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Sucampo Pharmaceuticals, Inc. Reports Third Quarter And Nine Months 2012 Financial And Operating Results

For the third quarter of 2012, income from operations was a loss of $1.6 million, a decrease of $2.9 million or 63%, compared to a loss from operations of $4.5 million for the third quarter of 2011. For the first nine months of 2012, income from operations was a loss of $4.6 million, a decrease of $16.7 million or 78%, compared to a loss from operations of $21.3 million in the same period last year.

Recent Operational Highlights –

  • As reported previously, the Japanese Ministry of Health, Labor and Welfare approved lubiprostone (AMITIZA) for the treatment of chronic constipation (CC) (excluding constipation caused by organic diseases), Japan’s first-ever approval of a prescription drug for this indication. Following reimbursement negotiations with the Japanese regulatory authorities, we expect our partner, Abbott Japan, Ltd., to launch the product later this month to primary care and specialist physicians. This event will trigger a $15.0 million milestone payment to Sucampo.
  • In July, Sucampo filed a supplemental new drug application (sNDA) with the FDA for a new indication for AMITIZA for the treatment of OIC in patients with chronic, non-cancer pain. This is the first oral product to be filed with the FDA for this indication. In September, the FDA confirmed that the filing has been accepted for priority review, with an action date of late January 2013.
  • Also as previously reported in September, the United Kingdom approved AMITIZA for the treatment of chronic idiopathic constipation (CIC).
  • For RESCULA, during the quarter, Sucampo awaits a complete response letter from the FDA, currently anticipated to be received by the end of 2012. The FDA’s action will reflect discussions with the FDA concerning updates to the product’s label and clearance of the manufacturer’s, R-Tech Ueno, Ltd, facility. Sucampo plans to launch RESCULA in the U.S. shortly after the approval of the sNDA. We continue to evaluate the opportunities to obtain an appropriate label in the E.U. and other European countries, and the timing of seeking reauthorization in these countries to commercialize unoprostone isopropyl.
  • As mentioned during our September Analyst Meeting, Sucampo initiated a phase 1 trial of SPI-8811 (cobiprostone oral spray), whose target indication is prevention of oral mucositis. The phase 1 trial is designed to investigate the tolerability, safety, and pharmacokinetic profile of an oral spray formulation of SPI-8811 after its single oral cavity administration in Japanese healthy adult volunteers. The trial is continuing and we expect it to conclude in the first quarter of 2013. Oral mucositis, an inflammation of the oral mucosa which includes symptoms of severe mouth pain, sores, infection, and dehydration, is a common toxicity of cancer treatments and is an area of unmet medical need.
  • Additionally, Sucampo continued to plan for the initiation of a phase 2 study in the first quarter of 2013 for SPI-017. The target indication for this compound will be the management of symptoms associated with severe lumbar spinal stenosis. Lumbar spinal stenosis is caused by degenerative change in the lumbar spine, and is a very common disease observed in the growing aging population.
  • As was described at our September Analyst Meeting, we have continued to plan for another indication for lubiprostone, or AMITIZA, for pediatric functional constipation. In addition, we are undertaking development of a new liquid formulation of AMITIZA. This liquid formulation is significant because it can potentially allow us to provide AMITIZA to new patient populations who may need it but cannot swallow the current gel cap formulation. In support of a pediatric indication, in the first quarter of 2013 we will be initiating a phase 3 pediatric functional constipation trial in the US, Canada, and Europe. Takeda will fund a significant amount of the development costs for the pediatric indication, and 100% of the development costs for the new, liquid formulation.

Key Value Drivers

Sucampo management today reported that it has met four of its 2012 AMITIZA-related value drivers:

  1. In September, AMITIZA was approved by the United Kingdom’s Medicines and Healthcare products Regulatory Agency for the treatment of CIC.
  2. In June, AMITIZA received regulatory approval in Japan for the treatment of CC (excluding constipation caused by organic disease).
  3. In July, we filed an sNDA with the FDA for the treatment of OIC in patients with chronic, non-cancer pain, which has been accepted for priority review.
  4. In July, we received the binding decision from the International Court of Arbitration, International Chamber of Commerce (ICC), which has concluded our dispute with Takeda.

Management confirmed that it continues to pursue the following 2012 and early 2013 AMITIZA-related value drivers:

  1. In Japan, we expect our partner, Abbott Japan, Ltd., to conduct a comprehensive launch of the product later this month to primary care and specialist physicians.
  2. In Switzerland, we have concluded pricing negotiations with the authorities for an appropriate reimbursement price for the treatment of CIC and plan to actively market AMITIZA there beginning in early 2013.
  3. In the UK, we intend to market AMITIZA in the first quarter of 2013.
  4. In the U.K. and Switzerland, we expect to file with regulatory agencies for approval of the OIC indication.

Management also confirmed continuing efforts to achieve this 2012 and early 2013 RESCULA-related value driver:

  • In the U.S., we expect to obtain further improvements in the label during the fourth quarter of 2012 to fully reflect current scientific understanding in advance of the RESCULA launch shortly thereafter.

Financial Results for the Quarter and First Nine Months of 2012

For the third quarter of 2012, Sucampo reported total revenue of $15.5 million compared to $14.4 million for the same period in 2011, a growth of 7.8%. The key components of revenue for the third quarter included product royalty revenue of $13.9 million and R&D revenue of $0.7 million, which compare to $10.6 million and $2.9 million, respectively, in the same period of 2011. For the first nine months of 2012, Sucampo reported total revenue of $46.6 million, compared to $40.5 million for the same period in 2011, a growth of 15.0%. The key components of total revenue for the nine month period were product royalty revenue of $36.5 million and R&D revenue of $6.4 million, which compares to $30.7 million and $6.6 million, respectively, for the same period of 2011. The decrease in R&D revenue in the third quarter was primarily due to lower activity associated with the completion of the phase 3 OIC trial for AMITIZA. Net sales of AMITIZA, as reported to us by our partner, increased 24.2%, to $71.5 million, for the third quarter of 2012, compared to $57.6 million in the same period of 2011. The increase in AMITIZA net sales was primarily due to both volume and price increases, compared to the third quarter of 2011, as reported to us by our partner.

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