SciClone Reports Financial Results for the Second Quarter of 2011
Year End Cash and Investments Guidance Updated
Press Release Source: SciClone Pharmaceuticals, Inc. On Tuesday August 9, 2011, 4:05 pm EDT
FOSTER CITY, CA--(Marketwire -08/09/11)- SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN - News) today reported financial results for the second quarter of 2011. Revenues for the quarter were $33.1 million compared to $20.7 million for the same period last year. For the six months ended June 30, 2011, revenues were $54.8 million, compared with $38.7 million last year. The increase in revenues in the second quarter and year to date is a result of SciClone's growing ZADAXIN® business and the addition of NovaMed Pharmaceuticals, Inc. revenues from the date of acquisition on April 18, 2011.
SciClone reported non-GAAP net income of $7.5 million, for the second quarter of 2011, compared with non-GAAP net income of $6.2 million, for the same period last year. For the six months ended June 30, 2011, non-GAAP net income was $12.4 million, compared with non-GAAP net income of $10.7 million, for the same period last year.
For the six months and for the quarter ending June 30, 2011, the number of shares of common stock used in computing basic and diluted earnings per share increased compared to the same period in 2010 as a result of the 8,298,110 shares issued in the acquisition of NovaMed in the second quarter and by approximately 1,897,000 shares due to stock option exercises year to date. Non-GAAP earnings per share were $0.13 on both a basic and diluted basis for the second quarter of 2011, and $0.13 on a basic and $0.12 on a diluted basis, for the same period last year. For the six months ended June 30, 2011, non-GAAP earnings per share were $0.24 per share on a basic and $0.23 on a diluted basis, compared with $0.23 on a basic and $0.22 on a diluted basis for the same period last year.
SciClone believes this non-GAAP information is useful for investors by offering them the ability to better understand how management evaluates the business. The non-GAAP calculations and reconciliation to comparable GAAP measures were derived principally as a result of the NovaMed acquisition and is provided in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Net Income."
"It has been a very exciting first half of 2011, as we've successfully built upon our strategy of creating a market-leading specialty pharmaceutical company in China, which continues to be the foundation of our success. We are also optimistic that with our increased visibility and resources in China, we are a more attractive licensee for that market," commented Friedhelm Blobel, Ph.D., SciClone's President and Chief Executive Officer. "With the addition of NovaMed's product portfolio as well our expanded operational and sales and marketing capabilities, we are well positioned to grow sales in China for ZADAXIN and our marketed products, including Depakine®, Stilnox®, and Aggrastat®. We look forward to further growing revenues and earnings this year."
On a GAAP basis, SciClone reported net income of $2.0 million, or $0.04 per share on a basic and $0.03 per share on a diluted basis for the three months ended June 30, 2011, compared with net income of $5.5 million, or $0.12 per share on a basic and $0.11 per share on a diluted basis, for the same period last year. For the six months ended June 30, 2011, SciClone reported net income of $5.8 million, or $0.11 on both a basic and diluted basis, compared with net income of $9.7 million, or $0.20 per share on a basic and diluted basis, for the same period last year.
Research and development expenses for the second quarter of 2011 totaled $3.1 million, compared with $2.4 million for the same period last year. The increase was primarily related to clinical trial-related expenses including the initiation of the Company's phase 2b clinical trial for the delay to onset of oral mucositis in the first quarter of 2011. For the six months ended June 30, 2011, research and development expenses were $6.2 million, compared with $5.1 million for the same period last year. SciClone expects its research and development expenses to be at around this level for the next few quarters until the Company completes the current phase 2b clinical trial with the expectation that a partner would fund any non-China focused future trials with SCV-07, and to decline significantly in 2012 and beyond.
Sales and marketing expenses for the second quarter of 2011 were $12.9 million, compared with $5.6 million for the same period last year. The increase was primarily due to increased sales activities, including the size of SciClone's significantly increased sales force as a result of its acquisition of NovaMed and employee-related costs associated with the expanding sales efforts for SciClone's lead product ZADAXIN. For the six months ended June 30, 2011, sales and marketing expenses were $18.1 million, compared with $10.6 million for the same period last year. SciClone expects sales and marketing expenses in 2011 to be higher compared to 2010 as a result of its acquisition of NovaMed and also due to increased sales efforts for ZADAXIN, primarily in China.
General and administrative expenses for the second quarter of 2011 were $8.3 million compared with $3.4 million for the same period last year. The increase in general and administrative expenses in the second quarter of 2011 was primarily a result of one time transaction costs of approximately $3.3 million related to its acquisition of NovaMed, NovaMed's ongoing general and administrative expenses of approximately $0.7 million, and expenses associated with the Company's compliance activities of approximately $0.7 million. For the six months ended June 30, 2011, general and administrative expenses were $14.2 million, compared with $6.6 million for the same period last year. SciClone expects its general and administrative expenses to decrease in the second half of 2011.
Cash and investments totaled $49.1 million at June 30, 2011, compared with $56.5 million at December 31, 2010. The decrease in SciClone's cash balance is primarily due to the $24.6 million consideration paid in the second quarter as part of the acquisition of NovaMed on April 18, 2011 offset by cash generated by SciClone's operations.
Financial Outlook Update
SciClone is confirming its previous guidance and anticipates that its 2011 GAAP revenue will be between $133 and $138 million which excludes NovaMed's revenue prior to the closing of the acquisition on April 18, 2011. As a result of the various charges relating to the acquisition, and in order to provide what the Company believes is appropriate information on its operational results, SciClone is providing guidance on earnings per share on a non GAAP basis for 2011, and reporting GAAP as well as non GAAP EPS on a quarterly basis. SciClone's non GAAP EPS will exclude charges and write offs related to the acquisition, which may vary from quarter to quarter and which cannot be predicted at this time. SciClone's earnings per share for 2011, excluding charges and write offs related to the acquisition of NovaMed and employee stock-based compensation, are in line with its previous guidance and expected to be between $0.52 and $0.57 per share. SciClone is updating its guidance on cash, cash equivalents, and short and long term investments from greater than $45 million to greater than $55 million at the end of 2011, with $24.6 million having been paid to NovaMed shareholders as part of the initial consideration in the second quarter of this year.
Second Quarter 2011 Pipeline and Business Updates
With the acquisition of NovaMed in April of 2011, SciClone moved forward with its strategic goal of expanding its presence in China with additional key pharmaceutical assets, new therapeutic areas of focus, and an expanded management team, including a current sales force of over 680 professionals. Together with the products acquired from NovaMed, the SciClone portfolio now has 18 marketed products and spans major therapeutic areas including oncology, infectious diseases, and cardiovascular, urological, respiratory and central nervous system disorders. Over time, SciClone expects to optimize this product mix by shifting it to higher margin proprietary and in-licensed products, for which it recognizes the top line revenues. SciClone also has a strong pipeline of product candidates, which are in clinical trials or in other stages of the regulatory approval process in China, including DC Bead which has entered the last part of its regulatory process with a filing of its initial clinical study data with the SFDA. Through the NovaMed acquisition, SciClone now also has exclusive licensing and promotion agreements, for which it receives promotion fees, with a number of leading pharmaceutical companies. Although SciClone expects that ZADAXIN will continue to lead its product sales, the Company anticipates the addition of NovaMed products will increase its future revenues and strengthen its rapidly growing pharmaceutical business in China over the coming years. SciClone continues to look for in-licensing opportunities, with a focus on late-stage or approved branded, well-differentiated products that if not yet approved have a clear regulatory pathway in China based on existing approvals outside of China.
In June, SciClone announced new data from preclinical studies of SCV-07, the Company's lead development product candidate, which showed that the compound successfully inhibited the growth of a variety of tumor cell lines in mice.
Conference Call Information
SciClone is hosting a conference call today at 4:30 pm ET to provide a financial update. The call will be hosted by Friedhelm Blobel, Ph.D., President and CEO, Gary Titus, Senior Vice President and CFO.
