SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported
financial results for the fourth quarter and year ended December
31, 2011. Revenues increased by 75% for the quarter ended December
31, 2011, to $41.4 million, compared to revenues for the same
period in the prior year of $23.6 million. For the year ended
December 31, 2011, revenues were $133.6 million, compared with
$85.1 million in the prior year, an increase of 57%, or $48.5
million. The increases in revenues in the fourth quarter and year
were due to the continued growth of the ZADAXIN® business in China
and the inclusion of the NovaMed Pharmaceuticals, Inc. (NovaMed)
revenues since the date of the acquisition on April 18, 2011. For
the fourth quarter ending December 31, 2011, ZADAXIN revenues
increased 26% to $29.7 million, compared to revenues for the same
period in the prior year of $23.6 million, and net revenues
attributable to NovaMed were $11.7 million. ZADAXIN revenues
increased 23% to $104.8 million for the year ending December 31,
2011, compared to $85.1 million the prior year, and net revenues
attributable to NovaMed were $28.8 million from the date of
acquisition through December 31, 2011.
On a pro forma basis, assuming NovaMed had been acquired on
January 1, 2010, revenues for the quarter would have been $41.4
million compared to $33.0 million for the same period in the prior
year, an increase of $8.4 million, or 25%. For the year ended
December 31, 2011, revenues on a pro forma basis would have been
$141.7 million, compared with $116.5 million in 2010, an increase
of $25.2 million, or 22%.
"SciClone delivered solid financial performances in the fourth
quarter and full year of 2011, driven by the continued strong
revenue growth of ZADAXIN, Depakine® and our other marketed
products in China, and managed by the well coordinated efforts of
our integrated SciClone and NovaMed sales and marketing teams,"
said Friedhelm Blobel, PhD., SciClone President and Chief Executive
Officer. "We believe that 2011 was a year of significant strategic
advancement for our Company marked by important accomplishments
that strengthen our business, market position and reputation. Prime
among these was the transition from a typical biotech to a
China-focused specialty pharmaceutical company. With the successful
integration of NovaMed, we have largely completed this transition.
And we have significantly expanded our portfolio of marketed and
pipeline products and expanded our commercial capability. Our 23%
annual ZADAXIN revenue growth, which exceeds the growth rate of the
China pharmaceuticals market, and the overall strengthening of our
China platform, position SciClone in the top-performing echelon of
multi-national companies in this important and growing market. We
are confident that we have put the right strategies, management
talent and infrastructure in place to continue to capitalize on the
significant growth opportunities inherent in the China market. We
look forward to continuing this impressive growth in 2012."
On a GAAP basis, SciClone's net income for the fourth quarter of
2011 was $12.4 million, compared with $3.8 million for the same
period in the prior year, or $0.21 per share on both a basic and
diluted basis for the three months ended December 31, 2011,
compared with $0.08 per share on both a basic and diluted basis for
the same period in the prior year. For the year ended December 31,
2011, SciClone reported net income of $28.5 million, or $0.52 per
share on a basic and $0.50 per share on a diluted basis, compared
with net income of $21.1 million, or $0.44 on a basic and $0.43 on
a diluted basis for the same period in the prior year. Basic and
diluted earnings per share for the 2011 periods reflect the
issuance of 8.3 million shares of common stock as part of the
acquisition of NovaMed in April 2011.
SciClone's non-GAAP net income for the fourth quarter of 2011
was $12.2 million, compared with non-GAAP income of $4.5 million
for the same period in the prior year, or $0.21 per share on a
basic and $0.20 per share on a diluted basis for the three months
ended December 31, 2011, compared with $0.09 per share on both a
basic and diluted basis for the same period in the prior year. For
the year ended December 31, 2011, non-GAAP net income was $34.4
million, compared with non-GAAP net income of $23.6 million for the
same period in the prior year, or $0.62 and $0.60 per share on a
basic and diluted basis, respectively, compared with $0.50 and
$0.48 on a basic and diluted basis, respectively, in the prior
year.
SciClone believes this non-GAAP information is useful for
investors, taken in conjunction with SciClone's GAAP financial
statements, because management uses such information internally for
its operating, budgeting and financial planning purposes. Non-GAAP
information is not prepared under a comprehensive set of accounting
rules and should only be used to supplement an understanding of
SciClone's operating results as reported under GAAP. The non-GAAP
calculations and reconciliation to comparable GAAP measures were
derived principally as a result of the NovaMed acquisition and are
provided in the accompanying table titled "Reconciliation of GAAP
to Non-GAAP Net Income."
Research and development expenses for the fourth quarter of 2011
totaled $3.1 million, compared with $4.7 million for the same
period in the prior year. Research and development expenses for the
year ended December 31, 2011 were $12.3 million, compared with
$12.4 million for the same period in the prior year. The decrease
for the quarter was primarily related to the timing of costs
associated with the Company's SCV-07 program, partially offset by
the addition of NovaMed research and development expenses since its
acquisition in April 2011. Following the Company's announcement on
March 2nd, 2012 regarding the futility of our SCV-07 clinical
development program in Oral Mucositis, the Company has taken
certain steps to reduce its US-based clinical development expenses
and expects that these reductions will have a significant positive
impact on our 2012 profitability, which is reflected in the
Company's earnings guidance announced today.
Sales and marketing expenses for the fourth quarter of 2011 were
$15.5 million, compared with $6.0 million for the same period in
the prior year. The increase of $9.5 million was primarily a result
of the addition of approximately 450 sales and marketing employees
through the acquisition of NovaMed in April 2011, which
significantly expanded SciClone's sales and marketing capabilities,
as well as the expanded sales efforts for SciClone's lead product
ZADAXIN. The Company now has a combined sales organization
comprised of approximately 850 sales professionals in China. For
the year ended December 31, 2011, sales and marketing expenses were
$48.9 million, compared with $22.0 million for 2010.
General and administrative expenses for the fourth quarter of
2011 were $4.6 million, compared with $5.2 million for the same
period in the prior year. The decrease in 2011 was primarily due to
lower professional services fees related to the Company's FCPA
investigation, class action and derivative lawsuits, partially
offset by increases in general and administrative expenses
attributable to NovaMed operations. For the year ended December 31,
2011, general and administrative expenses were $24.0 million,
compared with $15.6 million for 2010.
At December 31, 2011, cash and investments totaled $67.0
million, compared with $56.5 million at December 31, 2010. The
increase in SciClone's cash balance was primarily due to the cash
generated by the Company's commercial operations, partially offset
by the $24.6 million consideration paid in the second quarter as
part of the acquisition of NovaMed and $3.5 million used in the
fourth quarter for the repurchase of SciClone stock.
Financial Outlook for 2012 SciClone
anticipates 2012 revenues between $165 and $170 million. The
Company expects non-GAAP earnings per share for the full year 2012
to be between $0.72 and $0.78. SciClone cash and investments at
December 31, 2012 are projected to be greater than $85 million,
excluding the cash impact of any future repurchases of common stock
from our remaining $16.5 million share repurchase plan.
Conference Call Today 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.
LIVE CALL: 866-730-5769 (U.S./Canada)
857-350-1593 (International)
Passcode: 99060403
REPLAY: 888-286-8010 (U.S./Canada)
617-801-6888 (International)
Passcode: 14328384
(Replay available from Tuesday, March 13, 2012, at 6:30 pm ET
until 11:59 pm ET on Tuesday, March 20, 2012)
The conference call will contain forward-looking statements.
Interested parties who wish to listen to the webcast should visit
the Investor Relations section of SciClone's website at
www.sciclone.com. The information provided on the teleconference is
accurate only at the time of the conference call, and SciClone will
take no responsibility for providing updated information except as
required by law.
About SciClone SciClone Pharmaceuticals is
a revenue-generating, profitable, specialty pharmaceutical company
with a substantial commercial business in China and a product
portfolio of therapies for oncology, infectious diseases and
cardiovascular, urological, respiratory, and central nervous system
disorders. SciClone's ZADAXIN® (thymalfasin) is approved in over 30
countries and may be used for the treatment of hepatitis B (HBV),
hepatitis C (HCV), as a vaccine adjuvant, and certain cancers
according to the local regulatory approvals. Besides ZADAXIN,
SciClone markets about 15 mostly partnered products in China,
including Depakine®, the most widely prescribed broad-spectrum
anti-convulsant in China; Tritace®, an ACE inhibitor for the
treatment of hypertension; Stilnox®, a fast-acting hypnotic for the
short-term treatment of insomnia (marketed as Ambien® in the US);
and Aggrastat®, a recently-launched interventional cardiology
product. SciClone is also pursuing the registration of several
other therapeutic products in China. SciClone is headquartered in
Foster City, California. For additional information, please visit
www.sciclone.com.
Forward-Looking Statements This press
release contains forward-looking statements regarding expected
financial results and expectations. Readers are urged to consider
statements that include the words "may," "will," "would," "could,"
"should," "might," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends,"
"continues," "forecast," "designed," "goal," "unaudited,"
"approximately" or the negative of those words or other comparable
words to be uncertain and forward-looking. These statements are
subject to risks and uncertainties that are difficult to predict
and actual outcomes may differ materially. These include risk and
uncertainties relating to: the course, cost and outcome of
regulatory matters, including pricing decisions by authorities in
China; the on-going regulatory investigations; the Company's
ability to execute on its goals in China and on its objectives for
revenue in fiscal 2012; the challenges presented by integrating an
acquired business into existing operations; the variability in
earnings on a GAAP basis that may result from non-cash charges
related to the NovaMed acquisition; the dependence on third party
license, promotion or distribution agreements including the need to
renew such agreements; operating an international business; the
clinical trial process, including the regulatory approval and the
process of initiating trials at, and enrolling patients at,
clinical sites; the effect of changes in its practices and policies
related to the Company's compliance programs. SciClone cannot
predict the timing or outcome of the SEC and DOJ investigations, or
of the level of its efforts required to cooperate with those
investigations, however the Company has incurred substantial
expenses in connection with the investigations and related
litigation and expects to incur additional expense and the
investigations could result in fines and further changes in its
internal control or other remediation measures that could adversely
affect its business. Please also refer to other risks and
uncertainties described in SciClone's filings with the SEC. All
forward-looking statements are based on information currently
available to SciClone and SciClone assumes no obligation to update
any such forward-looking statements.
Ambien, Depakine, Stilnox and Tritace are registered trademarks
of Sanofi.
Aggrastat is a registered trademark of Merck & Co., Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
December 31, Year Ended December 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
Net revenues:
Product sales $ 33,543 $ 23,616 $ 113,027 $ 85,112
Promotion services 7,903 - 20,614 -
----------- ----------- ----------- -----------
Total revenues, net 41,446 23,616 133,641 85,112
Operating expenses:
Cost of product sales 6,712 3,246 20,013 12,691
Sales and marketing 15,544 6,010 48,855 22,006
Amortization of
acquired intangible
assets, related to
sales and marketing 893 - 2,465 -
Research and
development 3,111 4,715 12,346 12,415
General and
administrative 4,613 5,203 24,032 15,606
Contingent
consideration* (2,072) - (3,495) -
----------- ----------- ----------- -----------
Total operating
expenses 28,801 19,174 104,216 62,718
----------- ----------- ----------- -----------
Income from operations 12,645 4,442 29,425 22,394
Non-operating income
(expense):
Interest income 23 26 71 105
Interest expense (54) (138) (213) (195)
Other (expense)
income, net (27) 972 (21) 953
----------- ----------- ----------- -----------
Income before provision
for income tax 12,587 5,302 29,262 23,257
Provision for income tax 185 1,522 798 2,176
----------- ----------- ----------- -----------
Net income $ 12,402 $ 3,780 $ 28,464 $ 21,081
=========== =========== =========== ===========
Basic net income per
share $ 0.21 $ 0.08 $ 0.52 $ 0.44
Diluted net income per
share $ 0.21 $ 0.08 $ 0.50 $ 0.43
Weighted average shares
used in computing:
Basic net income per
share 58,274 47,890 55,110 47,624
Diluted net income per
share 59,976 49,859 57,387 49,414
UNAUDITED SELECTED BALANCE SHEET DATA
(in thousands)
December 31, December 31,
2011 2010
------------ ------------
Cash and investments $ 67,018 $ 56,522
Accounts receivable 42,226 30,671
Inventories 8,813 7,078
Intangible assets, net 45,185 -
Goodwill 31,973 -
Total assets 200,326 97,807
Total current liabilities 25,284 12,129
Contingent consideration 15,400 -
Deferred tax liabilities 8,715 -
Borrowing on line of credit 2,500 2,500
Total shareholders' equity 150,458 82,188
SCICLONE PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31, Year Ended December 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
GAAP net income $ 12,402 $ 3,780 $ 28,464 $ 21,081
Non-GAAP adjustments:
Employee stock-based
compensation 978 672 3,108 2,224
Contingent
consideration (2,072) - (3,495) -
Amortization of
acquired intangible
assets 893 - 2,465 -
Acquisition related
costs 8 68 3,818 318
----------- ----------- ----------- -----------
Non-GAAP net income $ 12,209 $ 4,520 $ 34,360 $ 23,623
----------- ----------- ----------- -----------
Non-GAAP basic net income
per share $ 0.21 $ 0.09 $ 0.62 $ 0.50
Non-GAAP diluted net
income per share $ 0.20 $ 0.09 $ 0.60 $ 0.48
Weighted average shares
used in computing:
GAAP and Non-GAAP basic
net income per share 58,274 47,890 55,110 47,624
GAAP and Non-GAAP diluted
net income per share 59,976 49,859 57,387 49,414
SciClone management uses these non-GAAP financial measures to
monitor and evaluate the Company's operating results and trends on
an on-going basis and internally for operations, budgeting and
financial planning purposes. SciClone believes the non-GAAP
information is useful for investors by offering them the ability to
better understand how management evaluates the business. These
non-GAAP measures have limitations, however, because they do not
include all items of income and expenses that affect SciClone.
These non-GAAP financial measures that management uses are not
prepared in accordance with, and should not be considered in
isolation of, or as an alternative to, measurements required by
GAAP.
SciClone's non-GAAP financial measures exclude the following
items from GAAP net income and net income per share:
- Employee stock-based compensation. The
effects of non-cash employee stock-based compensation.
- *Contingent consideration. The contingent
consideration related to the acquisition of NovaMed is re-measured
each reporting period and the change in fair value is recorded as a
(credit) or debit to operating expense. SciClone's non-GAAP
financial measure excludes the change in fair value of the
liability for contingent consideration in connection with the
acquisition of NovaMed.
- Amortization of acquired intangible
assets. We recorded intangible assets in connection with the
acquisition of NovaMed. The amortization of these intangible assets
is excluded from SciClone's non-GAAP financial measure.
- Acquisition related costs. We incurred
certain one-time acquisition costs related to the acquisition of
NovaMed. The effects of these acquisition related costs are
excluded from SciClone's non-GAAP financial measure.
Corporate Contacts Gary Titus Chief Financial Officer
650.358.3456 gtitus@sciclone.com Jane Green Investors/Media
650.358.1447 jgreen@sciclone.com
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