not be a bad thing, if it helps convey the message that efforts to vaccinate a higher percentage of kids in at-risk regions need to be stepped up.
"The 'We're now on the homestretch' type of thinking led to, again, an expectation that the final success was right around the corner," said Pallansch, who serves on a World Health Organization technical advisory group for polio eradication. "You don't stop any of these outbreaks unless you can assure high [vaccination] coverage. And that to me is the dominant issue in the program in most of these geographies."
In the late 1980s, when the world embarked on the ambitious plan to consign polioviruses to history's trash bin, it was thought the job would have been done and dusted by now. The goal was to eradicate all three viruses that triggered the paralytic disease — types 1, 2, and 3 — by the dawn of the 21st century. Twenty-three years later, types 2 and 3 are eradicated and the campaign is tantalizingly close to snuffing out type 1. But all involved know the finish line has appeared tantalizingly close before.
Only three cases of paralytic polio caused by wild-type polio have been reported so far in 2023, from Afghanistan and Pakistan, the only two countries that have never managed to extinguish transmission of wild polio. Genetic sequencing of these viruses, and 28 others found in wastewater in the two countries, shows there are only two remaining lineages of wild viruses circulating, said Ananda Bandyopadhyay, deputy director of the polio team at the Bill and Melinda Gates Foundation.
That dwindling of the genetic diversity of the viruses has been seen in the past when polio was on the verge of being stopped in a country, or when type 2 and type 3 viruses were in their death throes, he said. "So this is the trend we see with viruses. It is promising. The virus is dying. It's gasping."
The Gates Foundation is one of the partners in the Global Polio Eradication Initiative. Other partners are: the CDC; the WHO; UNICEF, the U.N. Children's Fund; and the service club Rotary International.
The program has set a goal of stopping transmission of wild-type polio by the end of this year, an objective that at this point appears as if it may be within reach. (It should be noted many previous target dates have come and gone.)
It has also set the end of 2023 as a self-imposed deadline for having extinguished all outbreaks caused by the vaccine viruses, known in polio eradication parlance as cVDPVs, for circulating vaccine-derived polioviruses.
That latter goal, even program partners acknowledge, is probably out of reach at this point. "The current global epidemiology of poliovirus transmission makes the likelihood of meeting this target date unlikely," CDC scientists wrote earlier this month in the agency's online journal Morbidity and Mortality Weekly Report.
The original oral polio vaccine, known as OPV, was created by Sabin; it has been the workhorse of the global eradication effort. But one of its strengths turned out to be a double-edged sword. The live, weakened viruses contained in the vaccine, which is dripped into the mouths of children, are later shed in their stools. In places where hand hygiene and water quality are poor, these vaccine viruses transmit through communities, vaccinating kids who did not receive the oral vaccine.
When polio cases were common, that was a huge plus. But if these viruses spread long enough — which they can do if they are in environments where vaccination coverage is low — they can regain the power to paralyze. Last year 862 children in 26 countries were paralyzed by viruses from oral polio vaccine. By contrast, only 30 children were paralyzed by wild polioviruses in 2022.
(The United States stopped using oral polio vaccine in 2000 because of the risks associated with it. Children in the United States are vaccinated with inactivated polio vaccine, an injectable product that does not contain live viruses.)
The component of the Sabin vaccine that most frequently regained the power to paralyze was the part that targeted type 2 polio. With type 2 viruses long since gone — the last known case was in 1999 and the viruses were declared eradicated in 2015 — the polio eradication program decided to pull the type 2 component from the oral vaccine in a globally synchronized move in the spring of 2016. The hope was that by ceasing use of Sabin OPV2, the problem with the type 2 vaccine viruses would die out.
It has not. In the years since, there have been more than 2,600 type 2 vaccine virus cases, including one detected last summer in an unvaccinated young man in New York State.
At this point, "the switch," as that process was called, is perceived to have been a failure — one that necessitated the development of nOPV2 to build up immunity to type 2 polio and stamp out transmission in places where the type 2 vaccine viruses are circulating. The vaccine viruses in nOPV2 were genetically altered in ways to make them much less likely to be able to regain the capacity to paralyze, though it was recently confirmed that on very rare occasions, this unfortunate development can occur.
Though fewer in number, there are also type 1 and type 3 vaccine virus outbreaks. Last year the Democratic Republic of the Congo recorded 143 cases of paralytic polio caused by type 1 vaccine viruses. Novel vaccines targeting types 1 and 3 are now in development, and a trivalent vaccine, including all three of the new oral vaccines, will follow, said Bandyopadhyay.
Since giving nOPV2 an emergency use listing — the equivalent of the emergency use authorizations the Food and Drug Administration gave Covid-19 vaccines — the WHO has stipulated that the new oral vaccine should not be given in conjunction with the Sabin oral polio vaccine, known as bivalent or bOPV (the current version targets only types 1 and 3 viruses). There should be at least a four-week window between outbreak response use of nOPV2 and mass vaccination efforts using bOPV, the global health agency says.
But as the number of vaccine virus outbreaks has increased, a further complication has arisen. Some places, like the DRC, have been battling outbreaks caused by more than one type of vaccine virus.
The nonprofit group Kid Risk did some mathematical modeling to try to determine how countries in this situation could best combat concurrent vaccine virus outbreaks caused by different virus types. Concomitant use of both nOPV2 and bOPV would be more effective than running separate vaccination campaigns targeting different viruses, the group concluded.
"Every time you go in with just one vaccine, it's a missed opportunity to get kids who need the others," Kimberly Thompson, the organization's president, told STAT. Thompson has consulted for years with the polio eradication campaign.
In addition to requiring more workers and being more costly, vaccinating with different vaccines at different times creates a situation where no one has a clear picture of which children got what vaccine. Children who get oral polio doses have the nail on a pinky finger marked with purple marker; there are no electronic health records keeping track of what kind of vaccine led to the marked pinky.
"The logistics are a nightmare. At least if you're giving them both at the same time, you have some sense of every kid we got got two things," Thompson said.
But a recently published study showed that when the two vaccines are given at the same time, the effectiveness of nOPV2 is lessened.
It's a phenomenon called interference, where one vaccine dampens the immune response to another when two or more are given together. It was an issue with the vaccine Sabin created; the type 2 component worked better, and to the detriment of the types 1 and 3 components when they were delivered in a trivalent (three-in-one) formulation. The problem was eventually resolved by increasing the potency of the types 1 and 3 components.
In the new study, published in the Lancet, healthy 6-week-old babies were randomized to get two doses each of nOPV2, nOPV2 plus the bivalent Sabin type 1 plus 3 vaccine, or the Sabin bivalent vaccine alone, after which their immune responses were measured. The responses were as expected for the types 1 and 3 components in the Sabin vaccine, but the response to nOPV2 given with the Sabin vaccine was substantially lower than what is seen if nOPV2 is given alone, dropping from 86% to 65%.
"It is a big drop. It was larger than expected," said Steven Wassilak, associate chief for science for CDC's polio eradication branch and one of the authors of the paper.
"We had hoped that this could be an opportunity for battling against circulation of type 1 and type 2 at the same time in the populations that are having those two outbreaks together, whether it be wild or vaccine-derived cVDPV type 1," Wassilak said in an interview. "It would be best, in terms of resources and efforts, if it could be given together. … But it appears that it doesn't have the full effect given together as if you're giving it separately."
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For Wassilak, there is a takeaway that goes beyond the issue of whether nOPV2 should be given at the same time as the Sabin bivalent vaccine. "The novel OPV2 is less effective per dose than Sabin. That's my takeaway."
There have been other signals this may be the case. A study published in late December looked at how well nOPV2 did at eliciting immune responses in children during a vaccine virus outbreak in Tajikistan in 2021. There were still cases after two rounds of nOPV2 administration, prompting a decision to conduct a third round of vaccination. In a commentary that accompanied the study, Thompson suggested the results "might hint at lower population immunity effectiveness for nOPV2" than had been seen with the Sabin oral vaccine component targeting type 2 viruses.
She made a similar observation in a commentary that was published with the study showing interference when nOPV2 is given at the same time as the Sabin bivalent. "These results hint at the probable need to achieve higher coverage (or to perform more campaign rounds) using nOPV2 … to induce the same level of population immunity, and imply that nOPV2 use comes with real trade-offs that increase the complexity of an already complicated polio endgame," she wrote.
Sutter, who has worked on polio eradication since 1987, first at the CDC and then at the WHO before retiring from the latter, agreed that the new oral vaccine may not be as immunogenic — it isn't as good at inducing an immune response — as the older oral vaccine.
"It's important that we keep this in mind when we plan campaigns," he said. "Maybe with this vaccine we need to add one more campaign for outbreaks than we would usually do, or things like that."
That said, Sutter was quick to point out that even if the vaccine is less effective than the Sabin oral vaccine, it is still a highly useful vaccine, one that is far less likely to cause vaccine virus cases.
Pallansch agreed. "There is the possibility that is becoming a little more seriously considered that indeed per-dose efficacy is not as good as" the Sabin type 2 oral vaccine, he said. "And whether that difference matters compared to coverage is not clear."
A little less effective still could be good enough to get the job done, both Pallansch and Sutter said, but only if enough children get the vaccine.
"Coverage is still the number one issue for either vaccine," Pallansch said. "In the end, stopping the outbreaks is the requirement. And the requirement is identical in that you have to achieve high coverage."
Correction: An earlier version of this article incorrectly stated there should be a four-week window between outbreak response use of nOPV2 and routine vaccination with bOPV. The gap is required outbreak responses with nOPV2 and mass vaccination efforts using bOPV.
A Rude Awakening: The Return Of Polio To The West
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LONDON — Parents in London are scrambling for a vaccine. This time, it's not the fear of COVID-19, but rather the return of a virus that in the past has killed and paralyzed thousands of young children.
Poliovirus has been detected in the capital's sewage, with children in affected areas being offered a booster polio vaccine. Vaccination clinics are booked out in some areas and local councils are urging parents to get their children boosted. Across the Atlantic, the state of New York declared an emergency on September 9 due to growing community spread. "On polio, we simply cannot roll the dice … the risk of paralytic disease is real," its health commissioner warned.
But unlike past outbreaks, the virus detected in London, New York and Jerusalem is not wild polio. Rather, the two cases of paralysis detected this year in wealthy Western countries were caused by vaccine-derived poliovirus.
Cases of vaccine-derived poliovirus aren't new. In 2020, there were over 1,000 cases of paralysis through this route. The difference is that such cases usually occur in low-income countries, with most of those reported in 2020 found in Afghanistan, Pakistan, Chad and the Democratic Republic of the Congo.
For experts who've worked on polio for years, the unusual emergence of the virus in countries like the U.S., Israel and the U.K. Should serve as an uncomfortable reminder to Western governments that the COVID-era adage that "no one is safe until everyone is safe," is more than just an empty slogan.
"[It's] a wake-up call for governments and other donors that polio is not restricted only to a few, distant, low-income countries, but a reminder that we are all in the same global fight against this virus," said Andrew Pollard, director of the Oxford Vaccine Group and one of the prime movers behind the Oxford/AstraZeneca coronavirus vaccine.
"The final efforts in controlling wild polio and the increasing relative threat of [vaccine-derived polio] mean that a surge in funding and focus on polio is urgently needed to ensure a permanent end to the scourge of this disease," Pollard said in comments emailed to POLITICO.
Doom loopThe detection of polio in wastewater in the U.K., the U.S. And Israel, as well as the two cases of paralysis — one in New York and the other in Jerusalem — is part of a complex cycle.
The presence of the virus in the sewage can be traced back to vaccination with a specific type of oral vaccine that is used in some countries and contains live polio virus "attenuated" to make it harmless. This oral vaccine can be shed into wastewater and the vaccine virus can be transmitted among people. That's not usually a problem, in fact, it can help generate passive immunity. But if not enough people are vaccinated and if spread occurs for long enough, the virus can mutate back to a form that can cause illness and paralysis.
What complicates matters is that the vaccine currently given in countries like the U.K. And the U.S. Is based on the inactivated poliovirus. This vaccine doesn't result in virus shedding, but it also doesn't completely stop transmission. So a person can have received the inactivated vaccine, yet still become infected and transmit the virus while themselves remaining protected against paralysis.
In a world where people are traveling between countries that administer different types of vaccines, the virus can be imported. Speaking on September 12, Hans Kluge, WHO regional director for Europe, said top U.S. Virologist Anthony Fauci had told him recently that the cases in the U.S. Were genetically linked to the cases in the European region. These, in turn, were linked to Afghanistan and Pakistan, where polio remains endemic. "It reminds us that a crisis anywhere quickly becomes a crisis everywhere," he told a meeting of the WHO Regional Committee for Europe in Tel Aviv.
The global plan to eradicate polio rests on eventually scrapping the oral vaccines that can result in virus shedding. But moving over to inactivated vaccines isn't that simple, because these vaccines cannot effectively halt outbreaks. That's because they don't generate significant immunity in the gut, which is important to stop person-to-person transmission.
The other reason for the reliance on oral vaccines in some countries is the ease of administration and the logistics around distribution.
"It's not entirely surprising," said Ondrej Mach, research and product development team lead for the WHO's polio department, when asked about the cases in countries that don't traditionally detect poliovirus in wastewater. "If you use this [oral] vaccine anywhere in the world, then any other country is kind of exposed to this risk."
For Mach and his team leading the work on global poliovirus, the hope is that there is still a reasonable level of protection in the population in these countries due to the use of the inactivated vaccine. "The moment we start seeing more paralytic cases, we would have to re-evaluate the response strategy," he said.
The outbreaks in the West generate substantial media coverage and take up a lot of Mach's time. "But in terms of our ability to control it, I have no doubt that we will be able to successfully control these events in these areas," Mach told POLITICO. "I have more doubt, obviously, about our ability to do something in the Democratic Republic of Congo, or Somalia, or Northern Nigeria, or Yemen."
Final pushThe global expert community is now looking toward a key funding drive in October, in which the Global Polio Eradication Initiative, an international public-private partnership, will seek $4.8 billion over five years. The initiative is managed by national governments with six partners — the World Health Organization, Rotary International, the U.S. Centers for Disease Control and Prevention, the United Nations Children's Fund, the Bill & Melinda Gates Foundation, and Gavi, the Vaccine Alliance.
Mach is aware that competing global health priorities such as the coronavirus pandemic and the broader geopolitical situation may affect the funding effort. "I'm not sure where we will end up with our ability to raise money," he said. "Maybe these events will help us. Maybe not."
For David Heymann, professor of infectious disease epidemiology at the London School of Hygiene and Tropical Medicine and former representative for polio eradication at the World Health Organization, the message to donors ahead of the replenishment is that "it's almost over."
"We need to now get busy with Africa again and help them get rid of this," he said. "They've got rid of wild poliovirus. Now they need to get rid of vaccine-derived poliovirus, and it's possible, and what's needed is continued resources."
SINOVAC Reports Unaudited Second Half Of 2022 Financial Results And Files 2022 Annual Report On Form 20-F
SINOVAC Reports Unaudited Second Half of 2022 Financial Results and Files 2022 Annual Report on Form 20-F
Sinovac Biotech Ltd. (NASDAQ: SVA) ("SINOVAC" or the "Company"), a leading provider of biopharmaceutical products in China, has filed its 2022 annual report on Form 20-F with the U.S. Securities and Exchange Commission for the year ended December 31, 2022. The Company also reported its unaudited financial for the second half and audited financial for full year ended December 31, 2022.
Second Half and Full Year 2022 Financial Summary
Mr. Weidong Yin, Chairman, President and CEO of SINOVAC, commented "In 2022, we significantly increased our R&D investment and expanded our global market reach. Our R&D investment nearly tripled, and we are developing various vaccines to prevent over 20 life-threatening diseases. Growth was maintained in our non-covid business in 2022. We keep executing our business strategy of expanding our regular business into international market. More than 10 countries granted licenses to our non-COVID vaccines. In addition, our varicella vaccine and sIPV were successfully passed WHO prequalification assessment in 2022.
"Looking ahead into 2023, we remain confident in our comprehensive product portfolio and growing business and scientific partnerships. Our mission to 'supply vaccines to eliminate human diseases' remains at the forefront, and we are committed to achieving this goal by investing in cutting-edge technology, expanding our global partnerships, and increasing accessibility to our life-saving vaccines," Mr.Yin added.
Business Updates
COVID-19 Vaccine – CoronaVac®, the inactivated COVID-19 vaccine developed by SINOVAC, has been approved for use in more than 60 countries and regions worldwide. At this time, over 2.9 billion doses of CoronaVac® have been delivered globally, making SINOVAC the largest China-based COVID-19 vaccine provider to the international market.
CoronaVac® has been validated by the World Health Organization ("WHO") for extended use in children as young as three years old under the Emergency Use Listing ("EUL") Procedure, in November 2022. This is the youngest age that the WHO has validated for EUL of COVID-19 vaccines in the world so far. CoronaVac® has also been fully registered in Hong Kong under the Pharmacy and Poisons Ordinance Cap 138 in December 2022, as one of the first COVID-19 vaccines approved for such official registration in Hong Kong. Since then, the vaccine can be supplied to registered medical practitioners and institutions for both private and public markets in Hong Kong.
In 2022, the results of sufficient real-world studies and clinical trials in various regions and countries confirmed the safety and effectiveness of CoronaVac® for pediatric and adolescent populations, as well as demonstrated that the vaccine was effective in preventing multiple Omicron waves, particularly for individuals over the age of 60 who received three doses of the vaccine.
Influenza Vaccines – Quadrivalent Influenza Vaccine, the latest development of SINOVAC's influenza vaccine family, entered the global market in 2022 by gaining overseas commercialization approvals. In 2022, the influenza vaccines became SINOVAC's highest revenue generating non-COVID product for the first time. Recently, a new and state-of-the-art influenza vaccine production facility of SINOVAC started operations in Beijing. The plant, which complies with Chinese Good Manufacturing Practice (GMP) guidelines and utilizes green production processes, enables automated production at scale that expands SINOVAC capacity to meet the growing global demand for high-quality influenza vaccines.
Varicella Vaccine – the live attenuated varicella vaccine was prequalified by the WHO in November 2022, marking the first WHO prequalified Chinese varicella vaccine, and received its first overseas order in 2022.
Hepatitis A Vaccine – Healive®, the first and only WHO prequalified hepatitis A vaccine from China, has been registered in 24 countries and organizations worldwide thus far.
Inactivated Enterovirus Type 71 (EV71) Vaccine – Inlive®, has been authorized for children between the ages of six months to three-years-old by BPOM, the food and drug agency of Indonesia, in November 2022, which is the first vaccine approved in Indonesia to protect from hand, foot and mouth diseases (HFMD). This is also Inlive®'s first overseas authorization.
Sabin Inactivated Polio vaccine ("sIPV") – the Poliomyelitis Vaccine (Vero Cell), Inactivated, Sabin Strains, was prequalified by WHO in June 2022, and sIPV is available for United Nations (UN) agencies to purchase to support the global polio eradication strategy.
Quality Control – Two quality control laboratories in SINOVAC have been accredited by the China National Accreditation Service for Conformity Assessment (CNAS) in 2022.
Unaudited Financial Results for the Second Half of 2022
Sales for the second half of 2022 were $280.5 million, compared to $8.4 billion in the prior year period. The decrease was mainly due to decreased sales of CoronaVac®.
Selling, general and administrative expenses in the second half of 2022 were $667.7 million, compared to $428.5 million in the prior year period.
R&D expenses in the second half of 2022 were $257.7 million, compared to $101.1 million in the prior year period.
Net loss in the second half of 2022 was $702.3 million, compared to net income of $5.9 billion in the prior year period.
Net loss attributable to common shareholders was $373.7 million, or a loss of $3.76 per basic and diluted share, in the second half of 2022, compared to a net income attributable to common shareholders of $3.4 billion, or $33.79 per basic and $29.46 per diluted share, in the prior year period.
As the Company announced on February 22, 2019, the Company's Board of Directors determined that certain shareholders became acquiring persons, as defined in the Company's rights agreement ("Rights Agreement"), under which a trigger event occurred. As a result, the Company issued new common and preferred shares of SINOVAC. Without the effect of implementing the Rights Agreement and newly-issued common and preferred shares, basic and diluted loss per share for the second half of 2022 would be $5.17.
Non-GAAP adjusted EBITDA was $1.0 billion loss in the second half of 2022, compared to $7.5 billion in the prior year period. Non-GAAP net loss was $805.8 million in the second half of 2022, compared to $5.9 billion net income in the prior year period. Non-GAAP diluted loss per share in the second half of 2022 was $3.79 compared to an earnings per share of $29.87 in the prior year period. Non-GAAP diluted loss per share in the second half of 2022, excluding the implementation of the Rights Agreement and the newly-issued common and preferred shares, would be $6.02. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.
The Company's second half of 2022 financial statements are prepared and presented in accordance with U.S. GAAP. However, they have not been audited or reviewed by the Company's independent registered accounting firm.
Financial Results for the Twelve Months Ended December 31, 2022
Sales in 2022 were $1.5 billion, a decrease from $19.4 billion in the prior year. The decrease was due to decreased sales of CoronaVac®.
Selling, general and administrative expenses in 2022 were $823.5 million, compared to $591.2 million in the prior year.
R&D expenses in 2022 were $442.1 million, compared to $155.0 million in the prior year. The Company continued to invest in the advancement of pipeline vaccines.
Net income in 2022 was $88.1 million, compared to $14.5 billion in the prior year. Net income decreased primarily due to decreased sales.
Net income attributable to common shareholders was $107.9 million, or $1.08 per basic and $1.00 per diluted share, compared to net income attributable to common shareholders of $8.5 billion, or $85.20 per basic and $74.27 per diluted share, in the prior year.
Excluding the implementation of the Rights Agreement, as described above, and the newly-issued common and preferred shares, basic and diluted earnings per share for 2022 would be $1.59.
Non-GAAP adjusted EBITDA was $309.5 million loss in 2022, compared to income of $17.6 billion in the prior year. Non-GAAP net loss in 2022 was $177.0 million, compared to a net income of $14.5 billion in the prior year. Non-GAAP diluted loss per share in 2022 was $0.37, compared to an earnings of $74.67 per share in the prior year. Non-GAAP diluted loss per share in 2022, excluding the implementation of the Rights Agreement and the newly-issued common and preferred shares, would be $0.59 per share. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.
As of December 31, 2022, cash and cash equivalents and restricted cash totaled $4.3 billion, compared to $11.6 billion as of December 31, 2021. In 2022, net cash used in operating activities was $770.7 million, net cash used in investing activities was $5.8 billion, and net cash used in financing activities was $241.4 million. As of December 31, 2022, the Company had $0.3 million in bank loans due within one year. The Company expects that its current cash position will be able to support its operations for at least the next 12 months.
Legal Proceedings
As previously disclosed by the Company, on March 13, 2018, 1Globe Capital LLC ("1Globe") filed a complaint against the Company in the Antigua Court. The trial of the matter took place from December 3 to 5, 2018. On December 19, 2018, the Antigua judge handed down his judgment (the "Antigua Judgment"), finding the Company fully in favor, dismissing 1Globe's claim and declaring the Rights Agreement was validly adopted as a matter of Antigua law. On January 29, 2019, 1Globe filed a Notice of Appeal against the Antigua Judgment. On March 4, 2019, 1Globe filed an application for urgent interim relief, seeking an injunction to prevent the Company from continuing to implement its Rights Agreement until the resolution of the appeal. This application was heard on April 4, 2019, at which the Court of Appeal issued an order restraining the Company from operating the Rights Agreement in any way that affects 1Globe's rights or shareholding or otherwise distributing the exchange shares to the Company's shareholders who did not trigger the Rights Plan until after the determination of the appeal (the "Exchange Shares"). 1Globe's appeal against the Antigua Judgment was heard on September 18, 2019, and the appeal decision was announced by the Eastern Caribbean Supreme Court, Court of Appeal (the "Court of Appeal") on December 9, 2021, upholding the Antigua Judgment in each point. 1Globe applied for leave to appeal to the Judicial Committee of the Privy Council (the "Privy Council"), and the hearing of the application was held on February 24, 2022, in which the Court of Appeal granted 1Globe leave to appeal to the Privy Council on certain grounds, although not including the challenge to the validity of the Rights Agreement. On April 19, 2022, 1Globe renewed its application directly to the Privy Council for leave to appeal on its ground of appeal concerning the validity of the Rights Agreement. On July 13, 2022, 1Globe filed its Notice of Appeal on those grounds on which the Court of Appeal had granted 1Globe leave to appeal. On September 16, 2022, 1Globe filed an application to the Privy Council seeking permission to amend its existing application for permission to appeal and its existing Notice of Appeal, and to seek permission to appeal on another ground rejected by the Court of Appeal concerning the exercise of the Antigua Court's discretion. The Company responded on October 21, 2022. On February 15, 2023, the Privy Council made a procedural decision to allow amendment of its existing application for permission to appeal, and decided to deal with procedural and substantive issues together at the Final Hearing. 1Globe has not yet taken steps to list a substantive hearing before the Privy Council. The appeal outcome is therefore pending.
As previously disclosed, on March 5, 2018, the Company filed a lawsuit in the Court of Chancery of the State of Delaware, seeking a determination on whether 1Globe, the Chiang Li Family, OrbiMed Advisors, LLC and certain other shareholders of the Company had triggered the Rights Agreement. On April 12, 2018, 1Globe filed an amended answer to the Company's complaint, counterclaims and a third-party complaint against the Company and Mr. Weidong Yin, alleging, among other allegations, that the Rights Agreement is not valid. On March 6, 2019, the Delaware Chancery Court entered a status quo order, providing that the Company not distribute any of the Exchange Shares to the Company's shareholders who did not trigger the Rights Plan until the final disposition of the pending Delaware litigation or further order of the Court. On April 8, 2019, the Delaware Chancery Court stated that the Delaware litigation was pending the final outcome of 1Globe's appeal of the Antigua Judgment.
Separately, Heng Ren Investments LP ("Heng Ren") filed suits against SINOVAC and Weidong Yin on May 31, 2019 in Massachusetts state court for the alleged breach of fiduciary duties and wrongful equity dilution. SINOVAC moved the matter from the state court to the United States District Court for the District of Massachusetts. Subsequently, on April 29, 2021, Heng Ren filed an amended complaint which alleged that Mr. Yin breached fiduciary duties owed to minority shareholders, that SINOVAC aided and abetted breaches of fiduciary duties and that both SINOVAC and Mr. Yin engaged in wrongful equity dilution. Heng Ren requested damages, attorney fees, and prejudgment interest. In July 2021, SINOVAC moved to dismiss Heng Ren's amended complaint in the federal court in Massachusetts. On March 4, 2022, the court granted the motion as to the breach of fiduciary duty claims and denied the motion as to the wrongful equity dilution claim, and denied reconsideration of its decision on the motion. SINOVAC has answered the complaint. On July 2, 2018, the Company completed a private placement of its common shares with two private investors (the "PIPE Transaction"). On December 5, 2022, a purported shareholder filed a putative class action complaint in the United States District Court for the District of Massachusetts, asserting a claim under Section 204 of the Antigua and Barbuda International Business Corporations Act related to the PIPE Transaction, alleging that all shareholders were harmed in an identical manner to one another by the PIPE Transaction because the shares that were issued in the PIPE Transaction allegedly undervalued SINOVAC and all shareholders were purportedly wrongfully diluted as a result. The purported shareholder is represented by the same attorney who represents Heng Ren, and requests damages, attorneys' fees, and prejudgment interest. On January 18, 2023, the Company filed a motion to dismiss in such purported shareholder's matter (the "Motion to Dismiss"). On February 15, 2023, the court stayed discovery in the Heng Ren matter pending the resolution of the Motion to Dismiss. The Motion to Dismiss was fully briefed as of March 9, 2023, and is currently pending before the court.
Status of Exchange Shares and Trading in the Company's Shares
As a result of the pending legal proceedings described above, the Exchange Shares are expected to remain in a trust for the benefit of the Company's shareholders who did not trigger the Rights Plan until, at least, the conclusion of the appeal against the Antigua Judgement and the final disposition of the Delaware litigation or further order of the Delaware Chancery Court. The Exchange Shares remain issued and outstanding. The Nasdaq Stock Market LLC implemented a halt on trading of the Company's common shares at the time the Exchange Shares were issued to the trust. The Company is currently unable to estimate when trading will resume, or if Nasdaq will take any additional action in regards to trading of the Company's common shares.
About SINOVAC
Sinovac Biotech Ltd. (SINOVAC) is a China-based biopharmaceutical company that focuses on the R&D, manufacturing, and commercialization of vaccines that protect against human infectious diseases.
SINOVAC's product portfolio includes vaccines against COVID-19, enterovirus 71 (EV71) infected hand-foot-mouth disease (HFMD), hepatitis A, varicella, influenza, poliomyelitis, pneumococcal disease, mumps, etc.
The COVID-19 vaccine, CoronaVac®, has been approved for use in more than 60 countries and regions worldwide. The hepatitis A vaccine, Healive®, passed WHO prequalification requirements in 2017. The EV71 vaccine, Inlive®, is an innovative vaccine under "Category 1 Preventative Biological Products" and commercialized in China in 2016. In 2022, SINOVAC's Sabin-strain inactivated polio vaccine (sIPV) and varicella vaccine were prequalified by the WHO.
SINOVAC was the first company to be granted approval for its H1N1 influenza vaccine Panflu.1®, which has supplied the Chinese government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine, Panflu®, to the Chinese government stockpiling program.
SINOVAC continually dedicates itself to new vaccine R&D, with more combination vaccine products in its pipeline, and constantly explores global market opportunities. SINOVAC plans to conduct more extensive and in-depth trade and cooperation with additional countries, and business and industry organizations.
For more information, please visit the Company's website at www.Sinovac.Com.
Safe Harbor Statement
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. In particular, the outcome of any litigation is uncertain, and the Company cannot predict the potential results of the litigation it filed or filed against it by others. Additionally, the triggering of a shareholder rights plan is nearly unprecedented, and the Company cannot predict the impact on the Company or its stock price as a result of the trigger of the rights plan.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, SINOVAC uses the following non-GAAP financial measures: non-GAAP adjusted EBITDA, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share. For more information on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement.
SINOVAC believes that non-GAAP adjusted EBITDA, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that SINOVAC includes in net income and diluted earnings (loss) per share. SINOVAC believes that non-GAAP adjusted EBITDA, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share provide useful information about its core operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Non-GAAP adjusted EBITDA, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share should not be considered in isolation or construed as an alternative to income from operations, net income (loss), diluted earnings (loss) per share, or any other measure of performance or as an indicator of SINOVAC's operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.
Non-GAAP adjusted EBITDA represents net income (loss) and excludes interest and financing expenses, interest income, net other income and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation expenses, amortization and depreciation that SINOVAC does not believe are reflective of the core operating performance during the periods presented.
Non-GAAP net income (loss) represents net income (loss) before share-based compensation expenses and foreign exchange gain or loss.
Non-GAAP diluted earnings (loss) per share represents non-GAAP net income (loss) attributable to common shareholders divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.
SINOVAC BIOTECH LTD.
Consolidated Balance Sheets
As of December 31, 2022 and 2021
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