AMITIZA Revenue Performance Drives Income
Growth
R-Tech Ueno Tender Offer Achieved
Threshold; Sucampo Closed on Debt Financing
Company Reiterates 2015 Earnings
Guidance
Company to Host Conference Call Today
at 8:30 a.m. EST
Sucampo Pharmaceuticals, Inc. (Sucampo) (NASDAQ:SCMP), a global
biopharmaceutical company, today reported consolidated financial
results for the third quarter ended September 30, 2015.
For the three months ended September 30, 2015, Sucampo reported
year-over-year growth of 6% to $33.4 million in total revenue.
Excluding a one-time $2.5 million milestone payment earned in the
third quarter of 2014 as a result of net sales of AMITIZA in Japan,
year-over-year total revenue growth was 16%. Product sales revenue
increased to $11.0 million, representing 20% year-over-year growth
excluding the 2014 milestone payment. Product royalty revenue grew
15% year-over-year to $19.3 million. Sucampo reported net income of
$7.2 million and diluted earnings per share (EPS) of $0.16 during
the third quarter of 2015, compared to net income of $1.5 million
and diluted EPS of $0.03 in the same period in 2014.
"At Sucampo, we continue to be excited about our progress driven
by the strong performance of our flagship brand, AMITIZA," said
Peter Greenleaf, Chief Executive Officer of Sucampo. "In the third
quarter, we delivered year-over-year earnings growth driven by
AMITIZA sales in the U.S. and Japan, and we embarked upon our first
strategic transaction with our tender offer for R-Tech Ueno, which
we completed in October. We expect the acquisition of R-Tech Ueno
to be immediately accretive to our financial results, to increase
our revenue from AMITIZA and to expand our product development
pipeline with product candidates across multiple different diseases
of high unmet medical need, such as the vascular adhesion protein
inhibitor program which may hold promise in nonalcoholic
steatohepatitis (NASH) and chronic obstructive pulmonary disease
(COPD)."
Third Quarter 2015 Operational Review
AMITIZA
United States
- AMITIZA total prescriptions were approximately 379,000, an
increase of 10% compared to the third quarter of 2014. Net sales of
AMITIZA, reported by Takeda Pharmaceuticals U.S.A., Inc. (Takeda)
for royalty calculation purposes, increased 15% to $101.7 million
for the third quarter of 2015, compared to $88.5 million in the
same period of 2014.
Global Markets
- In Japan, Sucampo's revenue from sales of AMITIZA to Mylan N.V.
continued to grow, increasing 16% to $10.3 million for the third
quarter of 2015, compared to $8.9 million in the same period of
2014.
- In October 2015, Health Canada approved AMITIZA for chronic
idiopathic constipation (CIC) in adults. AMITIZA will be marketed
in Canada by Takeda.
- Following a recommendation for marketing authorization for
AMITIZA for the treatment of CIC in early 2015, Spain issued
marketing authorization in the third quarter, joining Ireland,
Luxembourg, the Netherlands, Belgium, Austria, Germany, and
Italy.
Corporate
- In August 2015, Sucampo launched, through its wholly-owned
Japanese subsidiary, an all-cash tender offer in Japan to acquire
up to 56% of the outstanding shares of R-Tech Ueno (TSE:4573:JP).
Separately, Sucampo entered into a share purchase agreement with
the founders of R-Tech Ueno, who are also Sucampo's founders, and a
related entity to acquire the remaining 44% of R-Tech Ueno shares.
Both transactions closed successfully in October 2015, resulting in
Sucampo's acquisition of approximately 98% of R-Tech's shares.
Sucampo will acquire the remaining outstanding shares of R-Tech
Ueno through a squeeze-out process under Japanese law, which is
expected to conclude in early December. The total purchase price
for all outstanding R-Tech Ueno shares—including the tender offer,
private share purchase, and squeeze out—is 32.8 billion Japanese
Yen (JPY), or approximately $275 million.
The R-Tech Ueno acquisition is expected to provide a number of
strategic benefits to Sucampo, including:
- Immediate accretion to revenue, earnings and operating cash
flows;
- Manufacturing and supply chain control, with resulting
efficiencies in cost of goods sold; and
- Expansion of Sucampo's product pipeline and diversification in
major therapeutic areas.
- In October 2015, Timothy P. Walbert was appointed to Sucampo's
Board of Directors.
Research and Development
- In September 2015, Sucampo initiated a phase 2a clinical trial
of cobiprostone oral spray for the prevention of oral mucositis in
patients suffering from head and neck cancer receiving concurrent
radiation and chemotherapy.
Third Quarter 2015 Financial Review
- Net income was $7.2 million for the third quarter of 2015
compared to net income of $1.5 million in the same period in 2014.
Diluted EPS for the third quarter of 2015 was $0.16 compared to
diluted EPS of $0.03 in the same period in 2014. Income from
operations for the third quarter of 2015 was $11.7 million compared
to operating income of $3.6 million in the same period in 2014.
Adjusted EBITDA, defined as net income before interest, taxes,
depreciation, amortization, stock-based compensation expense and
intangible impairment, was $13.0 million for the third quarter of
2015 compared to $10.0 million in the same period in 2014, an
increase of 31%. A reconciliation of adjusted EBITDA to income from
operations, the most directly comparable GAAP financial measure, is
included in the tables below.
- Total revenues were $33.4 million for the third quarter of 2015
compared to $31.5 million in the same period in 2014, an increase
of 6%. The increase was primarily due to the growth of AMITIZA
sales in Japan and higher product royalty revenue on AMITIZA net
sales in the U.S. These increases were offset by a $2.5 million
milestone payment earned in the third quarter of 2014 upon the
first occurrence of annual net sales of AMITIZA for CIC exceeding
5.0 billion JPY. There were no milestone payments earned in the
third quarter of 2015.
- Costs of goods sold were $5.3 million for the third quarter of
2015 compared to $5.0 million for the same period in 2014, an
increase of 6%. The increase was primarily due to increased AMITIZA
sales in Japan.
- Research and development expenses were $8.4 million for the
third quarter of 2015 compared to $5.3 million for the same period
of 2014, an increase of 58%. The increase was primarily due to
increased activity on our product development programs, mainly
those related to cobiprostone for PPI-refractory non-erosive reflux
disease/ symptomatic gastro-esophageal reflux disease and AMITIZA
for pediatric functional constipation. A portion of our research
and development expenses for this AMITIZA program is reimbursed by
Takeda and reported separately as research and development
revenue.
- General and administrative expenses were $7.8 million for the
third quarter of 2015 compared to $8.1 million for the same period
of 2014, a decrease of 5%. The decrease was primarily due to lower
legal fees due to settlement of our patent infringement lawsuit
against Par Pharmaceutical, offset in part by an increase in
stock-based compensation expense.
- Selling and marketing expenses were $0.4 million for the third
quarter of 2015 compared to $3.8 million for the same period of
2014, a decrease of 90%. The decrease was primarily due to the
reduction in our direct commercial operations in the U.S. and
Europe in the fourth quarter of 2014.
- The effective tax rate for the third quarter of 2015 was 37%,
compared to 61% in the same period of 2014. The effective rate for
the quarter is based on a projection of the full year rate. The
reduction in tax rate is due to the timing of the allowable
deduction for intangible impairment expense, together with the
effect on the treatment of non-U.S. income following the reduction
in holdings of Sucampo's founding stockholders below 50% of
Sucampo's outstanding shares, which occurred in the first quarter
of 2015.
- Sucampo's results of operations for the prior year quarter
included a $5.6 million impairment charge related to RESCULA®
(unoprostone isopropyl), a product that Sucampo returned to R-Tech
Ueno in May 2015 and is no longer marketing for any
indications.
Cash, Cash Equivalents, Restricted Cash and Marketable
Securities
For the quarter ended September 30, 2015, cash provided by
operating activities was $24.2 million, compared to $7.5 million
for the same period in 2014.
At September 30, 2015, cash, cash equivalents, restricted cash
and investments were $136.6 million compared to $110.0 million at
December 31, 2014. At September 30, 2015 and December 31, 2014,
notes payable were $21.7 million and $25.8 million, respectively,
including current portions of $8.4 million and $8.2 million,
respectively.
Subsequent to September 30, 2015, in connection with its
acquisition of R-Tech Ueno, Sucampo entered into a credit facility
with institutional lenders allowing for term loans in the aggregate
amount of $250.0 million. The loans under the credit facility bear
interest at LIBOR (subject to a 1% floor) plus 7.25% or base rate
(subject to a 2% floor) plus 6.25%, and are payable in quarterly
installments beginning in March 2016 and continuing until September
2021, with a final installment due in October 2021. Amounts due
under the credit facility are also subject to annual mandatory
prepayments based on cash flows.
Guidance
Sucampo today reiterated its earnings guidance for the full year
ending December 31, 2015. Sucampo expects full year 2015 GAAP net
income to be in the range of $30.0 million to $35.0 million, or
$0.65 to $0.75 per diluted share.
Sucampo is amending its guidance for 2016, which was provided at
the time of the announcement of the R-Tech Ueno tender offer in
August 2015. The 2016 amended guidance includes interest expense
and debt costs related to the acquisition, which were excluded as
previously noted. For full year 2016, excluding any projected
amortization of intangibles and purchase accounting entries related
to the acquisition, Sucampo expects to achieve net income of $45.0
million to $50.0 million, earnings per share of $0.97 to $1.07, and
adjusted EBITDA of $100.0 million to $105.0 million. In addition,
Sucampo expects to achieve pre-tax operational synergies of
approximately $11.4 million on an annualized basis in 2016.
Additionally, Sucampo is issuing revenue guidance for 2016.
Based on information as of today, Sucampo expects to achieve total
GAAP revenues of $195.0 million to $205.0 million for the year
ending December 31, 2016.
Non-GAAP Financial Measures
This press release contains non-GAAP earnings, which is GAAP net
income before interest, tax, depreciation, amortization, stock
option expense and intangible impairment. Sucampo believes that
this non-GAAP measure of financial results provides useful
information to management and investors relating to its results of
operations. Sucampo's management uses this non-GAAP measure to
compare Sucampo's performance to that of prior periods for trend
analyses, and for budgeting and planning purposes. Sucampo believes
that the use of non-GAAP financial measures provides an additional
tool for investors to use in evaluating ongoing operating results
and trends and in comparing the Sucampo's financial measures with
other companies in its industry, many of which present similar
non-GAAP financial measures to investors, and that it allows for
greater transparency with respect to key metrics used by management
in its financial and operational decision-making.
Management of the company does not consider non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitation of non-GAAP
financial measures is that they exclude significant expenses that
are required by GAAP to be recorded in the Sucampo's financial
statements. In order to compensate for these limitations,
management presents non-GAAP financial measures together with GAAP
results. Non-GAAP measures should be considered in addition to
results and guidance prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
Reconciliation tables of the most comparable GAAP financial measure
to the non-GAAP financial measure used in this press release are
included with the financial tables at the end of this release.
Sucampo urges investors to review the reconciliation and not to
rely on any single financial measure to evaluate the Sucampo's
business. In addition, other companies, including companies in our
industry, may calculate similarly named non-GAAP measures
differently than we do, which limits their usefulness in comparing
our financial results with theirs.
Company to Host Conference Call Today
Sucampo will host a conference call and webcast today at 8:30 am
EST. To participate on the live call, please dial 877-415-3180
(domestic) or 857-244-7323 (international) and use passcode
25105024, five to ten minutes ahead of the start of the call. A
replay of the call will be available within a few hours after the
call ends. Investors may listen to the replay by dialing
888-286-8010 (domestic) or 617-801-6888 (international), passcode
68410149. Investors interested in accessing the live audio webcast
of the teleconference may do so at
http://www.sucampo.com/investors/events-presentations/ and should
log on before the teleconference begins in order to download any
software required. The archive of the teleconference will remain
available for 30 days.
About AMITIZA® (lubiprostone)
AMITIZA (lubiprostone) is a chloride channel activator that acts
locally in the small intestine. By increasing intestinal fluid
secretion, lubiprostone increases motility in the intestine,
thereby facilitating the passage of stool and alleviating symptoms
associated with CIC. Lubiprostone, via activation of apical CIC-2
channels in intestinal epithelial cells, bypasses the antisecretory
action of opiates that results from suppression of secretomotor
neuron excitability. Activation of CIC-2 by lubiprostone has also
been shown to stimulate recovery of mucosal barrier function and
reduce intestinal permeability via the restoration of tight
junction protein complexes in ex vivo studies of ischemic porcine
intestine.
AMITIZA (24 mcg twice daily) is indicated in the U.S. for the
treatment of adults with CIC and opioid-induced constipation (OIC)
with chronic, non-cancer pain. AMITIZA (8 mcg twice daily) is also
approved in the U.S. for irritable bowel syndrome with constipation
(IBS-C) in women 18 years of age and older. In Japan, AMITIZA (24
mcg twice daily) is indicated for the treatment of chronic
constipation (excluding constipation caused by organic diseases).
In Canada, AMITIZA (24 mcg twice daily) is indicated for the
treatment of CIC in adults. In the U.K., AMITIZA (24 mcg twice
daily) is indicated for the treatment of CIC and associated
symptoms in adults, when response to diet and other
non-pharmacological measures (e.g. educational measures, physical
activity) are inappropriate. In Switzerland, AMITIZA (24 mcg twice
daily) is indicated for the treatment of CIC in adults and for the
treatment of OIC and associated signs and symptoms such as stool
consistency, straining, constipation severity, abdominal
discomfort, and abdominal bloating in adults with chronic,
non-cancer pain. The efficacy of AMITIZA for the treatment of OIC
in patients taking opioids of the diphenylheptane class, such as
methadone, has not been established.
About Sucampo Pharmaceuticals, Inc.
Sucampo Pharmaceuticals, Inc. is focused on the development and
commercialization of medicines that meet major unmet medical needs
of patients worldwide. Sucampo has one marketed product – AMITIZA –
and a pipeline of product candidates in clinical development. A
global company, Sucampo is headquartered in Rockville, Maryland,
and has operations in Japan, Switzerland and the U.K. For more
information, please visit www.sucampo.com.
The Sucampo logo and the tagline, The Science of Innovation, are
registered trademarks of Sucampo AG. AMITIZA is a registered
trademark of Sucampo AG.
Follow us on Twitter (@Sucampo_Pharma). Follow us on LinkedIn
(Sucampo Pharmaceuticals).
Twitter LinkedIn
Sucampo Forward-Looking Statement
This press release contains "forward-looking statements" as that
term is defined in the Private Securities Litigation Reform Act of
1995. These statements are based on management's current
expectations and involve risks and uncertainties, which may cause
results to differ materially from those set forth in the
statements. The forward-looking statements may include statements
regarding financial results for the full years ending December 31,
2015 and 2016, as well as statements about potential future revenue
growth, statements regarding the acquisition of R-Tech Ueno and the
integration of its business and operations with that of Sucampo,
and statements regarding product development, and other statements
that are not historical facts. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: the impact of pharmaceutical industry
regulation and health care legislation; the ability of Sucampo to
continue to develop the market for AMITIZA; the ability of Sucampo
to develop, commercialize or license existing pipeline products or
compounds or license or acquire non-prostone products or drug
candidates; Sucampo's ability to accurately predict future market
conditions; dependence on the effectiveness of Sucampo's patents
and other protections for innovative products; he risk of new and
changing regulation and health policies in the U.S. and
internationally; the effects of competitive products on Sucampo's
products; risks relating to Sucampo's financing for the R-Tech Ueno
acquisition, including the restrictive covenants undertaken by
Sucampo as part of the financing; risks related to the squeeze-out
of R-Tech Ueno minority stockholders under Japanese law; Sucampo's
ability to successfully integrate R-Tech Ueno's operations
following the close of the acquisition; and the exposure to
litigation and/or regulatory actions.
No forward-looking statement can be guaranteed and actual
results may differ materially from those projected. Sucampo
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events,
or otherwise. Forward-looking statements in this press release
should be evaluated together with the many uncertainties that
affect Sucampo's business, particularly those mentioned in the risk
factors and cautionary statements in Sucampo's most recent Form
10-K as filed with the Securities and Exchange Commission on March
9, 2015 as well as its filings with the Securities and Exchange
Commission on Forms 8-K and 10-Q since the filing of the Form 10-K,
all of which Sucampo incorporates by reference.
Sucampo Pharmaceuticals,
Inc. |
Consolidated Statements
of Operations and Comprehensive Income (unaudited) |
(in thousands, except per share
data) |
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
Revenues: |
|
|
|
|
Research and development revenue |
$ 2,714 |
$ 1,797 |
$ 7,468 |
$ 5,281 |
Product royalty revenue |
19,328 |
16,811 |
51,209 |
44,200 |
Product sales revenue |
11,022 |
11,717 |
36,678 |
25,572 |
Co-promotion revenue |
-- |
936 |
-- |
2,021 |
Contract and collaboration revenue |
384 |
202 |
2,457 |
619 |
Total revenues |
33,448 |
31,463 |
97,812 |
77,693 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Costs of goods sold |
5,286 |
4,974 |
18,656 |
12,163 |
Intangible assets impairment |
-- |
5,631 |
-- |
5,631 |
Research and development expenses |
8,368 |
5,297 |
22,285 |
14,684 |
General and administrative expenses |
7,752 |
8,117 |
22,363 |
23,571 |
Selling and marketing expenses |
385 |
3,801 |
1,617 |
11,461 |
Total costs and
expenses |
21,791 |
27,820 |
64,921 |
67,510 |
|
|
|
|
|
Income from operations |
11,657 |
3,643 |
32,891 |
10,183 |
Non-operating income (expense): |
|
|
|
|
Interest income |
62 |
26 |
155 |
106 |
Interest expense |
(243) |
(384) |
(784) |
(1,176) |
Other income, net |
87 |
519 |
1,947 |
143 |
Total non-operating income
(expense), net |
(94) |
161 |
1,318 |
(927) |
|
|
|
|
|
Income before income taxes |
11,563 |
3,804 |
34,209 |
9,256 |
Income tax provision |
(4,327) |
(2,324) |
(10,989) |
(5,410) |
Net income |
$ 7,236 |
$ 1,480 |
$ 23,220 |
$ 3,846 |
|
|
|
|
|
Net income per share: |
|
|
|
|
Basic |
$ 0.16 |
$ 0.03 |
$ 0.52 |
$ 0.09 |
Diluted |
$ 0.16 |
$ 0.03 |
$ 0.51 |
$ 0.09 |
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
44,731 |
43,796 |
44,576 |
43,613 |
Diluted |
46,309 |
43,796 |
45,939 |
43,613 |
|
|
|
|
|
|
|
|
|
|
Earnings before interest, tax, depreciation
& amortization, stock-based compensation and intangible
impairment |
|
|
|
|
Income from operations |
$ 11,657 |
$ 3,643 |
$ 32,891 |
$ 10,183 |
Other income, net |
87 |
519 |
1,947 |
143 |
Earnings before interest and tax
(EBIT) |
11,744 |
4,162 |
34,838 |
10,326 |
Depreciation and amortization |
218 |
263 |
433 |
984 |
Stock-based compensation |
1,054 |
725 |
4,007 |
1,476 |
Intangibles asset impairment, net of tax |
-- |
4,802 |
-- |
4,802 |
Earnings before interest, tax,
depreciation & amortization, stock-based compensation and
intangible impairment |
$ 13,016 |
$ 9,952 |
$ 39,278 |
$ 17,588 |
|
|
|
|
|
Sucampo Pharmaceuticals,
Inc. |
Consolidated Balance
Sheets (unaudited) |
(in thousands, except share and
per share data) |
|
|
|
|
September 30, |
December 31, |
|
2015 |
2014 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 91,505 |
$ 71,622 |
Investments, current |
38,022 |
22,393 |
Product royalties receivable |
19,328 |
18,576 |
Accounts receivable, net |
6,682 |
5,338 |
Restricted cash, current |
1,927 |
213 |
Inventory |
296 |
-- |
Prepaid expenses and other current
assets |
3,686 |
4,182 |
Total current assets |
161,446 |
122,324 |
|
|
|
Investments, non-current |
5,124 |
13,540 |
Property and equipment, net |
2,296 |
763 |
Intangible assets, net |
136 |
151 |
Deferred tax assets, non-current |
3,136 |
571 |
Deferred charge, non-current |
1,474 |
1,695 |
Restricted cash, non-current |
-- |
2,224 |
Other assets |
160 |
306 |
Total assets |
$ 173,772 |
$ 141,574 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 4,936 |
$ 4,143 |
Accrued expenses |
10,151 |
8,467 |
Deferred revenue, current |
1,152 |
2,051 |
Collaboration obligation |
5,552 |
6,000 |
Income tax payable |
691 |
1,291 |
Notes payable, current |
8,411 |
8,240 |
Other current liabilities |
2,581 |
3,618 |
Total current
liabilities |
33,474 |
33,810 |
|
|
|
Notes payable, non-current |
13,330 |
17,578 |
Deferred revenue, non-current |
4,586 |
5,118 |
Deferred tax liability, non-current |
210 |
820 |
Other liabilities |
4,384 |
1,936 |
Total liabilities |
55,984 |
59,262 |
|
|
|
Preferred stock, $0.01 par value; 5,000,000
shares authorized at September 30, 2015 and December 31, 2014;
no shares issued and outstanding at September 30, 2015 and December
31, 2014 |
-- |
-- |
Class A common stock, $0.01 par value;
270,000,000 shares authorized at September 30, 2015 and December
31, 2014; 45,312,051 and 44,602,988 shares issued and outstanding
at September 30, 2015 and December 31, 2014, respectively |
453 |
446 |
Class B common stock, $0.01 par value;
75,000,000 shares authorized at September 30, 2015 and December 31,
2014; no shares issued and outstanding at September 30, 2015 and
December 31, 2014 |
-- |
-- |
Additional paid-in capital |
95,749 |
83,646 |
Accumulated other comprehensive income |
14,411 |
14,265 |
Treasury stock, at cost; 524,792 shares at
September 30, 2015 and December 31, 2014 |
(2,313) |
(2,313) |
Retained earnings (accumulated deficit) |
9,488 |
(13,732) |
Total stockholders'
equity |
117,788 |
82,312 |
Total liabilities and
stockholders' equity |
$ 173,772 |
$ 141,574 |
CONTACT: Sucampo Pharmaceuticals, Inc.
Silvia Taylor
Senior Vice President, Investor Relations and
Corporate Affairs
1-240-223-3718
staylor@sucampo.com
Sucampo Pharmaceuticals, Inc. (delisted) (NASDAQ:SCMP)
Historical Stock Chart
From Apr 2024 to May 2024
Sucampo Pharmaceuticals, Inc. (delisted) (NASDAQ:SCMP)
Historical Stock Chart
From May 2023 to May 2024