BMP Sunstone Announces Pro Forma Financial Results for the Full Year 2007

Business Wire, April 14, 2008

Adjusted EBITDA Increases 38% Year Over Year to $7.7 Million in 2007

Pro Forma Results Assume 100% Ownership Of Sunstone Prior to 2008

PLYMOUTH MEETING, Pa. -- BMP Sunstone Corporation (NASDAQ:BJGP) ("BMP Sunstone" or the "Company"), one of China's leading marketing and distribution pharmaceutical companies, today announced that the Company has filed a Form 8-K/A disclosing unaudited pro forma financial information for the year ended December 31, 2007. Unaudited pro forma results reflect the combined financial results of BMP Sunstone and Hong Kong Fly International Health Care, including its wholly-owned subsidiary, Sunstone Pharmaceutical Co., Ltd., ("Sunstone"), for the fiscal year 2007. Pro forma fiscal year 2006 financial results were made public in a Form 8-K/A on January 16, 2008.

While pro forma revenue increased 21.3% year over year to $73.0 million in 2007, gross profit increased 28.3% year over year to $33.1 million in 2007, and adjusted EBITDA increased 38% year over year to $7.7 million in 2007, BMP Sunstone's financial results reflect significant acquisition-related costs, non-cash charges as well as costs that the Company considers either one-time in nature or non-operating. These costs include the following:

* $1.1 million inventory adjustment to reflect beginning inventory at fair value, in pro forma cost of sales;

* $0.4 million pro forma adjustment to reflect incremental amortization and depreciation, in pro forma cost of sales;

* $1.9 million pro forma adjustment to reflect incremental amortization and depreciation, in sales and marketing expense; and

* $3.3 million stock compensation expense, in Sunstone's general and administrative expense.

Additionally, the Company notes that BMP Sunstone's reported 2007 financial results included approximately $2.0 million of costs related to licensing Enablex from Novartis.

Pro Forma 2007 Financial Results

On a pro forma basis, revenue increased 21.3% in 2007 to $73.0 million from $60.1 million in the prior year, while gross profit increased 28.3% to $33.1 million from $25.8 million the year before. Gross margin increased 246 basis points to 45.4% from 42.9% in 2006, reflecting a revenue-mix shift toward higher-margin sales and marketing services at BMP China. Gross margin performance was offset by a $1.1 million adjustment to reflect beginning Sunstone's inventory at fair value, as well as approximately $0.4 million related to Sunstone's incremental amortization and depreciation. Excluding these acquisition-related adjustments, gross profit would have been $34.6 million and gross margin would have been 47.4%.

BMP Sunstone's pro forma operating loss was $2.1 million compared to $0.4 million in the full year 2006. Operating performance was offset by approximately $1.9 million of acquisition-related adjustments, specifically fair value adjustments to amortization and depreciation, in addition to the $3.3 million non-cash share-based compensation expense granted to Mr. Han, the Chairman and General Manager of Sunstone, for services he previously rendered as Chairman and General Manager. Excluding these costs and the $1.5 million acquisition-related adjustments in cost of sales, as explained above, BMP Sunstone's operating income would have been approximately $4.6 million.

David Gao, Chief Executive Officer of BMP Sunstone, stated, "Today's pro forma results reflect a significant number of acquisition-related costs, but we believe that long-term, we have opportunities to optimize the cost structure and drive revenue growth. We view 2008 as a year of transition in this regard, even though we did see some early progress as our gross margins improved substantially. With the acquisition of Sunstone, we believe we are a stronger, more robust service provider than ever before, and this matters most as we approach global pharmaceutical companies to bring their products into China."

Adjusted EBITDA in 2007 increased 38% to $7.7 million from $5.6 million in 2006. Due to BMP Sunstone's recent acquisition and debt financing, the Company incurs significant non-cash charges for depreciation, amortization and stock compensation expense that may not reflect the Company's operating performance and ability to generate cash flow from operations. Management believes that adjusted EBITDA is a worthwhile indicator of the Company's financial performance. Adjusted EBITDA is a non-GAAP financial measure within the meaning of the Securities and Exchange Commission (SEC) regulations. As such, BMP Sunstone has provided a reconciliation of Adjusted EBITDA to net income in a table in this press release.

Balance Sheet

On a pro forma basis, the Company's cash and cash equivalents were approximately $29.8 million as of December 31, 2007. BMP Sunstone had short term borrowings of $7.8 million as well as $3.7 million of current liabilities due to related parties as of December 31, 2007.

Additionally, please note that the pro forma balance sheet reflects $25.3 million of Sunstone's accounts receivable, of which $15.3 million are bills receivable. To reduce the Company's credit risk, the Company requires certain customers to pay for the sale of the Company's products by bills receivable. Bills receivable represents short-term notes receivable issued by a financial institution that entitles the Company to receive the full face amount from the financial institution at maturity, which generally ranges from 3 to 6 months from the date of issuance. Historically, the Company has experienced no losses on bills receivable.