Sucampo Pharmaceuticals second-quarter 2010 total revenue declines to $13.8 million

Aug 7 2010

Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) today reported its consolidated financial results for the quarter and six months ended June 30, 2010.

“In addition, we continue to work towards resolution of our ongoing dispute with Takeda Pharmaceuticals.”

Sucampo reported a net loss of $2.0 million, or $0.05 per diluted share, for the second quarter of 2010, compared to a net loss of $0.2 million, or $0.01 per diluted share, for the same period in 2009. Sucampo reported a net loss of $2.3 million, or $0.05 per diluted share, for the first six months of 2010, compared to a net loss of $2.0 million, or $0.05 per diluted share, for the same period in 2009.

"We are making progress with our pipeline and are pleased to confirm our decision to conduct another phase 3 efficacy study of Amitiza^® for the treatment of opioid-induced bowel dysfunction. We also continue to advance in our design of two phase 2 trials of Rescula^® for retinitis pigmentosa and dry age-related macular degeneration," said James J. Egan, Chief Operating Officer. "In addition, we continue to work towards resolution of our ongoing dispute with Takeda Pharmaceuticals."

Financial Results for the Quarter and Year-to-Date

For the second quarter of 2010, Sucampo reported total revenue of $13.8 million, compared to $17.7 million for the same period in 2009. For the first six months of 2010, Sucampo reported total revenue of $28.6 million, compared to $33.2 million for the same period in 2009. The decreases were mainly a result of lower R&D revenue recognized for the opioid-induced bowel dysfunction (OBD) trials of Amitiza in the U.S. funded by Takeda Pharmaceutical Company (Takeda) as well as reduced revenue recognized under the agreement with Abbott related to Amitiza development in Japan. These R&D revenues were partially offset by a slight increase in product royalty revenue.

Key components of total revenue in the second quarter of 2010 included R&D revenue of $2.8 million and product royalty revenue of $9.6 million, compared to $7.4 million and $8.9 million, respectively, for the same period in 2009. Total revenue for the first six months of 2010 included R&D revenue of $6.8 million and product royalty revenue of $19.4 million, compared to $12.9 million and $17.9 million, respectively, for the same period in 2009. The decrease in R&D revenue is in line with the completion of two phase 3 trials of Amitiza for OBD in 2009 funded by Takeda and the change in estimated costs and timeline to complete the OBD program, including an additional phase 3 efficacy trial. Furthermore, the reduced R&D revenue recognized under our agreement with Abbott in Japan reflects the progress of the phase 3 program in Japan for the respective periods. The increase in product royalty revenue was in line with the increase in net sales as reported by Takeda which increased to $53.4 million for the second quarter 2010, compared to $49.5 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 $4.9 million in the second quarter of 2010, compared to $9.6 million for the same period in 2009. R&D expenses were $10.2 million for the first six months of 2010, compared to $19.6 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, the completion in July 2009 of the phase 2 trial of cobiprostone for the prevention of non-steroidal anti-inflammatory drug (NSAID)-induced gastrointestinal injury as well as reduced costs related to development of SPI-017.

G&A expenses were $6.6 million in the second quarter of 2010, compared to $2.9 million for the same period in 2009. G&A expenses were $12.4 million for the first six months of 2010, compared to $6.4 million for the same period in 2009. The increase in G&A expenses are due mainly to costs incurred in connection with ongoing legal matters.

Selling and marketing expenses were $2.3 million in the second quarter of 2010, compared to $2.2 million for the same period in 2009. Selling and marketing expenses were $4.5 million for the first six months of 2010, compared to $4.7 million for the same period in 2009.

Cash, Cash Equivalents and Marketable Securities

At June 30, 2010, cash, cash equivalents and investments were $114.4 million, compared to $118.3 million at December 31, 2009. This slight decrease was mainly due to the use of cash in operating activities.

Second Quarter and Recent Highlights

• Sucampo announced that the company plans to conduct an additional phase 3 efficacy study of Amitiza for the treatment of OBD in order to file its supplemental new drug application (sNDA) for this indication as requested by the U.S. Food and Drug Administration (FDA). As per our agreement with Takeda, we will expect to fund approximately 50.0% of the costs of the study. We anticipate initiating that study in late 2010.
• Sucampo previously announced that a pivotal phase 3 clinical trial of lubiprostone in Japanese chronic idiopathic constipation (CIC) patients met its primary endpoint with statistical significance (p<0.001) and demonstrated a safety profile consistent with previously reported clinical trial lubiprostone data. The primary endpoint of this trial was a change in the number of spontaneous bowel movements (SBMs) at the end of the first week of treatment. This pivotal, double-blinded, placebo-controlled trial evaluated 124 Japanese CIC patients each of whom received one lubiprostone 24-mcg, or placebo, capsule twice daily for 28 days.
• Sucampo today reports the interim results through 24 weeks of a 48-week phase 3 clinical trial to evaluate the long-term safety of lubiprostone in Japanese CIC patients. Those results, from this companion trial to the efficacy trial noted above, showed that lubiprostone was safe and well-tolerated. As of this interim analysis, a total of 7.7% of patients experienced moderate adverse drug reactions, 65.6% experienced mild adverse drug reactions and no severe adverse drug reactions were reported. The two most common adverse drug reactions reported were diarrhea (32.5% of patients) and nausea (26.3% of patients). The nausea was transient in duration and the majority of patients experiencing nausea remained on treatment. Data from patients' daily diary cards showed improvements from baseline in all efficacy endpoints, including bowel movements frequency, straining, incomplete evacuation, stool consistency, abdominal bloating and abdominal discomfort. Patients' quality of life (QOL), as measured by the IBS-QOL and SF-36 questionnaires, also showed improvement from baseline at Week 24. Top-line data from this 48-week long-term safety study are expected to be available during the fourth quarter of 2010.
• Sucampo presented data at Digestive Disease Week (DDW), held on May 1 through May 5, 2010. Three oral 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.
• Sucampo announced that its partner, R-Tech Ueno, Ltd. (RTU), reported results from its recently completed phase 2 clinical trial of UF-021 in retinitis pigmentosa patients, which showed a dose-dependent improvement in visual function. Sucampo today announces that it plans to initiate a phase 2 trial of Rescula in retinitis pigmentosa patients and a phase 2 trial of Rescula in dry aged-related macular degeneration (dry AMD) patients in 2011.

Takeda Dispute Update

As previously reported, 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 dated October 29, 2004. The respective arbitrators for both Sucampo and Takeda have been confirmed and both parties have selected a third arbitrator. If the third arbitrator is confirmed, then it will comprise the panel that will conduct the arbitration proceedings.