SuperGen, Inc. (NASDAQ: SUPG) today reported financial results
for the second quarter ended June 30, 2011. The Company reported
net income for the 2011 second quarter of $903,000, or $0.01 per
basic and diluted share, compared with $961,000, or $0.02 per basic
and diluted share, for the same prior year period. The Company
reported net income for the six months ended June 30, 2011 of $6.4
million, or $0.11 per basic and $0.10 per diluted share, compared
with a net income of $5.6 million, or $0.09 per basic and diluted
share, for the same prior year period.
“We are pleased with our second quarter financial results. We
reported another quarter of profitability and ended the quarter
with approximately $129 million in cash, cash equivalents and
current and non-current marketable securities. In July 2011, we
completed the acquisition of Astex Therapeutics Limited and our
partners, Eisai and Johnson & Johnson, submitted regulatory
filings in the US and Europe seeking approval of Dacogen®
(decitabine) for Injection in the treatment of acute myeloid
leukemia (AML),” said James S.J. Manuso, Ph.D., chairman and chief
executive officer of SuperGen. “As part of the process of merging
SuperGen and Astex assets, projects and people to become Astex
Pharmaceuticals, Inc., we are targeting to exit the Salt Lake City
and Pleasanton research hubs by year end. Thereafter, we anticipate
all research will be conducted in our Cambridge, UK facility and
all clinical and regulatory development functions will continue to
be located in our Dublin, California headquarters. Taking into
account all estimated one-time charges and incremental recurring
future non-cash charges attendant with the acquisition of Astex, we
expect to operate the Company on a cash flow neutral basis for the
second half of 2011, after giving effect to a portfolio
rationalization now underway.”
Total revenues for the 2011 second quarter were $11.7 million
compared with $9.9 million for the same prior year period. Total
revenues for the 2011 second quarter include royalty revenue of
$11.5 million compared with $9.8 million for the same prior year
period. Royalty revenue is earned pursuant to the license agreement
entered into with MGI PHARMA (acquired by Eisai Corporation of
North America in January 2008) during 2004, which granted MGI
PHARMA exclusive rights to the development, manufacture,
commercialization and distribution of Dacogen. The Company
generally recognizes royalty revenue when it is received. Total
revenues for the 2011 second quarter also include development and
license revenue of $127,000 compared to a similar amount for the
same prior year period. Development and license revenue represents
the amortization of deferred revenue relating to payments received
pursuant to the collaborative research and license arrangement
entered into with GlaxoSmithKline (GSK) during October 2009.
Excluding gain on sale of products, total operating expenses for
the 2011 second quarter were $11.5 million, compared with $9.7
million for the same prior year period. The primary reasons for the
increase in total operating expenses for the 2011 second quarter
were higher research and development expenses due to increased
activities for product development and clinical trial programs
associated with SGI-110, incremental transaction costs associated
with the acquisition of Astex Therapeutics, and an increase in
stock-based compensation expense. Approximately $1.3 million of
additional expenses associated with the acquisition were charged to
general and administrative expenses during the 2011 second quarter.
Stock-based compensation expense, a non-cash expense that is
included in operating expenses, was $744,000 for the 2011 second
quarter, compared with $488,000 for the same prior year period.
The gain on sale of products for the 2011 second quarter was
$700,000 compared with a similar amount for the same prior year
period. The gain on sale of products relates to the receipt of
additional contractual payments resulting from the 2007 sale of the
worldwide rights for Nipent® (pentostatin for injection) to Mayne
Pharma (acquired by Hospira, Inc. in February 2007).
Total revenues for the six months ended June 30, 2011 were $28.8
million compared with $24.3 million for the same prior year period.
Total revenues for the six months ended June 30, 2011 include
royalty revenue of $28.5 million compared with $24.1 million for
the same prior year period. Total revenues for the six months ended
June 30, 2011 also include development and license revenue of
$254,000 compared with a similar amount for the same prior year
period. Development and license revenue represents amortization of
deferred revenue relating to payments received pursuant to the
collaborative research and license arrangement entered into with
GSK during October 2009.
Excluding gain on sale of products, total operating expenses for
the six months ended June 30, 2011 were $23.1 million compared with
$19.5 million for the same prior year period. The primary reasons
for the increase in total operating expenses for the six months
ended June 30, 2011 were higher research and development expenses
due to increased activities for product development and clinical
trial programs associated with SGI-110, incremental transaction
costs associated with the acquisition of Astex Therapeutics, and an
increase in stock-based compensation expense. Approximately $2.6
million of additional expenses associated with the acquisition were
charged to general and administrative expenses for the six months
ended June 30, 2011. Stock-based compensation expense, a non-cash
expense that is included in operating expenses, was $1.5 million
for the six months ended June 30, 2011, compared with $735,000 for
the same prior year period.
As of June 30, 2011, the Company had approximately $128.6
million in unrestricted cash, cash equivalents and current and
non-current marketable securities compared to $129.5 million at
March 31, 2011.
2011 Revised Annual Financial Guidance (Post Closing)
Following completion of the acquisition of Astex Therapeutics
Limited on July 20, 2011, the financial guidance for 2011 has been
updated to reflect the anticipated operational forecasts of the
combined entities post closing. The revised financial guidance
includes one-time charges relating to estimated severance costs
associated with merging the combined operations, estimated contract
termination costs, and transaction costs associated with the
acquisition pre- and post closing. In addition, non-cash charges
influenced by or directly related to the acquisition have also been
estimated and included in the revised 2011 financial guidance. A
summary of one-time charges and non-recurring costs are presented
below the 2011 revised annual financial guidance. The financial
guidance for the second half of 2011 forecasts the combined entity
may operate at or near cash flow neutral.
Table Representing
Updated Financial Guidance for 2011 (Post Closing)
2011 Revised Annual Financial Guidance
First Half Second Half (In $000's, except income
(loss) per share) Actual
Guidance Combined
Revenues: Royalty revenue $ 28,510 $ 28,990 $ 57,500 Development
and license revenue 254
6,246 6,500 Total
revenues 28,764 35,236
64,000 Operating
expenses: Research & development 15,985 34,015 50,000 General
& administrative 7,152 9,848 17,000 Gain on sale of products
(700 ) -
(700 ) Total operating expenses 22,437
43,863
66,300 Income (loss) from operations 6,327
(8,627 ) (2,300 ) Other, net 66
534 600 Net Income
(loss) $ 6,393 $ (8,093 )
$ (1,700 ) Net income (loss) per basic and diluted
shares $ 0.11 $ (0.09 )
$ (0.02 ) Weighted average shares outstanding
60,382 93,000
77,000
Summary of Estimated
Various One-Time and Recurring Non-Cash Items One-time
acquisition related expenses: Transaction related costs $ 2,566
1,434 $ 4,000 Severance and other expenses $ -
1,200 $ 1,200 $
2,566 $ 2,634
$ 5,200 Non-cash items (recurring):
Stock-based compensation expense $ 1,455 1,345 $ 2,800 Depreciation
expense $ 576 824 $ 1,400 Amortization of acquisition based
intangibles $ - 3,600 $ 3,600 Accretion of deferred consideration
obligation $ - 500
$ 500 $ 2,031 $
6,269 $ 8,300
Summary
of Estimated Net Decrease in Personnel At
Closing Net Decrease
Year-end Personnel 184
(44 ) 140
Conference Call Information
SuperGen will host a conference call to discuss the 2011 second
quarter financial results today at 6:00 a.m. PT / 9:00 a.m. ET. A
live webcast of the conference call is accessible via the investor
relations section of the Company’s website at http://www.supergen.com. A webcast replay of the
conference call will be available for 30 days.
About SuperGen
SuperGen is a pharmaceutical company dedicated to discovery and
development of novel cancer therapeutics in epigenetic and cell
signaling modulation. The Company develops products through
biochemical and clinical proof of concept to partner for further
development and commercialization. On April 6, 2011, SuperGen
entered into a definitive merger agreement to acquire Astex
Therapeutics Limited, a UK-based biotechnology company. The
transaction closed on July 20, 2011. For more information about
SuperGen, please visit http://www.supergen.com.
Forward-Looking Statements
This press release contains “forward-looking” statements within
the meaning of Section 21A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and is subject to the safe harbor created thereby. Actual
results could differ materially from those projected in the
forward-looking statements as a result of a number of risks and
uncertainties. These forward-looking statements include, but are
not limited to, statements regarding the expectations regarding the
anticipated generation of shareholder value as a result of the
acquisition of Astex Therapeutics Limited; the expected expansion
of the Company’s pipeline of products as a result of the
acquisition; the expectations about the timing and costs of exiting
our Salt Lake City and Pleasanton research facilities and our
ability to fully transition our research facilities to Cambridge;
the expectations regarding our clinical trials; progress of our
collaboration with GSK; the sufficiency of our operating cash to
fund our development initiatives this year and thereafter;
expectations about increases in royalty revenue; expectations
regarding research and development expenses and general and
administrative expenses; expectations regarding development and
license revenue, and gains from sales of products from the previous
sale of our commercial business; estimates of 2011 net income;
estimates of non-cash stock-based compensation and other non-cash
items; and expectations regarding Eisai’s and Johnson &
Johnson’s plans for Dacogen. Important factors that could cause
actual results to differ materially from the expectations reflected
in the forward-looking statements include, but are not limited to:
the ability of Eisai and Johnson & Johnson to generate global
sales of Dacogen; risks and uncertainties related to the
achievement of developmental milestones with respect to the
compounds in development; the research and development of
amuvatinib and SGI-110; the decision by GSK and other strategic
partners whether or not to license and then develop and
commercialize the products that are the subject of our
collaboration with them and whether any of those products will be
commercially successful; the outcome of Eisai’s and Johnson &
Johnson’s examination of Dacogen clinical trial data and the
submission of US and European regulatory filings; and the risks and
uncertainties associated with the post-transaction company. In
general, our future success is dependent upon numerous factors,
including our ability to generate pre-clinical development
candidates for selection into clinical testing, obtaining
regulatory approval of product development programs, conducting and
completing clinical trials, obtaining regulatory approval of our
products and product candidates, and creating opportunities for
future commercialization of compounds. Our future revenue and
operating and net income or loss could be worse than anticipated if
demand for our products is less than expected, if our partnerships
and collaborations with other parties are not successful, or if the
introductions of new products are delayed, for any reason,
including regulatory delay. References made to the discussion of
risk factors are detailed in the Company’s filings with the
Securities and Exchange Commission (the “SEC”) including reports on
its most recently filed Form 10-K and Form 10-Q. These
forward-looking statements are made only as of the date hereof, and
we disclaim any obligation to update or revise the information
contained in any such forward-looking statements, whether as a
result of new information, future events or otherwise.
SUPERGEN, INC. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands, except per share amounts)
(Unaudited)
Three months
ended Six months ended June 30, June 30,
2011 2010
2011 2010 Revenues:
Royalty revenue $ 11,539 $ 9,764 $ 28,510 $ 24,057 Development and
license revenue 127 127 254
254 Total revenues 11,666 9,891 28,764 24,311
Operating expenses: Research and development 7,992 7,269
15,985 14,705 General and administrative 3,532 2,407 7,152 4,768
Gain on sale of products (700 ) (700 ) (700 )
(700 ) Total operating expenses 10,824
8,976 22,437 18,773
Income from operations 842 915 6,327 5,538 Interest income
57 46 106 97 Other income 10 -
10 - Income before income tax provision 909
961 6,443 5,635 Income tax provision (6 ) - (50 ) -
Net income $ 903 $ 961 $ 6,393
$ 5,635 Net income per common share: Basic $ 0.01
$ 0.02 $ 0.11 $ 0.09 Diluted $ 0.01
$ 0.02 $ 0.10 $ 0.09 Weighted average
shares outstanding: Basic 60,399 60,293
60,382 60,251 Diluted 61,070
60,770 61,044 60,752
SUPERGEN, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) (Unaudited)
June 30, December 31, 2011
2010 ASSETS Current assets: Cash and
cash equivalents $ 30,028 $ 25,554 Marketable securities 95,129
89,699 Income tax receivable - 40 Prepaid expenses and other
current assets 1,496 1,330 Total current assets
126,653 116,623 Marketable securities, non-current 3,465
5,124 Property, plant and equipment, net 3,857 3,932 Goodwill 731
731 Restricted cash - 2,134 Other assets 554 554
Total assets $ 135,260 $ 129,098
LIABILITIES &
STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 2,181 $ 1,198 Accrued compensation 2,663 3,556 Other
accrued liabilities 679 773 Deferred revenue 509 509 Deferred rent
14 12 Total current liabilities 6,046 6,048
Deferred rent, non-current 21 9 Deferred revenue, non-current
1,175 1,429 Total liabilities 7,242 7,486
Total stockholders' equity 128,018 121,612 Total
liabilities and stockholders' equity $ 135,260 $ 129,098
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