SAN MATEO, CA -- 03/15/2007 -- SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported results for the fourth quarter and full year ended December 31, 2006.
"We achieved several substantial clinical, financial and regulatory milestones over the course of the last twelve months. We reported positive interim phase 2 data using our lead product ZADAXIN® to treat malignant melanoma and advanced our plans to initiate a phase 2 clinical trial for our novel compound SCV-07," said Friedhelm Blobel, Ph.D., President and Chief Executive Officer of SciClone Pharmaceuticals, Inc. "Advancing toward our goal of building a leading pharmaceutical business in China, we increased our revenues from the sale of ZADAXIN to China, acquired the Chinese marketing rights to DC Bead™ and within six months filed a regulatory application for this product."
"Looking ahead into 2007, we intend to report final data from our ongoing phase 2 clinical trial using ZADAXIN to treat malignant melanoma and with our partner Sigma-Tau initiate a phase 3 clinical trial for this indication. In addition, we expect to commence a phase 2 clinical trial with SCV-07 in the United States and begin a clinical trial using DC Bead in China. Throughout the year, we will promote our unique development and marketing capabilities in China in our efforts to in-license additional products," continued Dr. Blobel.
Recent Highlights and Accomplishments
- -- Increased ZADAXIN product revenues 16% for the full year 2006,
primarily from our sales to China;
- -- Submitted a regulatory application to the Chinese State Food and Drug
Administration (SFDA) in December 2006 to market DC Bead, a product for the
treatment of liver cancer, after acquiring the Chinese marketing rights in
June 2006;
- -- Reported positive interim phase 2 data showing that the use of ZADAXIN
increased both the median survival and the overall (complete and partial)
response for patients with stage IV malignant melanoma;
- -- Completed enrollment in December 2006 of approximately 550 hepatitis C
non-responder patients in the ongoing phase 3 clinical trial using a triple
therapy of ZADAXIN, pegylated interferon alpha and ribavirin;
- -- Advanced the clinical development of SCV-07 for the treatment of viral
infectious disease, with plans to initiate a phase 2 clinical trial in the
second quarter of 2007 for one of several indications being considered;
- -- In the first half of 2006, received $8,000,000 in the settlement of a
dispute regarding the performance of a clinical trial in Japan;
- -- Appointed Friedhelm Blobel, Ph.D., President and Chief Executive
Officer, in June 2006;
- -- Promoted Richard A. Waldron to Executive Vice President and Chief
Financial Officer and Hans Schmid to President and Managing Director of
SciClone Pharmaceuticals International Ltd.
Financial Results
For the fourth quarter 2006, revenues from the sale of ZADAXIN, SciClone's lead product, increased by 16% to $8,464,000, compared with revenues of $7,314,000 reported for the fourth quarter 2005. For the full year ended December 31, 2006, product revenues increased by 16% to $32,433,000, compared with product revenues of $27,842,000 for 2005. The increase in product revenues for the fourth quarter and year ended December 31, 2006 is primarily attributable to an increase in the quantity of ZADAXIN sold in China, which accounts for over 90% of total ZADAXIN sales. Cost of product sales as a percentage of product sales increased to 27.6% for the fourth quarter 2006 compared to 18.8% for the comparable period of 2005. The difference is attributable to a royalty accrual in the fourth quarter of 2006. We anticipate the cost of product sales as a percentage of product sales in future quarters for 2007 will return to previous levels of approximately 20%.
Net loss for the fourth quarter 2006 totaled $1,503,000, or $0.03 per share, compared to a net loss of $1,625,000, or $0.04 per share, for the fourth quarter 2005. For the full year ended December 31, 2006, net income was $727,000, or approximately $0.02 per share, compared to a net loss of $7,713,000, or $0.17 per share, for the full year ended December 31, 2005. Net income for the full year 2006 included an $8,000,000 settlement from Schering Plough KK in April 2006.
Research and development expenses for the fourth quarter 2006 totaled $3,191,000, compared to $3,213,000 for the fourth quarter 2005. Research and development expenses for the full year ended December 31, 2006 were $14,088,000, versus $14,406,000 for the full year ended December 31, 2005.
General and administrative (G&A) expenses for the fourth quarter 2006 were $2,076,000, compared to $1,944,000 for the fourth quarter 2005. G&A expenses for the full year 2006 were $9,040,000 versus $7,457,000 for 2005. The increase in G&A expenses for 2006 is primarily attributed to higher salary expense, increased consulting fees, and the expensing of stock-based options.
In January 2006, the Company adopted Financial Accounting Standards Board Statement No.123 (revised 2004), "Share-Based Payment" (SFAS 123R) requiring share-based payments to employees and directors, including grants of stock options, to be recognized in statements of operations based on their fair values. SFAS 123R related expenses will be non-cash charges.
Cash, cash equivalents and short-term investments totaled $42,592,000 at December 31, 2006, compared to $42,073,000 at September 30, 2006 and $42,256,000 at December 31, 2005.
Financial Guidance for Full Year 2007
Based on SciClone's current plans for operations and clinical development, the Company estimates that revenues for the full year 2007 will increase to approximately $35,000,000 to $36,000,000 driven primarily by continued growth in sales of ZADAXIN to China. Research and development expenses for the full year 2007 are estimated to be approximately $14,000,000 to advance the development of ZADAXIN, SCV-07 and DC Bead. Net loss for the full year 2007 is estimated to be approximately $7,000,000 or $0.15 net loss per share.
Cash, cash equivalents and short-term investments at December 31, 2007 are estimated to be approximately $32,000,000.
Conference Call
SciClone will host a conference call at 10:00 a.m. ET (7:00 a.m. PT) today, Thursday, March 15, 2007. The call will contain forward-looking statements. Financial and statistical information to be discussed in the conference call will be posted on the Investor Relations section of SciClone's web site at www.sciclone.com prior to the commencement of the conference call.
DATE: Thursday, March 15, 2007
TIME: 10:00 a.m. ET (7:00 a.m. PT)
WEBCAST: Live call and replay accessible at www.sciclone.com
LIVE CALL: 888-515-2235 (U.S./Canada)
719-457-2601 (International)
About SciCloneSciClone Pharmaceuticals is a biopharmaceutical company engaged in the development of therapeutics to treat life-threatening diseases. SciClone's lead product ZADAXIN® is currently being evaluated in late-stage clinical trials for the treatment of malignant melanoma and hepatitis C. ZADAXIN is approved for sale in select markets internationally, most notably in China where SciClone has an established sales and marketing operation. A key part of SciClone's strategy is to leverage its advantage in China by in-licensing or acquiring the marketing rights to other products, such as the DC Bead™, to broaden its portfolio in this rapidly growing pharmaceutical market. SciClone's other drug development candidate is SCV-07, currently in early clinical development in the U.S. for the treatment of viral infectious diseases. For more information about SciClone, visit www.sciclone.com.
The information in this press release contains forward-looking statements including our expectations and beliefs regarding future sales and financial results for 2007, and progress and results of our clinical trials. Words such as "expects," "plans," "believe," "may," "will," "anticipated," "intended" and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, goals, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, including changes in demand for ZADAXIN, the progress or failure of clinical trials, our actual experience in executing on our objectives, the performance of our partners, maintenance of the sufficiency and eligibility of the enrolled patient population, unanticipated delays or additional expenses incurred during our clinical trials, our future cash requirements, delays in analyzing and synthesizing data obtained from clinical trials, the performance and future actions of our strategic partners, unexpected delays in clinical trial enrollment, future actions by the U.S. Food and Drug Administration or equivalent regulatory authorities in Europe and the fact that experimental data and clinical results derived from studies with a limited group of patients may not be predictive of the results of larger studies, as well as other risks and uncertainties described in SciClone's filings with the Securities and Exchange Commission.
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
============ ============ ============ ============
Product sales $ 8,464,000 $ 7,314,000 $ 32,433,000 $ 27,842,000
Contract revenue 59,000 90,000 229,000 492,000
------------ ------------ ------------ ------------
Total revenues 8,523,000 7,404,000 32,662,000 28,334,000
Cost of product
sales 2,334,000 1,375,000 6,889,000 4,875,000
------------ ------------ ------------ ------------
Gross margin 6,189,000 6,029,000 25,773,000 23,459,000
Operating expenses:
Research and
development 3,191,000 3,213,000 14,088,000 14,406,000
Sales and
marketing 2,883,000 2,809,000 11,569,000 10,237,000
General and
administrative 2,076,000 1,944,000 9,040,000 7,457,000
------------ ------------ ------------ ------------
Total operating
expenses 8,150,000 7,966,000 34,697,000 32,100,000
------------ ------------ ------------ ------------
Loss from
operations (1,961,000) (1,937,000) (8,924,000) (8,641,000)
Interest and
investment income 474,000 386,000 1,764,000 1,273,000
Interest and
investment expense (22,000) (74,000) (94,000) (345,000)
Other income, net(1) 6,000 - 7,981,000 -
------------ ------------ ------------ ------------
Net income (loss) ($ 1,503,000) ($ 1,625,000) $ 727,000 ($ 7,713,000)
============ ============ ============ ============
Earnings per share:
Basic net income
(loss) per share ($ 0.03) ($ 0.04) $ 0.02 ($ 0.17)
============ ============ ============ ============
Diluted net
income (loss)
per share ($ 0.03) ($ 0.04) $ 0.02 ($ 0.17)
============ ============ ============ ============
Weighted average
shares used in
computing:
Basic net income
(loss) per
share 45,912,447 45,870,046 45,901,015 45,328,714
============ ============ ============ ============
Diluted net
income (loss)
per share 45,912,447 45,870,046 46,072,027 45,328,714
============ ============ ============ ============
(1) For the twelve-month period ended December 31, 2006, other income
included $8,000,000 from the settlement of a clinical trial disupute
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, December 31,
2006 2005
============ ============
(unaudited)
Current assets:
Cash and cash equivalents $ 25,615,000 $ 25,845,000
Restricted short-term investments 698,000 692,000
Other short-term investments 16,279,000 15,719,000
Accounts receivable, net of allowance of
$50,000 in 2006 and $82,000 in 2005 13,277,000 9,701,000
Inventories 3,232,000 3,272,000
Prepaid expenses and other current assets 1,640,000 1,890,000
------------ ------------
Total current assets 60,741,000 57,119,000
Property and equipment, net 297,000 380,000
Intangible assets, net 402,000 472,000
Other assets 1,144,000 1,544,000
------------ ------------
Total assets $ 62,584,000 $ 59,515,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 963,000 $ 626,000
Accrued compensation and employee benefits 1,813,000 1,960,000
Accrued professional fees 754,000 642,000
Other accrued expenses 2,487,000 1,687,000
Accrued clinical trials expense 1,803,000 1,658,000
Deferred revenue 62,000 211,000
Convertible notes payable - 1,600,000
------------ ------------
Total current liabilities 7,882,000 8,384,000
Other long-term liabilities 68,000 68,000
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.001 par value; 10,000,000
shares authorized; no shares outstanding in
2006 and 2005 - -
Common stock; $0.001 par value; 75,000,000
shares authorized; 46,001,249 and 45,877,420
shares issued and outstanding in 2006 and
2005, respectively 46,000 46,000
Additional paid-in capital 213,064,000 210,245,000
Accumulated other comprehensive income 78,000 53,000
Accumulated deficit (158,554,000) (159,281,000)
------------ ------------
Total stockholders' equity 54,634,000 51,063,000
------------ ------------
Total liabilities and stockholders' equity $ 62,584,000 $ 59,515,000
============ ============
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twelve months ended
December 31,
2006 2005
============ ============
Operating activities:
Net income (loss) $ 727,000 $ (7,713,000)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Non cash expense related to employee stock
options 2,446,000 472,000
Other non-cash income, net - 16,000
Depreciation and amortization 233,000 228,000
Changes in operating assets and liabilities:
Accounts receivable, net (3,576,000) 578,000
Inventories 148,000 907,000
Prepaid expenses and other assets 644,000 (447,000)
Accounts payable and other accrued expenses 1,137,000 (1,328,000)
Accrued compensation and employee benefits (147,000) (693,000)
Accrued clinical trials expenses 145,000 158,000
Accrued professional fees 112,000 191,000
Deferred revenue (149,000) (460,000)
------------ ------------
Net cash provided by (used in) operating
activities 1,720,000 (8,091,000)
------------ ------------
Investing activities:
Purchases of property and equipment (75,000) (119,000)
Purchases of short-term investments (13,274,000) (12,265,000)
Proceeds from maturities of short-term
investments 12,734,000 5,950,000
------------ ------------
Net cash used in investing activities (615,000) (6,434,000)
------------ ------------
Financing activities:
Proceeds from issuances of common stock,
net of financing costs 265,000 3,166,000
Repayment of notes payable (1,600,000) (4,000,000)
------------ ------------
Net cash used in financing activities (1,335,000) (834,000)
------------ ------------
Net decrease in cash and cash equivalents (230,000) (15,359,000)
Cash and cash equivalents, beginning of period 25,845,000 41,204,000
------------ ------------
Cash and cash equivalents, end of period $ 25,615,000 $ 25,845,000
============ ============
Corporate Contact: Richard Waldron Executive Vice President and Chief Financial Officer SciClone Pharmaceuticals, Inc. 650-358-3437