EdgarFilingEXHIBIT 99.1
Sucampo Reports Fourth Quarter and Full Year 2016 Financial Results
Continued Revenue Growth Leads to Strong Income Growth
Company Reiterates 2017 Guidance
Company Announces Key Executive Transitions
Company to Host Conference Call Today at 8:30 a.m. EST
ROCKVILLE, Md., March 08, 2017 (GLOBE NEWSWIRE) -- Sucampo Pharmaceuticals, Inc. (Sucampo) (NASDAQ:SCMP), a global biopharmaceutical company, today reported consolidated financial results for the fourth quarter and full year ended December 31, 2016.
| Summary of Results | Q4-16 | % Increase / (Decrease) over Q4-15 | FY-16 | % Increase / (Decrease) over FY-15 |
| Revenue | $73.0M | 32 | % | $230.1 M | 50 | % |
| Net Income GAAP | $15.3M | 51 | % | $18.5M | (45 | %) |
| EPS GAAP – diluted | $ | 0.34 | 49 | % | $ | 0.42 | (43 | %) |
| EBITDA | $19.4M | (23 | %) | $87.1M | 44 | % |
| Adjusted Net Income | $30.7M | 60 | % | $66.2M | 52 | % |
| Adjusted EPS – diluted | $ | 0.68 | 58 | % | $ | 1.51 | 58 | % |
| Adjusted EBITDA | $42.8M | 54 | % | $117.7M | 68 | % |
Additionally, today Sucampo announced two updates to its executive management team. Andrew Smith, Chief Financial Officer, will be leaving Sucampo to move back to Europe with his family to pursue professional opportunities there. He will remain in his CFO role through March 20 and will thereafter assist in the transition of his responsibilities. Peter Pfreundschuh, CPA will become Sucampo’s new Chief Financial Officer, effective on March 20. Also, effective March 20, Jones “Woody” Bryan, Ph.D. will become Sucampo’s new Senior Vice President of Business Development and Licensing.
“The strong financial results we achieved in the fourth quarter concluded an incredibly successful 2016 highlighted by significant growth in revenues, earnings and EBITDA and the achievement of several key corporate objectives,” said Peter Greenleaf, Chairman and Chief Executive Officer of Sucampo. “We expect to maintain this momentum through 2017, with continued strong financial performance and execution on strategic transactions to further boost growth and diversify our product portfolio. Additionally, I’d like to thank Andrew for his years of service to Sucampo, and I wish him and his family all the best as he embarks on the next phase of his professional life. I’d also like to extend a warm welcome to Peter and Woody and look forward to the contributions they will make to Sucampo in these key roles.”
For the three months ended December 31, 2016, Sucampo reported year-over-year total revenue growth of 32% to $73.0 million. Product sales revenue increased to $42.3 million, representing year over year growth of 43%, and product royalty revenue grew 15% year-over-year to $26.3 million. Revenue in the fourth quarter of 2016 also included a one-time milestone of $10 million related to the achievement of certain Amitiza sales milestones in Japan from Mylan N.V., versus a one-time sales milestones of $5 million in 2015.
Sucampo reported GAAP net income of $15.3 million, or $0.34 per diluted share during the fourth quarter of 2016 compared to GAAP net income of $10.2 million, or $0.23 per diluted share, during the fourth quarter of 2015, an increase of 51% and 49%, respectively.
Sucampo reported adjusted net income of $30.7 million, or $0.68 per diluted share, during the fourth quarter of 2016, compared to adjusted net income of $19.2 million, or $0.43 per diluted shares, during the fourth quarter of 2015, an increase year-over-year of 60% and 58%, respectively. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, and various non-cash items, which includes amortization of acquired intangibles, inventory step-up adjustment, R&D intangible asset impairment, restructuring costs, legal settlement, acquisition related expenses, amortization of debt financing costs, debt extinguishment, R&D license option expense, acquisition related acceleration of deferred revenue, foreign currency translations and the tax impact of these adjustments.
For the full year 2016, Sucampo reported year-over-year total revenue growth of 50% to $230.1 million. Product sales revenue increased to $128.8 million, representing 94% year-over-year growth, and product royalty revenue grew 11% year-over-year to $82.5 million. Revenue for the year 2016 and 2015 included an additional $55.5 million and $11.8 million due to the acquisition of R-Tech Ueno, which we acquired on October 20, 2015. Excluding the additional revenues from the acquisition, base revenue grew by 22%.
For the full year 2016, Sucampo reported GAAP net income of $18.5 million, or $0.42 per diluted share compared to GAAP net income of $33.4 million, or $0.73 per diluted share, during the full year 2015, a decrease of 45% and 43%, respectively. The fluctuation was primarily due to the release of inventory step-up and intangible amortization resulting from the aforementioned RTU acquisition. On an adjusted basis, Sucampo reported net income of $66.2 million, or $1.51 per diluted share, during the full year 2016, compared to net income of $ 43.7 million, or $0.96 per diluted shares, during the full year 2015, an increase year-over-year of 52% and 58%, respectively.
Fourth Quarter 2016 Operational Review
CORPORATE
- Effective on March 20, 2017, Peter Pfreundschuh, CPA will join Sucampo as Chief Financial Officer. Peter brings to Sucampo more than 25 years of progressive financial and business experience, including roles in commercial leadership and business development and licensing. He is the former Vice President Finance and Chief Financial Officer for Immunomedics Inc. and the former Chief Financial Officer of CircuLite, Inc. Prior roles include leadership positions at AstraZeneca Pharmaceuticals L.P., Johnson & Johnson Pharmaceuticals L.L.C., Johnson & Johnson Research & Development L.L.C., and Alimenterics Inc. Peter holds a Masters in Business Administration degree from the Rider University Graduate School of Business and a Bachelor of Science degree in Accounting from Rutgers University School of Business. He is a member of the Board of Directors of GiTBasic LLC and an advisor to Data Reduction Systems, LLC.
- Also effective on March 20, 2017, Jones “Woody” Bryan, Ph.D. will join Sucampo as the new Senior Vice President of Business Development and Licensing. Through Woody’s more than 25 years of professional experience, he brings to Sucampo expertise in business development and licensing grounded by previous roles in scientific research and product development. Woody is the former Senior Vice President – Business Development for Brands at Lupin Pharmaceuticals Inc., and has held positions of increasing responsibility at Supernus Pharmaceuticals Inc., Shire Laboratories, Applied Analytical Industries, Inc., and Schering Plough Research Institute. Woody holds a Ph.D. in Pharmaceutical Sciences from the Medical University of South Carolina and a Bachelor of Science degree in Zoology from Clemson University. He is a member of the Board of Directors of Afecta Pharma.
AMITIZA
United States
- On March 2, 2017, Sucampo received a Paragraph IV certification notice letter (Notice Letter) regarding an Abbreviated New Drug Application (ANDA) submitted to the U.S. Food and Drug Administration (FDA) by Amneal Pharmaceuticals requesting approval to market, sell and use a generic version of the 8 mcg and 24 mcg AMITIZA® (lubiprostone) soft gelatin capsule products for the treatment of opioid induced constipation. Sucampo is currently reviewing the Notice Letter. By statute, if Sucampo initiates a patent infringement lawsuit against Amneal within 45 days of the notice date, the FDA would automatically stay approval of the Amneal ANDA until the earlier of 30 months from the notice date or entry of a district court decision finding the patents invalid or not infringed. AMITIZA is currently protected by 15 issued patents that are listed in the FDA’s Orange Book, with the latest expiring in 2027.
- AMITIZA total prescriptions in the fourth quarter of 2016 were 383,863, as reported by IMS, a decrease of 2% compared to the fourth quarter of 2015. Net sales of AMITIZA, reported by Takeda Pharmaceuticals U.S.A., Inc. (Takeda) for royalty calculation purposes, increased 11% to $114.2 million for the fourth quarter of 2016, compared to $103.0 million in the same period of 2015. The increase was due to a mix of price and royalty rate. For the full year 2016, AMITIZA total prescriptions were 1,487,641, an increase of 1% compared to the full year of 2015. Net sales of AMITIZA, reported by Takeda for royalty calculation purposes, increased 10% to $416.5 million for the full year 2016, compared to $380.4 million in the same period of 2015. The increase was due to a mix of price and royalty rate.
- Royalty revenue was $26.3 million in the fourth quarter of 2016 compared to $22.8 million in the same period in 2015, an increase of 15%. For the full year 2016, royalty revenue was $82.3 million compared to $74.1 million in the same period in 2015, an increase of 11%. Takeda AMITIZA sales resulting from R-Tech Ueno acquisition was $13.2 million in the fourth quarter 2016 comparted to $10.3 million in the same period of 2015. For the full year 2016, Takeda AMITIZA sales was $45.2 million compared to $10.3 million in the same period of 2015.
Global Markets
In Japan, Sucampo's revenue from sales of AMITIZA to Mylan was $26.2 million for the fourth quarter of 2016, compared to $17.9 million in the same period of 2015, an increase of 46%. Revenue in the fourth quarter of 2016 and 2015 included Japan sales milestones of $10 million and $5 million, respectively. For the full year 2016, revenue from sales of AMITIZA to Mylan was $72.7 million, compared to $53.9 million in the same period of 2015. Unit volume as reported by Mylan grew more than 41% for the full year 2016 compared to the full year 2015, to 137.0 million units versus 89.7 million units in 2015
Corporate
- On December 27, 2016, Sucampo sold $300.0 million aggregate principal amount of 3.25% convertible senior notes due 2021 in a private placement to Leerink Partners LLC. The proceeds from the notes were utilized to pay off all existing amounts due under Sucampo’s $250.0 million credit agreement. The excess proceeds will be utilized for general business purposes.
Research and Development
- Clinical development of a sprinkle formulation of lubiprostone was initiated in December 2016. An initial healthy volunteer comparative pharmacokinetics and food-effect bioavailability study was completed. Top line results will be available in Q1 2017. In the same timeframe, a randomized, placebo-controlled bioequivalence study comparing sprinkle and capsule formulations of lubiprostone in adult CIC patients will be initiated. An sNDA for approval of the sprinkle formulation for adults is intended to be submitted in the second half of 2017.
Fourth Quarter and Full Year 2016 Financial Review
- On a GAAP basis, Sucampo reported net income of $15.3 million and a diluted EPS of $0.34 during the fourth quarter of 2016, compared to net income of $10.2 million and diluted EPS of $0.23 in the same period in 2015. Adjusted net income was $30.7 million, or $0.68 per diluted share, during the fourth quarter of 2016, compared to adjusted net income of $19.2 million, or $0.43 per diluted share in the fourth quarter of 2015. For the full year 2016, Sucampo reported GAAP net income of $18.5 million and a diluted EPS of $0.42, compared to net income of $33.4 million and diluted EPS of $0.73 in the same period in 2015. Adjusted net income was $66.2 million, or $1.51 per diluted share, for the full year 2016, compared to adjusted net income of $43.7 million, or $0.96 per diluted share for the full year 2015.
- EBITDA reflects net income excluding the impact of provision for income taxes, interest expense, interest income, depreciation, R&D intangible asset impairment, amortization of acquired intangibles, and inventory step-up adjustments. EBITDA was $19.4 million for the fourth quarter of 2016 compared to EBITDA of $25.1 million for the same period in 2015, a decrease of 23%. Adjusted EBITDA was $42.8 million for the fourth quarter of 2016, compared to $27.8 million in the same period in 2015, an increase of 54%. For the full year 2016, EBITDA was $87.1 million compared to EBITDA of $60.3 million for the same period in 2015, an increase of 44%. Adjusted EBITDA was $117.7 million for the full year 2016 compared to $69.9 million in the same period in 2015, an increase of 68%. Adjusted EBITDA reflects EBITDA and adjusts for specified items that can be highly variable or difficult to predict, and various non-cash items, which includes share based compensation expense, restructuring costs, acquisition related expenses, debt extinguishment, R&D license option, legal settlement, foreign currency translations and the acquisition related acceleration of deferred revenue
- Total revenues were $73.0 million for the fourth quarter of 2016 compared to $55.4 million in the same period in 2015, an increase of $17.6 million or 32%. The increase was primarily due to the receipt of a Japan Mylan milestone in the fourth quarter of 2016 in the amount of $10.0 million, coupled with an increase of AMITIZA sales in both North America and Japan. For the full year of 2016, total revenues were $230.1 million compared to $153.2 million in the same period in 2015, an increase of $76.9 million or 50%. The increase for the full year was primarily due to the increase in AMITIZA sales in both North America and Japan, coupled with the inclusion of the acquisition of R-Tech Ueno.
- Cost of goods sold were $16.7 million for the fourth quarter of 2016 compared to $18.0 million for the same period in 2015, a decrease of $1.3 million or 7%. The decrease was primarily due to the release of inventory step-up in the fourth quarter of 2015 offset by an increase in sales volumes. Excluding intangible asset amortization of $6.7 million in the fourth quarter of 2016 and the release of inventory step up of $5.6 million and intangible amortization of $3.7 million in the fourth quarter of 2015, cost of goods sold was $9.9 million in the fourth quarter of 2016, compared to $8.7 million in the fourth quarter of 2015, an increase of 15%. The increase was mainly due to higher sales volume. For the full year 2016, cost of goods sold were $76.0 million compared to $36.7 million for the same period in 2015, an increase of $39.3 million or 107%. Excluding intangible asset amortization of $25.7 million and the release of inventory step up of $15.2 million in full year 2016 and intangible amortization of $3.7 million and the release of inventory step-up of $5.6 million in 2015, cost of goods sold was $35.1 million in full year 2016 compared to $27.3 million in full year 2015, an increase of 28%. The increase was primarily due to increased sales and the inclusion of the results from the R-Tech Ueno acquisition.
- Gross margin, calculated as product sales revenue less cost of goods sold as a percentage of product sales revenue, was 60% for the fourth quarter of 2016, compared to 39% for the same period in 2015, an increase of 21%. The increase was primarily due the receipt of a $10.0 million sales milestone in the fourth quarter of 2016 from Mylan, coupled with the release of the inventory step costs in connection with the R-Tech Ueno acquisition in the fourth quarter of 2015. Excluding the intangible asset amortization and release of inventory step up, gross margin was 76.4% in the fourth quarter of 2016 compared to 71% in the fourth quarter of 2015, an increase of 5%. For the full year 2016, gross margin was 41%, compared to 45% for the same period in 2015, a decrease of 4%. The decrease was primarily due to intangible amortization and the release of inventory step up costs as noted above. Excluding the intangible asset amortization and the inventory step up costs, gross margin for the full year 2016 was 73%, compared to 59% for the full year 2015, an increase of 14%. This increase is due to the inclusion of the results arising from the R-Tech Ueno acquisition.
- Research and development expenses were $11.0 million for the fourth quarter of 2016 compared to $10.8 million for the same period of 2015, an increase of $0.2 million, or 2%. For the full year 2016, research and development expenses were $53.9 million compared to $33.6 million for the same period of 2015, an increase of $20.3 million, or 60%. The increase was primarily due to increased spending on lubiprostone pediatric studies, the investment in Cancer Prevention Pharmaceuticals in connection with the execution of a collaboration and option agreement for their phase three program in familial adenomatous polyposis, as well as the impairment of IPR&D asset acquired in connection with the R-Tech Ueno acquisition.
- General and administrative expenses were $11.4 million for the fourth quarter of 2016 compared to $13.7 million for the same period of 2015, a decrease of $2.3 million or 17%. The decrease was primarily due to synergies arising from the R-Tech Ueno acquisition. For the full year 2016, general and administrative expenses were $43.8 million for the period compared to $35.5 million for the same period of 2015, an increase of $8.3 million, or 23%. The increase was primarily due to the inclusion of the results arising from the R-Tech Ueno acquisition, legal costs associated with the Dr. Reddy’s settlement, integration costs, and restructuring related costs.
- Selling and marketing expenses were $0.4 million for the fourth quarter of 2016 compared to $1.2 million for the same period of 2015. For the full year 2016, selling and marketing expenses were $2.5 million compared to $2.8 million for the same period of 2015.
- The effective tax rate for the fourth quarter of 2016 was a negative 123%, compared to negative 7% in the same period of 2015. The decrease in the tax rate is primarily due to foreign currency movement related to tax liabilities arising from the R-Tech Ueno acquisition, coupled with a shift in profits among foreign subsidiaries with varying tax rates. The effective tax rate for the full year 2016 was a negative 28%, compared to 24% in the same period of 2015. The reduction in the full year tax rate is driven by the same factors that impacted the Q4 tax rate.
Certain prior year non-GAAP amounts have been reclassified for consistency with the current period- adjusted presentation. These reclassifications had no effect on the reported results of operations. A reconciliation of adjusted Net Income to GAAP Net Income and adjusted EBITDA to net income, the most directly comparable GAAP financial measure, is included in the tables below.
| | |
| | RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME |
| | (in thousands, except per share amounts) |
| | | | | |
| | Three Months Ended | Three Months
Ended | For the Year Ended | For the Year Ended |
| | December 31,
2016 | December 31,
2015 | December 31,
2016 | December 31,
2015 |
| Adjusted Non-GAAP Net Income: | | | | |
| GAAP Net Income | 15,283 | 10,151 | 18,487 | 33,371 |
| Non-GAAP Adjustments: | | | | |
| Amortization of Acquired Intangibles | 6,748 | 3,732 | 25,655 | 3,732 |
| Inventory Step Up Adjustment | - | 5,645 | 15,236 | 5,645 |
| R&D Intangible Asset Impairment | - | - | 7,286 | - |
| Restructuring Costs | 455 | 958 | 2,350 | 958 |
| Legal Settlement | - | - | -9,515 | - |
| Acquisition Related Expenses | - | 3,914 | 2,173 | 5,135 |
| Amortization of Debt Financing Costs | 841 | 870 | 3,526 | 870 |
| Loss on Debt Extinguishment | 14,047 | - | 14,047 | - |
| R&D License Option | - | - | 3,000 | |
| Acceleration of Deferred Revenue | - | -4,079 | - | -4,079 |
| Foreign Currency Translation | 7,070 | 123 | 11,280 | 178 |
| Tax Effect of Adjustments | -13,762 | -2,119 | -27,313 | -2,119 |
| Total Non-GAAP Adjustments | 15,399 | 9,044 | 47,725 | 10,320 |
| Adjusted Non-GAAP Net Income | 30,682 | 19,195 | 66,212 | 43,691 |
| | | | | |
| Weighted Average Shares - Dilutive | | | | |
| Adjusted Non-GAAP Net Income Per Share - Diluted | 44,910 | 44,338 | 43,749 | 45,680 |
| GAAP Net Income per Share - Diluted | 0.34 | 0.23 | 0.42 | 0.73 |
| Non-GAAP Adjustments | 0.34 | 0.20 | 1.09 | 0.23 |
| Adjusted Non-GAAP Net Income per Share - Diluted | 0.68 | 0.43 | 1.51 | 0.96 |
| | | | | |
| | | | | |
| | RECONCILIATION OF INCOME FROM OPERATIONS TO ADJUSTED EBITDA |
| | (in thousands, except per share amounts) |
| | | | | |
| | Three Months
Ended | Three Months
Ended | For the Year
Ended | For the Year
Ended |
| | December 31,
2016 | December 31,
2015 | December 31,
2016 | December 31,
2015 |
| GAAP Net Income | 15,283 | 10,151 | 18,487 | 33,371 |
| Adjustments: | | | | |
| Taxes | -8,433 | -684 | -4,112 | 10,304 |
| Interest expense | 5,620 | 6,070 | 23,761 | 6,854 |
| Interest Income | -5 | -27 | -72 | -181 |
| Depreciation | 217 | 221 | 904 | 623 |
| R&D Intangible Asset Impairment | | - | 7,286 | - |
| Amortization of Acquired Intangibles | 6,748 | 3,732 | 25,655 | 3,732 |
| Inventory Step Up Adjustment | | 5,645 | 15,236 | 5,645 |
| EBITDA | 19,430 | 25,108 | 87,145 | 60,348 |
| Non-GAAP Adjustments: | | | | |
| Share Based Compensation Expense | 1,838 | 1,742 | 7,258 | 7,349 |
| Restructuring Costs | 455 | 958 | 2,350 | 958 |
| Acquisition Related Expenses | - | 3,914 | 2,173 | 5,135 |
| Loss on Debt Extinguishment | 14,047 | | 14,047 | - |
| R&D License Option | | | 3,000 | |
| Legal Settlement | - | - | -9,515 | - |
| Foreign Currency Translation | 7,070 | 123 | 11,280 | 178 |
| Acceleration of Deferred Revenue | - | -4,079 | | -4,079 |
| Total Non-GAAP Adjustments | 23,410 | 2,658 | 30,593 | 9,541 |
| Adjusted EBITDA | 42,840 | 27,766 | 117,738 | 69,889 |
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities
- At December 31, 2016, cash, cash equivalents, restricted cash and investments were $198.5 million compared to $163.5 million at December 31, 2015. This change is primarily due to the issuance of $300.0 million in convertible notes during December 2016, offset by the paydown of outstanding amounts due under the Company’s $250.0 million credit agreement. At December 31, 2016 and December 31, 2015, notes payable were $290.5 million and $252.4 million, respectively, including current portions of $0 million and $39.1 million, respectively. The change in the overall note payable balance is due to aforementioned issuance of the convertible notes offset by the paydown of outstanding amounts due under the Company’s $250 million credit agreement. Sucampo’s net debt position at December 31, 2016 is $92 million, compared to $88.9 million at December 31, 2015.
Geographic Sales
- Company revenues by product type and geographic location for the three months and full year ended December 30, 2016 and 2015 were as follows
| |
| | | | Three months ended December 31, 2016 | | Three months ended December 31, 2015 |
| (In thousands) | | USA | | Japan | | Rest of
the
World | | Total | | USA | | Japan | | Rest of
the
World | | Total |
| | | | | | | | | | | | | | | | | | |
| AMITIZA Product sales | | 13,211 | | | 26,173 | | - | | 39,384 | | 10,311 | | 17,929 | | - | | 28,240 |
| AMITIZA Royalty | | 26,259 | | | - | | - | | 26,259 | | 22,792 | | 137 | | - | | 22,929 |
| Rescula Product Sales | | (33 | ) | | 2,906 | | - | | 2,873 | | 49 | | 1,310 | | - | | 1,359 |
| | Total | | 39,437 | | | 29,079 | | - | | 68,516 | | 33,152 | | 19,376 | | - | | 52,528 |
| | | | Twelve months ended December 31, 2016 | | Twelve months ended December 31, 2015 |
| (In thousands) | | USA | | Japan | | Rest of
the
World | | Total | | USA | | Japan | | Rest of
the
World | | Total |
| | | | | | | | | | | | | | | | | | |
| AMITIZA Product sales | | 45,164 | | | 72,682 | | 792 | | 118,638 | | 10,311 | | 53,855 | | - | | 64,166 |
| AMITIZA Royalty | | 82,264 | | | | | - | | 82,264 | | 74,001 | | 137 | | - | | 74,138 |
| Rescula Product Sales | | (11 | ) | | 10,169 | | - | | 10,158 | | 797 | | 1,310 | | 3 | | 2,110 |
| | Total | | 127,417 | | | 82,851 | | 792 | | 211,060 | | 85,109 | | 55,302 | | 3 | | 140,414 |
Guidance
Sucampo today reiterated its guidance for the full year ending December 31, 2017. Sucampo expects total revenue of $220.0 million to $230.0 million, adjusted net income of $80.0 million to $90.0 million, adjusted diluted EPS of $1.35 to $1.50, and adjusted EBITDA of $145.0 million to $155.0 million. Adjusted net income guidance excludes amortization of acquired intangibles of approximately $22.58 million and debt financing related costs of $3.1 million. Adjusted EBITDA guidance excludes stock option related costs of $6.0 million.
Non-GAAP Financial Measures
This press release contains three financial metrics (Adjusted Net Income, EBITDA and Adjusted EBITA) that are considered “non-GAAP” financial metrics under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial metrics should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The company’s definition of these non-GAAP metrics may differ from similarly titled metrics used by others. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, and various non-cash items, which includes amortization of acquired intangibles, inventory step-up adjustment, R&D intangible asset impairment, restructuring costs, legal settlement, acquisition related expenses, amortization of debt financing costs, debt extinguishment, R&D license option expense, acquisition related acceleration of deferred revenue, foreign currency translations and the tax impact of these adjustments. EBITDA reflects net income excluding the impact of provision for income taxes, interest expense, interest income, depreciation, R&D intangible asset impairment, amortization of acquired intangibles, and inventory step-up adjustments. Adjusted EBITDA reflects EBITDA and adjusts for specified items that can be highly variable or difficult to predict, and various non-cash items, which includes share based compensation expense, restructuring costs, acquisition related expenses, debt extinguishment, R&D license option, legal settlement, foreign currency translations and the acquisition related acceleration of deferred revenue. The company views these non-GAAP financial metrics as a means to facilitate management’s financial and operational decision-making, including evaluation of the company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial metrics reflect an additional way of viewing aspects of the company’s operations that, when viewed with GAAP results may provide a more complete understanding of factors and trends affecting the company’s business.
The determination of the amounts that are excluded from these non-GAAP financial metrics is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial metrics exclude the effect of items that will increase or decrease the company’s reported results of operations, management strongly encourages investors to review the company’s consolidated financial statements and publicly-filed reports in their entirety.
Company to Host Conference Call Today
Sucampo will host a conference call and webcast today, Wednesday, March 8, 2017 at 8:30 am ET. Conference call and Webcast participation details are as follows:
Dial-in number: 888-636-8238 (domestic) or 484-747-6635 (international)
Passcode: 71158094
Webcast link: http://www.sucampo.com/investors/events-presentations/
Conference call replay:
Dates: Starting at 11:30 AM ET, March 8, 2017 a replay of the teleconference and webcast will be available
Dial-in number: 855-859-2056 (domestic) or 404-537-3406 (international)
Passcode: 71158094
Webcast link: http://www.sucampo.com/investors/events-presentations/; then click ‘Archived Events’
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. and Israel 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. and Israel 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 RESCULA®
Unoprostone isopropyl 0.12% (trade named RESCULA) first received marketing authorization in 1994 in Japan for the treatment of glaucoma and ocular hypertension. RESCULA is marketed in Japan by Santen Pharmaceutical Co., Ltd. (Santen). We acquired RESCULA as part of the acquisition of R-Tech Ueno in 2015.
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 two marketed products – AMITIZA, its lead product, and RESCULA. 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.
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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, 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; Sucampo's ability to accurately predict future market conditions; dependence on the effectiveness of Sucampo's patents and other protections for innovative products; the effects of competitive products on Sucampo’s products; 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 4, 2016 as amended, 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.
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| Sucampo Pharmaceuticals, Inc. | | | |
| Consolidated Balance Sheets (unaudited) | | | |
| (in thousands, except share and per share data) | | | |
| | | | | | |
| | | | December 31, |
| | | | | 2016 | | | | 2015 | |
| ASSETS: | | | |
| | | | | | |
| Current assets: | | | |
| | Cash and cash equivalents | $ | 198,308 | | | $ | 108,284 | |
| | Product royalties receivable | | 26,261 | | | | 22,792 | |
| | Accounts receivable, net | | 42,998 | | | | 22,759 | |
| | Deferred charge, current | | 17 | | | | 295 | |
| | Restricted cash, current | | 213 | | | | 55,218 | |
| | Inventories, net | | 23,468 | | | | 33,121 | |
| | Prepaid expenses and other current assets | | 15,967 | | | | 8,891 | |
| | | Total current assets | | 307,232 | | | | 251,360 | |
| | | | | | |
| Investments, non-current | | 5,495 | | | | - | |
| Property and equipment, net | | 6,216 | | | | 6,393 | |
| Intangible assets | | 128,134 | | | | 130,315 | |
| Goodwill | | 73,022 | | | | 60,937 | |
| In-process research & development | | - | | | | 6,171 | |
| Deferred charge, non-current | | 62 | | | | 1,400 | |
| Other assets | | 690 | | | | 605 | |
| | | Total assets | $ | 520,851 | | | $ | 457,181 | |
| | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | | |
| | | | | | |
| Current liabilities: | | | |
| | Accounts payable | $ | 9,190 | | | $ | 11,213 | |
| | Accrued expenses | | 12,389 | | | | 10,886 | |
| | Deferred revenue, current | | 1,315 | | | | 676 | |
| | Collaboration obligation | | - | | | | 5,623 | |
| | Income tax payable | | 7,153 | | | | 6,507 | |
| | Notes payable, current | | - | | | | 39,083 | |
| | Other current liabilities | | 2,304 | | | | 14,139 | |
| | | Total current liabilities | | 32,351 | | | | 88,127 | |
| | | | | | |
| Notes payable, non-current | | 290,516 | | | | 213,277 | |
| Deferred revenue, non-current | | 805 | | | | 1,088 | |
| Deferred tax liability, net | | 21,289 | | | | 52,497 | |
| Other liabilities | | 8,791 | | | | 15,743 | |
| | Total liabilities | | 353,752 | | | | 370,732 | |
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| Stockholders' equity: | | | |
| Preferred stock, $0.01 par value; 5,000,000 shares authorized at December 31, 2016 and 2015; | | | |
| | no shares issued and outstanding at December 31, 2016 and 2015, respectively | | - | | | | - | |
| Class A common stock, $0.01 par value; 270,000,000 shares authorized at December 31, 2016 and | | |
| | 2015; 46,415,749 and 45,509,150 shares issued and outstanding at December 31, 2016 and 2015, respectively | | 464 | | | | 455 | |
| Class B common stock, $0.01 par value; 75,000,000 shares authorized at December 31, 2016 and | | | |
| | 2015; no shares issued and outstanding at December 31, 2016 and 2015 | | - | | | | - | |
| Additional paid-in capital | | 120,251 | | | | 99,212 | |
| Accumulated other comprehensive income | | 54,527 | | | | 13,412 | |
| Treasury stock, at cost; 3,009,942 shares at December 31, 2016 and 2015 | | (46,269 | ) | | | (46,269 | ) |
| Retained earnings | | 38,126 | | | | 19,639 | |
| | | Total stockholders' equity | | 167,099 | | | | 86,449 | |
| Total liabilities and stockholders' equity | $ | 520,851 | | | $ | 457,181 | |
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| Sucampo Pharmaceuticals, Inc. | | | | | | | | |
| Consolidated Statements of Operations and Comprehensive Income (unaudited) | | | |
| (in thousands, except per share data) | | | | | | | | |
| | | | | | | | | | | |
| | | | Three Months Ended December 31, | | Year Ended December 31, | |
| | | | | 2016 | | | | 2015 | | | | 2016 | | | | 2015 | | |
| | | | | | | | | | | |
| Revenues: | | | | | | | | | |
| | Product royalty revenue | $ | 26,258 | | | $ | 22,929 | | | $ | 82,480 | | | $ | 74,138 | | |
| | Product sales revenue | | 42,258 | | | | 29,598 | | | | 128,796 | | | | 66,276 | | |
| | Research and development revenue | | 2,868 | | | | 2,731 | | | | 12,839 | | | | 10,199 | | |
| | Contract and collaboration revenue | | 1,640 | | | | 110 | | | | 5,941 | | | | 2,567 | | |
| | Co-promotion revenue | | - | | | | - | | | | - | | | | - | | |
| | | Total revenues | | 73,024 | | | | 55,368 | | | | 230,056 | | | | 153,180 | | |
| | | | | | | | | | | |
| Costs and expenses: | | | | | | | | |
| | Costs of goods sold | | 16,725 | | | | 18,075 | | | | 76,003 | | | | 36,731 | | |
| | Impairment of in-process research & development | | 0 | | | | - | | | | 7,286 | | | | - | | |
| | Research and development | | 11,035 | | | | 11,346 | | | | 46,615 | | | | 33,631 | | |
| | General and administrative | | 11,387 | | | | 13,154 | | | | 43,798 | | | | 35,517 | | |
| | Selling and marketing | | 384 | | | | 1,225 | | | | 2,478 | | | | 2,842 | | |
| | | Total costs and expenses | | 39,531 | | | | 43,800 | | | | 176,180 | | | | 108,721 | | |
| | | | | | | | | | | |
| Income from operations | | 33,493 | | | | 11,568 | | | | 53,876 | | | | 44,459 | | |
| Non-operating income (expense): | | | | | | | | |
| | Interest income | | 5 | | | | 26 | | | | 72 | | | | 181 | | |
| | Interest expense | | (5,620 | ) | | | (6,070 | ) | | | (23,761 | ) | | | (6,854 | ) | |
| | Loss on debt extinguishment | | (14,047 | ) | | | - | | | | (14,047 | ) | | | - | | |
| | Other income (expense), net | | (6,981 | ) | | | 3,942 | | | | (1,765 | ) | | | 5,889 | | |
| | | Total non-operating expense, net | | (26,643 | ) | | | (2,102 | ) | | | (39,501 | ) | | | (784 | ) | |
| | | | | | | | | | | |
| Income before income taxes | | 6,850 | | | | 9,466 | | | | 14,375 | | | | 43,675 | | |
| Income tax benefit (provision) | | 8,433 | | | | 685 | | | | 4,112 | | | | (10,304 | ) | |
| Net income | | $ | 15,283 | | | $ | 10,151 | | | $ | 18,487 | | | $ | 33,371 | | |
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| Net income per share: | | | | | | | | |
| | Basic | | $ | 0.36 | | | $ | 0.24 | | | $ | 0.43 | | | $ | 0.76 | | |
| | Diluted | $ | 0.34 | | | $ | 0.23 | | | $ | 0.42 | | | $ | 0.73 | | |
| Weighted average common shares outstanding: | | | | | | | | |
| | Basic | | | 43,049 | | | | 42,885 | | | | 42,791 | | | | 44,150 | | |
| | Diluted | | 44,910 | | | | 44,338 | | | | 43,749 | | | | 45,680 | | |
Contact:
Sucampo Pharmaceuticals, Inc.
Silvia Taylor
Senior Vice President, Investor Relations and Corporate Affairs
1-240-223-3718
staylor@sucampo.com
