Note 1 - Business Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2014 |
Disclosure Text Block [Abstract] | ' |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | ' |
1. Business Organization and Basis of Presentation |
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Description of the Business |
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Sucampo Pharmaceuticals, Inc., or the Company, is a global biopharmaceutical company focused on innovative research; discovery, development and commercialization of proprietary drugs to treat gastrointestinal, ophthalmic, neurologic, and oncology-based inflammatory disorders; and is also considering other potential therapeutic applications of the Company’s drug technologies. |
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The Company currently generates revenue mainly from product royalties, development milestone payments, product sales and clinical development activities. The Company expects to continue to incur significant expenses for the next several years as the Company continues its research and development activities, seeks regulatory approvals and additional indications for approved products and other compounds, and seeks partnering opportunities for the approved products and compounds on a global basis. |
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In the United States, AMITIZA® (lubiprostone) is marketed for three gastrointestinal indications under the October 2004 collaboration and license agreement, or the Takeda Agreement, with Takeda Pharmaceutical Company Limited, or Takeda. These indications are chronic idiopathic constipation, or CIC, in adults, irritable bowel syndrome with constipation, or IBS-C, in adult women, and opioid-induced constipation, or OIC, in adults. Takeda also holds marketing rights to AMITIZA in Canada and has taken steps to file for regulatory approval in Canada. The Company is primarily responsible for clinical development activities under the Takeda Agreement, while Takeda is primarily responsible for the commercialization of AMITIZA in the United States and Canada. The Company and Takeda initiated commercial sales of AMITIZA in the United States for the treatment of CIC, IBS-C, and OIC in April 2006, May 2008 and May 2013, respectively. |
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In Japan, AMITIZA is marketed under a license, commercialization and supply agreement, or the Abbott Agreement, with Abbott Japan Co. Ltd., or Abbott, for the gastrointestinal indication of chronic constipation, or CC, excluding constipation caused by organic diseases. Abbott initiated commercial sales of AMITIZA in Japan for the treatment of CC in November 2012. In early December 2013, the two-week limitation on prescriptions, generally applied to all new approvals of products for the first year after reimbursement price approval by the Japanese government was removed. AMITIZA is Japan’s only prescription medicine for CC. |
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In Switzerland, the Company is commercializing AMITIZA for CIC. The Company announced in February 2014 that the Bundesamt fur Gesundheit revised several reimbursement limitations with which AMITIZA was first approved for reimbursement and inclusion in the Specialitätenliste to allow all Swiss physicians to prescribe AMITIZA to patients who have failed previous treatments with at least two laxatives over a nine month period. In July 2014, the Company announced that Swissmedic, the Swiss Agency for Therapeutic Products, approved AMIITZA for the treatment of OIC in chronic, non-cancer adult patients. |
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In the United Kingdom, the Company is commercializing AMITIZA for CIC. In July 2014, the Company announced that the National Institute for Health and Care Excellence had published the technology appraisal guidance recommending of the use of AMITIZA in the treatment of CIC and associated symptoms in adults who have failed previous treatments with laxatives. The Company filed for the OIC indication in the United Kingdom and in March 2014, the Company received notification from Medicines and Healthcare Products Regulatory Agency, or MHRA, that the application was not approved. The Company is in continued discussion with MHRA exploring all available options. The Company will be seeking approval for AMITIZA for the CIC indication in other European Union countries following the Mutual Recognition Procedure. |
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The Company holds license agreements for RESCULA® (unoprostone isopropyl ophthalmic solution) 0.15% in the United States and Canada and the rest of the world, with the exception of Japan, Korea, Taiwan and the People’s Republic of China. The Company is commercializing RESCULA for the lowering of intraocular pressure, or IOP, in patients with open-angle glaucoma or ocular hypertension. According to the U.S. approved product labeling, RESCULA may be used as a first-line agent or concomitantly with other topical ophthalmic drug products to lower intraocular pressure. RESCULA is a BK channel activator, which is different from other available IOP lowering agents. |
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The Company’s other clinical development programs include the following: |
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Lubiprostone Reformulation for Pediatric Functional Constipation |
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As announced previously, Takeda has agreed to fund 100% of the costs for additional reformulation work for lubiprostone. Feasibility testing for this work is ongoing and is expected to be completed in the fourth quarter of 2014. If successful, the reformulation will enable future studies of lubiprostone in adults and younger children who may not be able to swallow the current soft gelatin capsule formulation. Currently, two of the four planned phase 3 studies for the pediatric functional constipation development program are ongoing, both of which are testing the current soft gelatin capsule formulation of lubiprostone in patients 6 to 17 years of age: a 12-week, randomized, placebo-controlled trial that initiated in December 2013 and a follow-on, long-term safety extension study that initiated in March 2014. |
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Intravenous and Oral Ion Channel Activators for Lumbar Spinal Stenosis |
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Two ion channel activators, in both the intravenous, or IV, and oral forms, are in clinical development for the treatment of lumbar spinal stenosis, or LSS. Positive top-line results from a phase 1b trial evaluating the safety and pharmacokinetics of the orally administered ion channel activator demonstrated the compound to be generally well-tolerated. This trial is expected to conclude in the third quarter of 2014. The Company plans to conduct an additional phase 2a trial in the second half of 2014 to evaluate the clinical effectiveness of the IV ion channel activator with LSS. |
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Cobiprostone as an Oral Spray for Oral Mucositis |
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The Company completed a phase 1b clinical trial for the target indication of prevention and/or treatment of oral mucositis. The results of the phase 1b trial showed that cobiprostone was well-tolerated and revealed low systemic exposure. The next phase of clinical development, a phase 2a trial, is expected to begin in the second half of 2014. |
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Basis of Presentation |
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The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and the rules and regulations of the Securities and Exchange Commission, or SEC, for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 12, 2014. The financial information as of June 30, 2014 and for the three and six months ended June 30, 2014 and June 30, 2013 is unaudited. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments or accruals, considered necessary for a fair statement of the results of these interim periods have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year. |
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The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries: Sucampo AG, or SAG, based in Zug, Switzerland, through which the Company conducts certain of its worldwide and European operations; Sucampo Pharma, Ltd., based in Tokyo and Osaka, Japan, through which the Company conducts its Asian operations; Sucampo Pharma Americas LLC, based in Bethesda, Maryland, through which the Company conducts its North and South American operations; and Sucampo Pharma Europe, Ltd., based in Oxford, United Kingdom. The Company liquidated Ambrent Investments S.à r.l., based in Luxembourg, at the end of 2013. All significant inter-company balances and transactions have been eliminated. |
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The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
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Revisions to Previously Issued Financial Statements |
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The Company has revised the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2013 to correct errors in the presentation of gross profit, other income and income taxes. As a result of this revision, gross profit will be removed as a sub-total and costs of goods sold will be disclosed as an operating cost under the heading “Costs and expenses”. Gross profit was presented on the Condensed Consolidated Statements of Operations and Comprehensive Income beginning in the period ended December 31, 2012 and for periods ended March 31, June 30 and September 30, 2013. |
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In addition, the Company has revised the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2013 and the Condensed Consolidated Balance Sheet as of December 31, 2013 to correct errors in the recognition of indirect taxes at its Swiss subsidiary. The errors affect the years ended December 31, 2012 and 2013 and the periods ended March 31, 2013, June 30, 2013, September 30, 2013 and March 31, 2014. During those periods, the Company overstated its indirect tax liability and understated net income. |
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The Company has also revised the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 to correct errors in the classification of foreign exchange gains and losses in net cash used in operating activities, investing activities and the effect of exchange rates on cash and cash equivalents and the change in net income. The errors in classification affect the year ended December 31, 2013 and the periods ended September 30, 2013, June 30, 2013 and March 31, 2013. These errors have no effect on the balances of cash and cash equivalents. |
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The revisions were determined to not be material, individually or in the aggregate, to any previously issued financial statements. Accordingly, the Company will revise previously reported interim and annual periods in future filings. The following revisions have been made to the previously reported June 30, 2013 balances: |
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| | Presentation as of three months ended June 30, 2013 | |
(In thousands, except per share data) | | As Previously | | | Revision | | | As Revised | |
Reported | Adjustment |
Gross profit | | $ | 25,115 | | | $ | (25,115 | ) | | $ | - | |
Total costs and expenses | | | (14,946 | ) | | | (1,908 | ) | | | (16,854 | ) |
Other income (expense), net | | | 744 | | | | 126 | | | | 870 | |
Total non-operating income (expense), net | | | 274 | | | | 126 | | | | 400 | |
Income (loss) before income taxes | | | 10,443 | | | | 126 | | | | 10,569 | |
Net income | | | 6,119 | | | | 126 | | | | 6,245 | |
Net income per share: Diluted | | | 0.14 | | | | 0.01 | | | | 0.15 | |
Comprehensive income | | | 5,914 | | | | 126 | | | | 6,040 | |
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| | Presentation as of six months ended June 30, 2013 | |
(In thousands, except per share data) | | As Previously | | | Revision | | | As Revised | |
Reported | Adjustment |
Gross profit | | $ | 40,752 | | | $ | (40,752 | ) | | $ | - | |
Total costs and expenses | | | (33,191 | ) | | | (3,190 | ) | | | (36,381 | ) |
Other income (expense), net | | | 1,825 | | | | 195 | | | | 2,020 | |
Total non-operating income (expense), net | | | 879 | | | | 195 | | | | 1,074 | |
Income (loss) before income taxes | | | 8,440 | | | | 195 | | | | 8,635 | |
Net income | | | 2,974 | | | | 195 | | | | 3,169 | |
Net income per share: Basic | | | 0.07 | | | | 0.01 | | | | 0.08 | |
Comprehensive income | | | 2,806 | | | | 195 | | | | 3,001 | |
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Net cash provided by (used in) operating activities | | | (5,902 | ) | | | 1,298 | | | | (4,604 | ) |
Net cash provided by (used in) investing activities | | | (7,506 | ) | | | 466 | | | | (7,040 | ) |
Effect of exchange rates on cash and cash equivalents | | | 267 | | | | (1,764 | ) | | | (1,497 | ) |
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| | Presentation as of December 31, 2013 | |
(In thousands) | | As Previously | | | Revision | | | As Revised | |
Reported | Adjustment |
Other assets | | $ | 584 | | | $ | (96 | ) | | $ | 488 | |
Total assets | | | 136,973 | | | | (96 | ) | | | 136,877 | |
Other liabilities | | | 2,150 | | | | (917 | ) | | | 1,233 | |
Total liabilities | | | 78,825 | | | | (917 | ) | | | 77,908 | |
Accumulated deficit | | | (27,681 | ) | | | 821 | | | | (26,860 | ) |
Total stockholders' equity | | | 58,148 | | | | 821 | | | | 58,969 | |
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