Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
SCMP > SEC Filings for SCMP > Form 10-Q on 10-May-2013All Recent SEC Filings

Show all filings for SUCAMPO PHARMACEUTICALS, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for SUCAMPO PHARMACEUTICALS, INC.


10-May-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements regarding Sucampo Pharmaceuticals, Inc. (the "Company," "we," "us," or "our") and our business, financial condition, results of operations and prospects within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included elsewhere in this Quarterly Report Form 10-Q and in our other SEC filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which we filed with the SEC on March 18, 2013. You should also read the following discussion and analysis of our financial condition and results of operations in conjunction with our Consolidated Financial Statements as of and for the year ended December 31, 2012 included in our Annual Report on Form 10-K.

Overview

We are a global pharmaceutical company focused on innovative research, discovery, development and commercialization of proprietary drugs based on prostones and other novel drug technologies. The therapeutic potential of prostones was first discovered by our cofounder, Dr. Ryuji Ueno, and under his leadership we have pioneered the field of prostones. Prostones are naturally occurring fatty acid metabolites. Originally thought to be biologically inert, prostones have emerged as a promising compound class with unique physiological activities which can be targeted for the treatment of unmet or underserved medical needs.

We are focused on developing and/or commercializing prostone-based drugs to treat gastrointestinal, ophthalmic, neurologic, and oncology-based inflammatory disorders, and are also considering other potential therapeutic applications of our drug technologies.

We currently generate revenue mainly from product royalties, development milestone payments, clinical development activities and product sales. We expect to continue to incur significant expenses for the next several years as we continue our research and development activities, seek additional regulatory approvals and additional indications for AMITIZA® (lubiprostone), RESCULA®(unoprostone isopropyl) and other compounds, and commercialize our approved products (as discussed below) on a global basis.

To date, two prostone products have received marketing approval, AMITIZA and RESCULA. A third prostone, cobiprostone, or SPI-8811, is in phase 1 clinical development for the target indication of prevention of oral mucositis, or OM. Two additional prostones, SPI-017 and SPI-3608, have also been developed for human testing for the indication of management of pain caused by spinal stenosis, and SPI-017 is currently in a phase 2A trial that is expected to conclude by the fourth quarter of 2013.

Our operations are conducted through subsidiaries based in Japan, the United States, Switzerland, the United Kingdom and Luxembourg. Our reportable geographic segments are Asia, the Americas and Europe and we evaluate the performance of these segments based primarily on income (loss) from operations, as well as other factors that depend on the growth of these subsidiaries. Such measures include the progress of research and development activities, collaboration and licensing efforts, commercialization activities and other factors.

Drs. Ryuji Ueno and Sachiko Kuno are our controlling stockholders and are married to each other. Dr. Ueno is our Chief Executive Officer and Chairman of the Board of Directors. Dr. Kuno was a member of our Board of Directors and our executive advisor on international business development through September 30, 2012. Drs. Ueno and Kuno, together, directly or indirectly, own a majority of the stock of R-Tech Ueno, Ltd., or R-Tech, a pharmaceutical research, development and manufacturing company in Japan. R-Tech is responsible for the manufacture and supply of all of our prostone products for commercial use or clinical development.

Our Prostone Products, Approved and in the Clinic

We are developing prostone compounds for the treatment of a broad range of diseases. The most advanced of these programs are:

AMITIZA in the United States and Canada

In April 2013, we received approval for a supplemental new drug application, or sNDA, for AMITIZA at dosage strength of 24 micrograms twice daily as the first and only oral medication for the treatment of OIC in adult patients with chronic, non-cancer pain. Upon the first commercial sale of AMITIZA for OIC, we will recognize a $10.0 million milestone payment from Takeda, which we expect to receive in the second quarter.

AMITIZA in Japan

In June 2012, we received approval from the Ministry of Health, Labour and Welfare, or MHLW, in Japan, for the use of AMITIZA for chronic constipation, or CC, excluding constipation caused by organic diseases. In November 2012, Abbott began marketing AMITIZA in Japan for CC. AMITIZA is Japan's only prescription medicine for CC.

AMITIZA in other territories

In the United Kingdom, we are currently working to achieve National Institute for Care Excellence, or NICE endorsement and launch AMITIZA to treat CIC in the United Kingdom in 2013. In Switzerland, we began active marketing of AMITIZA in the first quarter of 2013.

In the first quarter of 2013, we commenced the MRP approval process in other European Union countries for CIC. In the first quarter of 2013, we also filed for an OIC indication in the United Kingdom and Switzerland. If we receive approval in the United Kingdom, we will seek approval in other countries of the European Union following an MRP for OIC.

RESCULA

Under our 2009 and 2011 agreements with R-Tech, we hold the exclusive rights to commercialize and develop RESCULA worldwide except for Japan, Korea, Taiwan and the People's Republic of China, or R-Tech Territory, for its approved indication and all new ophthalmic indications developed by us. We are also evaluating the opportunities in the European Union and other European countriesto commercialize unoprostone isopropyl there. We also seek to develop new formulations using third party proprietary drug delivery technologies. We are exploring research programs with those third parties.

An sNDA for RESCULA (unoprostone isopropyl ophthalmic solution) 0.15% for the lowering of intraocular pressure, or IOP, in patients with open-angle glaucoma or ocular hypertension was approved by the FDA in December 2012 and we began commercializing the product in February 2013. In April 2013, we paid a $500,000 milestone payment to R-Tech upon the February 2013 RESCULA re-launch. According to the approved product labeling, RESCULA may be used as a first-line agent or concomitantly with other topical ophthalmic drug products to lower intraocular pressure. RESCULA is a BK channel activator, acting via an entirely different mechanism of action as compared to any other IOP lowering agent on the market.

In February 2013, we announced that the Japan Science and Technology Agency, or JST, adopted unoprostone isopropyl ophthalmic solution 0.15% in the Adaptable and Seamless Technology Transfer Program. As part of this program, R-Tech, our development partner, has signed an agreement for unoprostone isopropyl with the JST in which the Japanese government shall provide the majority of funding for phase 3 clinical development costs for unoprostone isopropyl for retinitis pigmentosa, or RP. We are co-developing unoprostone isopropyl with R-Tech and may file for FDA and European Medicines Agency approval for the treatment of RP in the future assuming successful clinical studies.

Product Pipeline

The table below summarizes the development status of lubiprostone, unoprostone isopropyl and several other prostone-based product candidates. We currently hold all of the commercialization rights to the prostone compounds in our product pipeline, other than for commercialization of AMITIZA in the United States, Canada and Japan, which is covered by our collaboration and license agreements with Takeda and Abbott, and for RESCULA, for which we hold all rights except in the R-Tech Territory. Commercialization may be after successful completion of clinical studies.

 Product/Product
    Candidate        Target Indication       Development Phase       Next Milestone
AMITIZA ®           Chronic idiopathic     Marketed in the U.S.    _____
(lubiprostone)      constipation (CIC)
                    (adults of all ages)

                                           Marketed in             _____
                                           Switzerland

                                           Marketing               Obtain NICE
                                           Authorization           endorsement within
                                           Application (MAA)       the U.K.
                                           approved for CIC in
                                           August 2012 in U.K.
                                           Initiated mutual
                                           recognition process
                                           for approval in other
                                           E.U. countries.

                    Chronic constipation   Marketed in Japan       _____
                                           since Q4 2012

                    Opioid-induced         sNDA approved in U.S.   M.A.A. approval
                    constipation (OIC)     in Q2 2013. MAA         Switzerland and UK;
                    in patients with       submitted in            MRP-wide E.U.
                    chronic non-cancer     Switzerland and UK in   approval after U.K.
                    pain                   Q1 2013                 approval

                    Pediatric functional   Phase 3 in U.S. and     File sNDA in U.S.
                    constipation           Europe                  and MAA in Europe
                                                                   for label updates

                    Irritable bowel        Marketed in the U.S.    Initiate phase 4
                    syndrome with                                  study on higher
                    constipation (adult                            dosage and with
                    women) (IBS-C)                                 additional male
                                                                   subjects

RESCULA ®           Primary open angle     Launch in the U.S. in   _____
(unoprostone        glaucoma and ocular    Q1 2013
isopropyl)          hypertension

                    Glaucoma and ocular    _____                   Updated label and
                    hypertension                                   reauthorization in
                                                                   the E.U. and
                                                                   Switzerland

Cobiprostone
(SPI-8811)          Gastrointestinal
                    Oral mucositis         Phase 1: spray          Complete Phase 1a:
                                           formulation             initiate phase
                                                                   1b/2a trial

SPI-3608                                                           Complete phase 1
                    Spinal stenosis        Phase 1 ongoing         trial

SPI-017                                                            Complete phase 2a
                    Spinal stenosis        Phase 2 ongoing         study

Results of Operations



Revenues



The following table summarizes our revenues for the three months ended March 31,
2013 and 2012:




                                                    Three Months Ended
                                                         March 31,
             (In thousands)                          2013          2012
             Research and development revenue     $    2,800     $  2,585
             Product royalty revenue                  11,677       10,928
             Co-promotion revenue                         61          766
             Contract and collaboration revenue          164          167
             Product sales revenue                     2,217            -
             Total                                $   16,919     $ 14,446

Total revenues were $16.9 million for the three months ended March 31, 2013 compared to $14.4 million for the three months ended March 31, 2012, an increase of $2.5 million or 17.1%.

Research and development revenue

Research and development revenue was $2.8 million for the three months ended March 31, 2013 compared to $2.6 million for the three months ended March 31, 2012, an increase of $215,000 or 8.3%.

Product royalty revenue

Product royalty revenue represents royalty revenue earned on net sales of AMITIZA in the United States. Product royalty revenue was $11.7 million for the three months ended March 31, 2013 compared to $10.9 million for the three months ended March 31, 2012, an increase of $749,000 or 6.9%. The increase was primarily due to higher price and volume of AMITIZA sales.

Product sales revenue

Product sales revenue represents product sales earned on net sales of AMITIZA in Japan and RESCULA in the United States. Product sales revenue was $2.2 million for the three months ended March 31, 2013 compared to nil for the three months ended March 31, 2012.

Co-promotion revenue

Co-promotion revenues represent reimbursement by Takeda of co-promotion costs for our specialty sales force. Co-promotion revenue was $61,000 for the three months ended March 31, 2013 compared to $766,000 for the three months March 31, 2012. The decrease in co-promotion revenue was attributable to a shift of our sales force from selling AMITIZA to selling RESCULA during the quarter.

Research and Development Expenses



The following summarizes our research and development expenses for the three
months ended March 31, 2013 and 2012:



                                             Three Months Ended
                                                  March 31,
                   (In thousands)             2013          2012
                   Direct costs:
                   Lubiprostone            $    2,061      $   749
                   Cobiprostone                   285          457
                   SPI-017                        733          106
                   Unoprostone isoproypl          436          784
                   Other                        1,247          815
                   Total                        4,762        2,911

                   Indirect costs                 867          441
                   Total                   $    5,629      $ 3,352

Total research and development expenses for the three months ended March 31, 2013 were $5.6 million compared to $3.4 million for the three months ended March 31, 2012, an increase of $2.3 million or 67.9%. The increase was primarily due to the initiation of our phase 3 clinical trial of lubiprostone for pediatric patients.

General and Administrative Expenses



The following summarizes our general and administrative expenses for the three
months ended March 31, 2013 and 2012:



                                                           Three Months Ended
                                                                March 31,
     (In thousands)                                         2013          2012
     Salaries, benefits and related costs                $    2,144      $ 2,026
     Legal, consulting and other professional expenses        2,046        3,118
     Stock option expense                                       250          518
     Other expenses                                           2,787        1,665
     Total                                               $    7,227      $ 7,327

General and administrative expenses were $7.2 million for the three months ended March 31, 2013, compared to $7.3 million for the three months ended March 31, 2012, a decrease of $100,000. The changes in general and administrative expense were primarily due to continued investment in corporate marketing and branding and staff to support business growth, partially offset by lower legal, consulting, and other professional expenses as a result of the conclusion of certain legal matters in 2012.

Selling and Marketing Expenses



The following summarizes our selling and marketing expenses for the three months
ended March 31, 2013 and 2012:



                                                        Three Months Ended
                                                             March 31,
         (In thousands)                                  2013          2012
         Salaries, benefits and related costs         $    1,949      $ 1,884
         Consulting and other professional expenses          901          338
         Stock option expense                                 57          113
         Other expenses                                    2,482        1,754
         Total                                        $    5,389      $ 4,089

Selling and marketing expenses represent costs we incur to co-promote AMITIZA, including salaries, benefits and related costs of our sales force and other sales and marketing personnel, and represent costs of market research and analysis and other selling and marketing expenses. Selling and marketing expenses were $5.4 million for the three months ended March 31, 2013, compared to $4.1 million for the three months ended March 31, 2012, an increase of $1.3 million or 31.8%. The increase in selling and marketing expenses relates primarily to commercialization and launch costs for RESCULA.

Non-Operating Income and Expense



The following table summarizes our non-operating income and expense for the
three months ended March 31, 2013 and 2012:



                                                Three Months Ended
                                                     March 31,
                (In thousands)                   2013          2012
                Interest income               $       19      $    20
                Interest expense                    (495 )       (592 )
                Other income (expense), net        1,081        1,274
                Total                         $      605      $   702

Interest income was $19,000 for the three months ended March 31, 2013, compared to $20,000 for the three months ended March 31, 2012, a decrease of $1,000, or 5.0%.

Interest expense was $495,000 for the three months ended March 31, 2013, compared to $592,000 for the three months ended March 31, 2012, a decrease of $97,000, or 16.4%.

Other income was $1.1 million for the three months ended March 31, 2013, compared to other income of $1.3 million for the three months ended March 31, 2012, a decrease of $194,000, or 15.2%. The majority of the decrease relates to higher foreign exchange gains in the prior year period that are unrealized and non-cash and that relate to amounts held within subsidiaries.

Income Taxes

We recorded a tax provision of $1.1 million and $2.3 million for three months ended March 31, 2013 and 2012, respectively. The tax provision for the three months ended March 31, 2013 primarily related to pre-tax income generated by our United States and Japanese subsidiaries.

Reportable Geographic Segments

We have determined that we have three reportable segments based on our method of internal reporting, which disaggregates business by geographic location. These segments are the Americas, Europe and Asia. We evaluate the performance of these segments based primarily on income (loss) from operations, as well as other factors, including the progress of research and development activities. The financial results in these three segments based on geographic locations for the three months ended March 31, 2013 are summarized in the table below.

The financial results of our segments reflect their varying stages of development. Our Americas segment recorded income before taxes of $2.9 million for the three months ended March 31, 2013 compared to income before taxes of $3.4 million for three months ended March 31, 2012.

Our segment in Europe recorded a loss before taxes of $4.2 million for the three months ended March 31, 2013 compared to loss before taxes of $2.8 million for the three months ended March 31, 2012.

Our segment in Asia recorded a loss before taxes of $786,000 for the three months ended March 31, 2013 compared to a loss before taxes of $237,000 during the three months ended March 31, 2012.

  Add SCMP to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for SCMP - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.