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

About lubiprostone (AMITIZA ® )

AMITIZA (lubiprostone) is a prostone, a locally acting chloride channel activator, indicated for the treatment of CIC (24 mcg twice daily) in adults and for IBS-C (8 mcg twice daily) in women 18 years of age and older in the United States. In Japan, lubiprostone (24 mcg twice daily) is indicated for the treatment of chronic constipation (excluding constipation caused by organic diseases). In Switzerland, lubiprostone 24 mcg twice daily is indicated for the treatment of chronic idiopathic constipation. In the U.K., lubiprostone 24 mcg twice daily is indicated for the treatment of chronic idiopathic constipation and associated symptoms in adults.

About Sucampo Pharmaceuticals, Inc.

Sucampo Pharmaceuticals, Inc. is a global pharmaceutical company focused on innovative research, discovery, development and commercialization of proprietary drugs based on prostones. The therapeutic potential of prostones was first discovered by Ryuji Ueno, M.D., Ph.D., Ph.D., Sucampo’s Chairman, Chief Executive Officer, and co-founder. Prostones, naturally occurring fatty acid metabolites that have emerged as promising compounds with unique physiological activities, can be targeted for the treatment of unmet or underserved medical needs. For more information, please visit www.sucampo.com.

AMITIZA is a registered trademark of Sucampo AG. RESCULA is a registered trademark of R-Tech Ueno, Ltd, and has been licensed to Sucampo.

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 product development, product launch or regulatory approval, product potential, future financial and operating results, 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; competitive products entering the markets in which Sucampo’s products are marketed; Sucampo's ability to accurately predict future market conditions; dependence on the effectiveness of Sucampo's patents and other protections for innovative products; the risk of new and changing regulation and health policies in the U.S. and internationally; 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 presentation 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 Form 10-K for the year ended December 31, 2011, which Sucampo incorporates by reference.

 
Sucampo Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)
(in thousands, except per share data)
               
 
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
 
Revenues:
Research and development revenue $ 737 $ 2,885 $ 6,418 $ 6,591
Product royalty revenue 13,890 10,563 36,521 30,724
Co-promotion revenue 730 769 3,253 2,768
Contract and collaboration revenue   139     155     433     463  
Total revenues   15,496     14,372     46,625     40,546  
 
Operating expenses:
Research and development 5,615 8,725 14,202 25,838
General and administrative 7,256 7,926 22,598 29,317
Selling and marketing   4,278     2,243     14,474     6,689  
Total operating expenses   17,149     18,894     51,274     61,844  
 
Loss from operations (1,653 ) (4,522 ) (4,649 ) (21,298 )
Non-operating income (expense):
Interest income 68 35 118 160
Interest expense (596 ) (619 ) (1,780 ) (1,844 )
Other income (expense), net   8     1,224     727     (2,033 )
Total non-operating income (expense), net   (520 )   640     (935 )   (3,717 )
 
Loss before income taxes (2,173 ) (3,882 ) (5,584 ) (25,015 )
Income tax provision   (3,776 )   (196 )   (3,112 )   5,009  
Net loss $ (5,949 ) $ (4,078 ) $ (8,696 ) $ (20,006 )
 
Net loss per share:
Basic net loss per share $ (0.14 ) $ (0.10 ) $ (0.21 ) $ (0.48 )
Diluted net loss per share $ (0.14 ) $ (0.10 ) $ (0.21 ) $ (0.48 )
Weighted average common shares outstanding - basic   41,678     41,877     41,697     41,864  
Weighted average common shares outstanding - diluted   41,678     41,877     41,697     41,864  
 
Comprehensive loss:
Net loss $ (5,949 ) $ (4,078 ) $ (8,696 ) $ (20,006 )
Other comprehensive income (loss):
Unrealized gain on investments, net of tax effect 28 100 23 108
Foreign currency translation   (175 )   (2,121 )   (1,767 )   1,161  
Comprehensive income (loss) $ (6,096 ) $ (6,099 ) $ (10,440 ) $ (18,737 )
 

 
Sucampo Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
 
       
September 30, December 31,
2012 2011
ASSETS:
Current assets:
Cash and cash equivalents $ 57,246 $ 50,662
Investments, current 6,229 24,452
Product royalties receivable 13,346 10,795
Unbilled accounts receivable 571 2,036
Accounts receivable, net 1,235 4,616
Prepaid and income taxes receivable 3,316 2,845
Deferred tax assets, current 33 163
Deferred charge, current 673 3,057
Restricted cash, current 15,113 15,113
Prepaid expenses and other current assets   2,611     1,177  
Total current assets 100,373 114,916
 
Investments, non-current - 998
Property and equipment, net 1,563 1,669
Intangibles assets, net 7,660 8,364
Deferred tax assets, non-current 1,728 2,089
Deferred charge, non-current 5,381 26,751
Restricted cash, non-current 3,548 2,129
Other assets   878     653  
Total assets $ 121,131   $ 157,569  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,455 $ 6,978
Accrued expenses 8,800 13,648
Deferred revenue, current 3,841 3,888
Deferred tax liability, current 51 2,167
Notes payable, current   20,300     20,400  
Total current liabilities 36,447 47,081
 
Notes payable, non-current 40,883 39,227
Deferred revenue, non-current 7,101 7,045
Deferred tax liability, non-current 5,125 23,019
Other liabilities   2,211     2,603  
Total liabilities   91,767     118,975  
 
 
 
Stockholders' equity:

Preferred stock, $0.01 par value; 5,000,000 shares authorized at September 30, 2012 and December 31, 2011; no shares issued and outstanding at September 30, 2012 and December 31, 2011

- -

Class A common stock, $0.01 par value; 270,000,000 shares authorized at September 30, 2012 and December 31, 2011; 41,901,785 and 15,690,780 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

419 157

Class B common stock, $0.01 par value; 0 and 75,000,000 shares authorized at September 30, 2012 and December 31, 2011; 0 and 26,191,050 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

- 262
Additional paid-in capital 61,723 59,957
Accumulated other comprehensive income 16,110 17,854
Treasury stock, at cost; 310,122 and 186,987 shares at September 30, 2012 and December 31, 2011, (1,256 ) (700 )
respectively   (47,632 )   (38,936 )
Accumulated deficit   29,364     38,594  
Total liabilities and stockholders' equity $ 121,131   $ 157,569  
 

 
Sucampo Pharmaceuticals, Inc.
Key Segment Information (unaudited)
(in thousands)
 
               
(In thousands) Americas Europe Asia Consolidated
Three Months Ended September 30, 2012
Research and development revenue $ 665 $ 72 $ - $ 737
Product royalty revenue 13,890 - - 13,890
Co-promotion revenue 730 - - 730
Contract and collaboration revenue   141     (15 )   13     139  
Total revenues 15,426 57 13 15,496
Research and development expenses 2,239 2,543 833 5,615
Depreciation and amortization 122 242 10 374
Other operating expenses   9,677     1,161     322     11,160  
Income (loss) from operations 3,388 (3,889 ) (1,152 ) (1,653 )
Interest income 65 3 - 68
Interest expense - (556 ) (40 ) (596 )
Other non-operating income (expense), net   34     165     (191 )   8  
Income (loss) before income taxes $ 3,487   $ (4,277 ) $ (1,383 ) $ (2,173 )
Capital expenditures $ 41   $ -   $ -   $ 41  
 
Three Months Ended September 30, 2011
Research and development revenue $ 2,658 $ - $ 227 $ 2,885
Product royalty revenue 10,563 - - 10,563
Co-promotion revenue 769 - - 769
Contract and collaboration revenue   141     -     14     155  
Total revenues 14,131 - 241 14,372
Research and development expenses 6,552 965 1,208 8,725
Depreciation and amortization 215 167 (6 ) 376
Other operating expenses   9,014     403     376     9,793  
Loss from operations (1,650 ) (1,535 ) (1,337 ) (4,522 )
Interest income 32 2 1 35
Interest expense - (576 ) (43 ) (619 )
Other non-operating income (expense), net   (10 )   1,463     (229 )   1,224  
Loss before income taxes $ (1,628 ) $ (646 ) $ (1,608 ) $ (3,882 )
Capital expenditures $ 15   $ 3   $ 86   $ 104  
 
Nine Months Ended September 30, 2012
Research and development revenue $ 5,878 $ 74 $ 466 $ 6,418
Product royalty revenue 36,521 - - 36,521
Co-promotion revenue 3,253 - - 3,253
Contract and collaboration revenue   424     (30 )   39     433  
Total revenues 46,076 44 505 46,625
Research and development expenses 6,250 5,405 2,547 14,202
Depreciation and amortization 366 709 30 1,105
Other operating expenses   32,475     2,576     916     35,967  
Income (loss) from operations 6,985 (8,646 ) (2,988 ) (4,649 )
Interest income 105 12 1 118
Interest expense - (1,656 ) (124 ) (1,780 )
Other non-operating income (expense), net   67     82     578     727  
Income (loss) before income taxes $ 7,157   $ (10,208 ) $ (2,533 ) $ (5,584 )
Capital expenditures $ 293   $ 3,445   $ -   $ 3,738  
 
Nine Months Ended September 30, 2011
Research and development revenue $ 5,555 $ - $ 1,036 $ 6,591
Product royalty revenue 30,724 - - 30,724
Co-promotion revenue 2,768 - - 2,768
Contract and collaboration revenue   424     -     39     463  
Total revenues 39,471 - 1,075 40,546
Research and development expenses 19,465 2,352 4,021 25,838
Depreciation and amortization 668 325 33 1,026
Other operating expenses   33,232     807     941     34,980  
Loss from operations (13,894 ) (3,484 ) (3,920 ) (21,298 )
Interest income 155 3 2 160
Interest expense - (1,719 ) (125 ) (1,844 )
Other non-operating income (expense), net   (21 )   (1,779 )   (233 )   (2,033 )
Loss before income taxes $ (13,760 ) $ (6,979 ) $ (4,276 ) $ (25,015 )
Capital expenditures $ 93   $ 6,003   $ 188   $ 6,284  
 




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