Sucampo reports $0.3M net loss, $14.8M total revenue for first-quarter 2010

May 11 2010

Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) today reported its consolidated financial results for the quarter ended March 31, 2010.

“We continue to focus on the further development of Amitiza® for new indications and our other pipeline products such as Rescula™, cobiprostone and SPI-017”

Sucampo reported a net loss of $0.3 million, or $0.01 per diluted share, for the first quarter of 2010, compared to a net loss of $1.8 million, or $0.04 per diluted share, for the same period in 2009, mainly due to lower research and development expenses.

"We continue to focus on the further development of Amitiza® for new indications and our other pipeline products such as Rescula™, cobiprostone and SPI-017," said Ryuji Ueno, M.D., Ph.D., Ph.D., Co-Founder, Chairman and Chief Executive Officer. "We expect 2010 to be a year of significant progress and, hopefully, resolution of our dispute with Takeda."

Financial Results

For the first quarter of 2010, Sucampo reported total revenue of $14.8 million, compared to $15.5 million for the same period in 2009, primarily as a result of decreased R&D revenue, partially offset by an increase in product royalty revenue.

Key components of revenue in the first quarter of 2010 included R&D revenue of $4.1 million and product royalty revenue of $9.8 million, compared to $5.5 million and $8.9 million, respectively, for the same period in 2009. The decrease in R&D revenue reflects reduced clinical trial activity for Amitiza for opioid-induced bowel dysfunction (OBD), which was offset by $2.8 million in revenue recognized under our agreement with Abbott in Japan. The increase in product royalty revenue by 9.2% was in line with the increase in net sales as reported by Takeda Pharmaceuticals which increased to $54.3 million for the first quarter 2010, compared to $49.7 million in the same period in 2009. The increase in net sales was primarily a result of a mid-2009 price increase for Amitiza and slightly higher sales volume.

Operating Expenses

R&D expenses were $5.4 million in the first quarter of 2010, compared to $10.0 million for the same period in 2009. The decrease in R&D expenses resulted primarily from the completion in July 2009 of two phase 3 clinical trials of Amitiza for OBD, completion in July 2009 of the phase 2 trial of cobiprostone for the prevention of non-steroidal anti-inflammatory (NSAID) -induced gastrointestinal injury and reduced costs related to development of SPI-017.

G&A expenses were $5.8 million in the first quarter of 2010, compared to $3.5 million for the same period in 2009. The increase in G&A expenses relates primarily to costs incurred in connection with the ongoing legal and contractual matters.

Selling and marketing expenses were $2.2 million in the first quarter of 2010, compared to $2.5 million for the same period in 2009. These lower expenses were primarily due to streamlined commercial operations and a reduction in market research expenses.

Cash, Cash Equivalents and Marketable Securities

At March 31, 2010, cash, cash equivalents and investments were $116.9 million, compared to $118.3 million at December 31, 2009. This slight decrease was primarily due to the use of cash in operating activities.

Quarter and Recent Highlights

• Sucampo presented data at Digestive Disease Week (DDW), held in New Orleans, LA, from May 1 through May 5, 2010. Presentations included results of the phase 2 clinical trial of cobiprostone for NSAID-induced gastrointestinal injury, selected phase 3 data for lubiprostone in OBD as well as results from a laboratory experiment demonstrating that methadone inhibits the activity of lubiprostone.
• Recently, Sucampo met with the U.S. Food and Drug Administration (FDA) regarding Amitiza as a treatment for OBD. Based on this discussion, Sucampo will be required to conduct one additional efficacy study to submit a supplemental new drug application for the OBD indication.

Takeda Dispute Update

As previously reported, on March 12, 2010, Sucampo submitted for filing with the International Court of Arbitration, International Chamber of Commerce a demand for arbitration under the applicable provisions of the Collaboration and License Agreement between the Company and Takeda Pharmaceuticals Company Limited dated October 29, 2004. Both sides have selected their respective arbitrators and if confirmed will select a third arbitrator to comprise the panel that will conduct the arbitration proceedings.