Company Increases 2017 Financial Guidance Based on Strong Performance Year to Date
Study Results for VTS-270 for Niemann-Pick Disease Type C1 Published in The Lancet
CPP-1X/sulindac Granted Fast-Track status by FDA for Adults with Familial Adenomatous Polyposis
FDA Accepted sNDA for AMITIZA for Pediatric Functional Constipation in Children 6-17 Years of Age, With Priority Review Designation
Company to Host Conference Call Today at 8:30 a.m. ET
Company to Host R&D Day on November 16, 2017 in NYC
ROCKVILLE, Md., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Sucampo Pharmaceuticals, Inc. (Sucampo) (NASDAQ:SCMP), a global biopharmaceutical company, today reported consolidated financial results for the third quarter ended September 30, 2017. The company also increased 2017 financial guidance.
Measure | Updated 2017 Guidance | Previous 2017 Guidance |
Total Revenue | $250.0 million to $255.0 million | $220.0 million to $230.0 million |
Adjusted Net Income | $63.0 million to $68.0 million | $56.0 million to $66.0 million |
Adjusted EPS | $1.10 to $1.15 | $1.00 to $1.10 |
Adjusted EBITDA | $120.0 million to $125.0 million | $109.0 million to $119.0 million |
Free Cash Flow | $99.0 million to $104.0 million | $86.0 million to $96.0 million |
“Our base business remains strong, driven by increasing AMITIZA product sales in the United States and Japan. Today we are increasing our 2017 guidance for all key financial metrics based on stronger than expected sales of AMITIZA in these two markets,” said Peter Greenleaf, Chairman and Chief Executive Officer of Sucampo. “In addition, we continue to make noteworthy progress with our two key pipeline products, VTS-270 and CPP-1X/sulindac, with data published in the preeminent medical journal The Lancet and FDA’s designation of fast-track status, respectively. We will be hosting an R&D Day in New York on November 16th to highlight the strong scientific rationale, clinical data and commercial opportunity for both these important programs.”
For the three months ended September 30, 2017, Sucampo reported year-over-year total revenue growth of 6% to $61.3 million. Product sales revenue increased to $35.8 million, representing year-over-year growth of 14%, and product royalty revenue grew 11% year-over-year to $23.0 million.
Sucampo reported GAAP net income of $10.4 million, or $0.19 per diluted share, during the third quarter of 2017, compared to a GAAP net income of $8.1 million, or $0.19 per diluted share, during the third quarter of 2016. Sucampo reported adjusted net income (as defined below) of $15.8 million, or $0.27 per diluted share, during the third quarter of 2017, compared to adjusted net income of $12.9 million, or $0.30 per diluted share, during the third quarter of 2016. The decrease year-over-year in diluted EPS is largely driven by the inclusion of the diluted shares associated with the convertible note which was entered into in December of 2016.
Year to date in 2017, Sucampo’s revenue grew 13% to $177.4 million as compared to $157.0 million for the same period of 2016. Adjusted net income grew 37% year to date for 2017 to $45.3 million as compared to $33.0 million for the same period of 2016. Adjusted EBITDA grew 15% year to date for 2017 to $86.2 million, as compared to $75.2 million for the same period of 2016.
Clinical Development
AMITIZA (lubiprostone)
United States
Global Markets
Corporate
Third Quarter 2017 Financial Review
Geographic Sales
Three months ended September 30, 2017 | Three months ended September 30, 2016 | ||||||||||||||||
(In thousands) | USA | Japan | Rest of the World | Total | USA | Japan | Rest of the World | Total | |||||||||
AMITIZA Product sales | 13,131 | 20,522 | - | 33,653 | 10,919 | 17,422 | 792 | 29,133 | |||||||||
AMITIZA Royalty | 23,024 | - | - | 23,024 | 20,770 | - | - | 20,770 | |||||||||
Rescula Product sales | - | 2,163 | - | 2,163 | 21 | 2,400 | - | 2,421 | |||||||||
Total | 36,155 | 22,685 | - | 58,840 | 31,710 | 19,822 | 792 | 52,324 |
Guidance
Sucampo today increased its guidance for the full year ending December 31, 2017, based on stronger than expected sales of AMITIZA in the U.S. and Japan. Sucampo now expects total revenue of $250.0 million to $255.0 million, adjusted net income of $63.0 million to $68.0 million, adjusted EPS of $1.10 to $1.15, adjusted EBITDA of $120.0 million to $125.0 million and free cash flow of $99.0 million to $104.0 million. Included in the revenue guidance for 2017 is a one-time milestone of $10.0 million from Mylan related to first-time achievement of 20 billion JPY in net sales in Japan which achievement is expected to occur in the fourth quarter of this year.
See the table below for a comparison of the Company's previous 2017 guidance to the updated 2017 guidance:
Measure | Updated 2017 Guidance | Previous 2017 Guidance |
Total Revenue | $250.0 million to $255.0 million | $220.0 million to $230.0 million |
Adjusted Net Income | $63.0 million to $68.0 million | $56.0 million to $66.0 million |
Adjusted EPS | $1.10 to $1.15 | $1.00 to $1.10 |
Adjusted EBITDA | $120.0 million to $125.0 million | $109.0 million to $119.0 million |
Free Cash Flow | $99.0 million to $104.0 million | $86.0 million to $96.0 million |
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 GAAP Net Income to Adjusted Net Income and GAAP Net Income to Adjusted EBITDA, the most directly comparable GAAP financial measure, is included in the tables below.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME | ||||
(in thousands, except per share amounts) | ||||
Three Months Ended | Three Months Ended | |||
September 30, 2017 | September 30, 2016 | |||
Adjusted Net Income: | ||||
GAAP net income | 10,367 | 8,092 | ||
Amortization of acquired intangibles | 6,753 | 6,677 | ||
Intangible Impairment | - | 7,286 | ||
Legal settlement | - | (9,260 | ) | |
Restructuring costs | - | 208 | ||
Acquisition and integration related expenses | 54 | 605 | ||
Amortization of debt financing costs | 489 | 875 | ||
Foreign currency effect | 797 | 1,199 | ||
Tax effect on adjustments | (2,627 | ) | (2,794 | ) |
Total Non-GAAP Adjustments | 5,466 | 4,796 | ||
Adjusted Net Income | 15,833 | 12,888 | ||
GAAP Weighted Average Shares - Dilutive | 65,083 | 43,443 | ||
Adjusted Weighted Average Shares - Diluted | 65,083 | 43,443 | ||
GAAP Net Income per Share – Diluted | 0.19 | 0.19 | ||
Adjusted Net Income per Share - Diluted | 0.27 | 0.30 |
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA | ||||
(in thousands) | ||||
Three Months Ended | Three Months Ended | |||
September 30, 2017 | September 30, 2016 | |||
GAAP net income | 10,367 | 8,092 | ||
Adjustments: | ||||
Income taxes | 7,204 | 7,410 | ||
Interest expense | 2,956 | 5,899 | ||
Interest income | (10 | ) | (31 | ) |
Depreciation | 204 | 223 | ||
Amortization of acquired intangibles | 6,753 | 6,677 | ||
Intangible Impairment | - | 7,286 | ||
EBITDA | 27,474 | 35,556 | ||
Non-GAAP Adjustments: | ||||
Share Based Compensation | 2,502 | 1,722 | ||
Restructuring costs | - | 208 | ||
Acquisition and integration related expenses | 54 | 605 | ||
Legal Settlement | - | (9,260 | ) | |
Foreign currency effect | 797 | 1,199 | ||
Total Non-GAAP Adjustments | 3,353 | (5,526 | ) | |
Adjusted EBITDA | 30,827 | 30,030 |
Q3 2017 Adjusted EPS Calculation
RECONCILIATION OF ADJUSTED NET INCOME TO ADJUSTED NET INCOME DILUTIVE EPS | |||
Three Months Ended | |||
(In thousands) | September 30, 2017 | ||
Adjusted Net Income | 15,833 | ||
Add back: Accrued interest exp. on conv debt | 2,457 | ||
Tax effect @ 40.99% | (1,007 | ) | |
Adjusted Net Income for dilutive EPS calc | 17,283 | ||
Weighted average shares- Basic | 46,344 | ||
Dilutive securities - Equity awards | 660 | ||
Dilutive securities - Convertible note | 18,079 | ||
Weighted average shares - Diluted | 65,083 | ||
Adjusted Net Income Basic EPS | 0.34 | ||
Dilutive securities - Equity awards impact | - | ||
Dilutive securities - Convertible note impact | (0.07 | ) | |
Adjusted Net Income Dilutive EPS | 0.27 |
Non-GAAP Financial Measures
This press release contains four financial metrics (Adjusted Net Income, EBITDA, Adjusted EBITDA and Free Cash Flow) 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, intangible impairment, legal settlement, restructuring costs, acquisition and integration related expenses, amortization of debt financing costs, foreign currency effect and the tax impact of these adjustments. EBITDA reflects net income excluding the impact of provision for income taxes, interest expense, interest income, depreciation, amortization of acquired intangibles and intangible impairment. 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, restructuring costs, acquisition and integration related expenses, legal settlement, and foreign currency effect. Free cash flow reflects net cash provided by operating activities less expenditures made for property and equipment. 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, November 1, 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: 97804103
Webcast link: http://www.sucampo.com/investors/events-presentations/
Conference call replay:
Dates: Starting at 11:30 AM ET, November 1, 2017, a replay of the teleconference and webcast will be available
Dial-in number: 855-859-2056 (domestic) or 404-537-3406 (international)
Passcode: 97804103
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 a biopharmaceutical company focused on the development and commercialization of highly specialized medicines. Sucampo has a late-stage pipeline of product candidates in clinical development for orphan disease areas, including VTS-270, a 2-hydroxypropyl-beta-cyclodextrin product with a specific compositional fingerprint that has been granted orphan designation in the U.S. and Europe and is in a pivotal Phase 2b/3 clinical trial for the treatment of Niemann-Pick Disease Type C-1, a rare progressive genetic disorder. VTS-270 also has been granted breakthrough therapy designation in the U.S. Sucampo has an exclusive option for the North American rights to CPP-1x/sulindac, which is in Phase 3 development for the treatment of familial adenomatous polyposis and has been granted orphan drug designation in the U.S. The company has two marketed products – AMITIZA and RESCULA. 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).
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; Sucampo’s ability to successfully integrate the operations of acquired businesses; 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 8, 2017, 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.
Contact:
Sucampo Pharmaceuticals, Inc.
Silvia Taylor
Senior Vice President, Investor Relations and Corporate Affairs
1-240-223-3718
staylor@sucampo.com
Sucampo Pharmaceuticals, Inc. | |||||||||
Consolidated Balance Sheets (unaudited) | |||||||||
(in thousands, except share and per share data) | |||||||||
September 30, | December 31, | ||||||||
2017 | 2016 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 75,041 | $ | 198,308 | |||||
Product royalties receivable | 23,015 | 26,261 | |||||||
Accounts receivable, net | 33,098 | 42,998 | |||||||
Restricted cash | - | 213 | |||||||
Inventories, net | 24,176 | 23,468 | |||||||
Prepaid expenses and other current assets | 34,731 | 15,984 | |||||||
Total current assets | 190,061 | 307,232 | |||||||
Investments, non-current | 10,698 | 5,495 | |||||||
Property and equipment, net | 5,690 | 6,216 | |||||||
Intangible assets, net | 107,875 | 128,134 | |||||||
Goodwill | 73,022 | 73,022 | |||||||
Other assets | 798 | 752 | |||||||
Total assets | $ | 388,144 | $ | 520,851 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 6,245 | $ | 9,190 | |||||
Accrued expenses | 12,239 | 12,389 | |||||||
Accrued interest | 2,888 | 129 | |||||||
Deferred revenue, current | 319 | 1,315 | |||||||
Income tax payable | 9,666 | 7,153 | |||||||
Other current liabilities | 5,821 | 2,175 | |||||||
Total current liabilities | 37,178 | 32,351 | |||||||
Notes payable, non-current | 291,945 | 290,516 | |||||||
Deferred revenue, non-current | 2,625 | 805 | |||||||
Deferred tax liability, net | 7,345 | 21,289 | |||||||
Other liabilities | 9,417 | 8,791 | |||||||
Total liabilities | 348,510 | 353,752 | |||||||
Preferred stock, $0.01 par value; 5,000,000 shares authorized at September 30, 2017 and December 31, | |||||||||
2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016 | - | - | |||||||
Class A common stock, $0.01 par value; 270,000,000 shares authorized at September 30, 2017 | |||||||||
and December 31, 2016; 46,636,924 and 46,415,749 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 466 | 464 | |||||||
Class B common stock, $0.01 par value; 75,000,000 shares authorized at September 30, 2017 and | |||||||||
December 31, 2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016 | - | - | |||||||
Additional paid-in capital | 130,101 | 120,251 | |||||||
Accumulated other comprehensive income | 54,457 | 54,527 | |||||||
Treasury stock, at cost; 227,266 and 3,009,942 shares at September 30, 2017 and December 31, | (4,018 | ) | (46,269 | ) | |||||
2016, respectively | |||||||||
(Accumulated deficit) retained earnings | (141,372 | ) | 38,126 | ||||||
Total stockholders' equity | 39,634 | 167,099 | |||||||
Total liabilities and stockholders' equity | $ | 388,144 | $ | 520,851 | |||||
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, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenues: | |||||||||||||||||
Product royalty revenue | $ | 23,024 | $ | 20,771 | $ | 62,021 | $ | 56,222 | |||||||||
Product sales revenue | 35,815 | 31,554 | 104,206 | 86,538 | |||||||||||||
Research and development revenue | 2,381 | 3,172 | 10,880 | 9,971 | |||||||||||||
Contract and collaboration revenue | 46 | 2,376 | 338 | 4,301 | |||||||||||||
Total revenues | 61,266 | 57,873 | 177,445 | 157,032 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Costs of goods sold | 17,436 | 15,586 | 51,354 | 59,278 | |||||||||||||
Research and development | 10,133 | 9,976 | 39,564 | 35,580 | |||||||||||||
Acquired in-process research and development | - | - | 186,603 | - | |||||||||||||
Impairment of in-process research and development | - | 7,286 | - | 7,286 | |||||||||||||
Impairment of in-process research and development | 9,972 | 11,061 | 39,246 | 32,411 | |||||||||||||
General and administrative | 2,525 | 696 | 4,452 | 2,094 | |||||||||||||
Total costs and expenses | 40,066 | 44,605 | 321,219 | 136,649 | |||||||||||||
Income (loss) from operations | 21,200 | 13,268 | (143,774 | ) | 20,383 | ||||||||||||
Non-operating income (expense): | |||||||||||||||||
Interest income | 10 | 31 | 38 | 67 | |||||||||||||
Interest expense | (2,956 | ) | (5,899 | ) | (8,762 | ) | (18,141 | ) | |||||||||
Other income (expense), net | (683 | ) | 8,102 | (948 | ) | 5,216 | |||||||||||
Total non-operating income (expense), net | (3,629 | ) | 2,234 | (9,672 | ) | (12,858 | ) | ||||||||||
Income (loss) before income taxes | 17,571 | 15,502 | (153,446 | ) | 7,525 | ||||||||||||
Income tax provision | (7,204 | ) | (7,410 | ) | (12,729 | ) | (4,321 | ) | |||||||||
Net income (loss) | $ | 10,367 | $ | 8,092 | $ | (166,175 | ) | $ | 3,204 | ||||||||
Net income (loss) per share: | |||||||||||||||||
Basic | $ | 0.22 | $ | 0.19 | $ | (3.67 | ) | $ | 0.08 | ||||||||
Diluted | $ | 0.19 | $ | 0.19 | $ | (3.67 | ) | $ | 0.07 | ||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 46,344 | 42,813 | 45,338 | 42,704 | |||||||||||||
Diluted | 65,083 | 43,443 | 45,338 | 43,334 | |||||||||||||
Comprehensive income (loss) : | |||||||||||||||||
Net income (loss) | $ | 10,367 | $ | 8,092 | $ | (166,175 | ) | $ | 3,204 | ||||||||
Other comprehensive income (expense): | |||||||||||||||||
Unrealized gain on pension benefit obligation, net of tax | 23 | 12 | - | 37 | |||||||||||||
Foreign currency translation gain (loss), net of tax | - | 4,635 | (77 | ) | 40,890 | ||||||||||||
Comprehensive income (loss) | $ | 10,390 | $ | 12,739 | $ | (166,245 | ) | $ | 44,131 | ||||||||