SciClone Reports 52% Revenue Growth and a Profit in the Third Quarter of 2008Guidance on 2008 Cash and Revenue Revised Upwards
FOSTER CITY, CA -- 11/06/2008 -- SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported results for the third quarter ended September 30, 2008. Among the financial results reported by the biopharmaceutical company, revenue from product sales grew 52% to $14,328,000 over the same period last year, and net income rose to $773,000 or $0.02 per share on a basic and diluted basis, compared with a loss of $3.1 million or $0.07 per share in the third quarter of 2007. The company achieved a positive cash flow of $2,489,000 this last quarter.
"SciClone continued to achieve excellent revenue growth in the third quarter due to continued strong sales of ZADAXIN® to China," said Friedhelm Blobel, Ph.D., President and Chief Executive Officer of SciClone. "Thanks to prudent cash management our cash on hand and from ongoing business operations should be sufficient to fund current business activities for the foreseeable future, although we may continue to report quarterly losses during this period. We believe that our ability to finance our programs, including phase 2 clinical trials of our pipeline compounds and commercialization of additional products in the Chinese market, without diluting shareholder value, is an extraordinary accomplishment for a biopharmaceutical company in today's environment."
Financial Results
For the third quarter of 2008, product revenues from the sale of ZADAXIN increased by 52% to $14,328,000, compared with product revenues of $9,421,000 for the third quarter of 2007. The increase in product revenues for the third quarter of 2008 is primarily attributable to an increase in the quantity of ZADAXIN sold to the People's Republic of China ("China"), which accounted for approximately 95% of total ZADAXIN sales for the quarter.
Research and development expenses for the third quarter of 2008 totaled $4,706,000, compared with $4,793,000 for the third quarter of 2007. Expenses for the quarter were primarily related to clinical trial expenses for our phase 2 trials for RP101 and SCV-07, and the phase 3 clinical trial for HCV. Sales and marketing expenses for the third quarter of 2008 were $4,188,000, compared with $3,805,000 for the third quarter of 2007. The increase in sales and marketing expenses was primarily due to increases in personnel and promotional activities, and conferences and seminars related to our expanding sales and marketing efforts. General and administrative expenses for the third quarter of 2008 were $2,405,000, compared with $2,594,000 for the third quarter of 2007.
Net income for the third quarter of 2008 totaled $773,000, or $0.02 per share on a basic and diluted basis, compared with a loss of $3,055,000, or $0.07 per share, for the third quarter of 2007.
Cash, cash equivalents and short-term investments totaled $24,378,000 at September 30, 2008, compared with $35,281,000 at December 31, 2007 and $37,516,000 at September 30, 2007. In addition, the Company had long-term investments of $2,034,000 at September 30, 2008.
SPIL China Quarterly Financial Data
For the third quarter of 2008, SciClone Pharmaceuticals International China Holding Ltd., a fully-owned SciClone subsidiary ("SPIL China"), generated product revenues of $13,637,000 from sales of ZADAXIN, a 58% increase compared with $8,624,000 of product revenues for the third quarter of 2007. SPIL China's operating income for the third quarter of 2008 was $7,595,000. The SPIL China results are provided on a GAAP basis and exclude inter-company expenses. Inter-company expenses payable to SciClone from SPIL China were $815,000 in the third quarter.
Clinical Development Update
SciClone and its partner Sigma-Tau earlier this week reported the phase 3 trial evaluating thymalfasin in combination with pegylated interferon alpha and ribavirin as a treatment for patients with HCV who have not responded to prior therapy with pegylated interferon alpha and ribavirin. The top-line data shows that the thymalfasin treatment group did not achieve statistical significance for the primary endpoint, a measurement of sustained virological response in the primary analysis -- or "Intent to Treat" population. In this population of 552 patients, 12.73% achieved sustained virological response at week 72 of the trial, in comparison to 10.47% in the control group.
However, the top-line data also showed that a prospectively defined secondary population did achieve statistically significant sustained virological response. This was a group of 182 patients who completed the full course of treatment, also known as the "Completer" population.
SciClone and its partner Sigma Tau are still in the process of fully analyzing the data from this study, which will help them to determine the course of action going forward for this drug in HCV as well as in additional indications, such as malignant melanoma. Further development of thymalfasin would be supported by extensive safety data from its clinical use in over 1,500 patients in the U.S. and Europe and commercial use by over 100,000 patients in China.
During the third quarter of 2008, SciClone continued to make progress in its other clinical-stage pipeline of products.
Other Recent Highlights
- -- In September, SciClone announced promising results from its proof-of-
concept phase 2A clinical trial using its proprietary, immunomodulatory
compound SCV-07 as a sole agent administered to patients chronically
infected with the hepatitis C virus (HCV). The trial was designed to
evaluate the effect of SCV-07 on HCV viral load, as well as on other
measures of immune response. SCV-07 demonstrated activity in some treated
patients in the higher dosage groups, and the decrease in viral load in
these patients was accompanied by an increase in an immunological biomarker
which is usually correlated with response against HCV. Additionally, SCV-07
was shown to be generally safe and well-tolerated with no dose limiting
toxicities or serious adverse events reported. Additional information on
this phase 2A trial may be found on our website, www.sciclone.com, and in a
press release issued September 22, 2008.
- -- SciClone also expects to obtain approval from the Chinese authorities
during the fourth quarter 2008 to launch DC Bead.
Financial Guidance for 2008
We are updating guidance for the full year 2008.
For the full year 2008, SciClone expects product revenues of $52 million to $54 million, a 41 to 46% increase compared with revenues of $37 million for 2007. The increased revenue guidance is primarily due to increased sales of ZADAXIN to China. SciClone expects research and development expenses of $22 million to $24 million for 2008, of which approximately $9 million relates to the ongoing phase 2 pancreatic cancer clinical trial for RP101. SciClone is achieving intended research and development milestones in 2008 at a lower cost than anticipated in its previous guidance. For the full year 2008, SciClone expects net loss to be $6 million to $8 million, or $0.13 to $0.17 per share, and expects to end 2008 with more than $20 million in cash, cash equivalents, and investments. SciClone believes that its cash on hand and ongoing business operations should be sufficient to fund current business activities for the foreseeable future. During this period, we may continue to report quarterly losses.
For SPIL China, SciClone expects product revenues of $49 million to $51 million and operating income of $22 million to $24 million.
In summary:
Fiscal Year Ending December 31, 2008
US$ in millions Previous New
(except per share amounts) Guidance Guidance
-------- --------
SciClone Consolidated
Revenues $48-$50 $52-$54
Research and development $24-$26 $22-$24
Net loss $(10-12) $(6-8)
Net loss per share $(0.22-0.26) $(0.13-0.17)
Cash, cash equivalents and $12-$14 > $20
investments (at 12/31/08)
SPIL China
Revenues $45-$47 $49-$51
Operating income $20-$22 $22-$24
Conference Call
Management will review operating results for the third quarter 2008 and give a business update. 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.
DATE: Thursday, November 6, 2008
TIME: 11:00 a.m. ET (8:00 a.m. PT)
WEBCAST: Live call and replay accessible at www.sciclone.com
LIVE CALL: 800-211-3767 (U.S./Canada)
719-955-1564 (International)
REPLAY: 888-203-1112 (U.S./Canada)
719-457-0820 (International)
Passcode: 8199423
(Replay available from Thursday, November 6, 2008 at 2:00 p.m.
ET until 11:59 p.m. ET on Wednesday, December 3, 2008)
About SciClone
SciClone Pharmaceuticals (NASDAQ: SCLN) is a global biopharmaceutical company dedicated to developing and commercializing promising therapies for life-threatening diseases. SciClone's corporate infrastructure leverages diverse global resources to finance growth in multiple markets and fund development of its advanced pipeline of mid- to late-stage product candidates. SciClone's lead product, ZADAXIN®, is approved for sale in over 30 countries for the treatment of hepatitis B, hepatitis C, and certain immune-sensitive cancers. Sales of ZADAXIN grew by 14% in 2007, reaching $34 million in China alone. SciClone has several products in clinical development, consisting of thymalfasin for stage IV melanoma, RP101 for the treatment of pancreatic cancer, and SCV-07 for the treatment of HCV and oral mucositis; and, awaiting approval in China, DC Bead™ for the treatment of liver cancer. For additional information, please visit www.sciclone.com.
The information in this press release contains forward-looking statements including our expectations and beliefs regarding financial results for 2008, future sales and operations, and the timing 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, 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 and actual results could differ materially and adversely. These risks include changes in demand for and sales of 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 Nine months ended
September 30, September 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product sales $ 14,328,000 $ 9,421,000 $ 38,796,000 $ 27,020,000
Contract revenue - 20,000 - 20,000
------------ ------------ ------------ ------------
Total revenues 14,328,000 9,441,000 38,796,000 27,040,000
Cost of product
sales 2,286,000 1,663,000 6,764,000 4,978,000
------------ ------------ ------------ ------------
Gross margin 12,042,000 7,778,000 32,032,000 22,062,000
Operating expenses:
Research and
development 4,637,000 4,666,000 16,525,000 11,548,000
Related party
research and
development 69,000 127,000 265,000 380,000
Sales and
marketing 4,188,000 3,805,000 12,328,000 9,968,000
General and
administrative 2,405,000 2,594,000 8,286,000 7,648,000
------------ ------------ ------------ ------------
Total operating
expenses 11,299,000 11,192,000 37,404,000 29,544,000
------------ ------------ ------------ ------------
Income (loss) from
operations 743,000 (3,414,000) (5,372,000) (7,482,000)
Interest and
investment income 116,000 408,000 501,000 1,280,000
Interest and
investment expense - - - (20,000)
Other (expense)
income, net (47,000) (8,000) 7,000 (24,000)
------------ ------------ ------------ ------------
Income (loss)
before provision
for income tax 812,000 (3,014,000) (4,864,000) (6,246,000)
Provision for
income tax 39,000 41,000 341,000 90,000
------------ ------------ ------------ ------------
Net income (loss) $ 773,000 $ (3,055,000) $ (5,205,000) $ (6,336,000)
============ ============ ============ ============
Basic and diluted
net income (loss)
per share $ 0.02 $ (0.07) $ (0.11) $ (0.14)
Weighted average
shares used in
computing:
Basic net income
(loss) per share 46,219,562 46,114,562 46,209,759 46,094,152
Diluted net
income (loss)
per share 46,232,364 46,114,562 46,209,759 46,094,152
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2008 2007
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 24,162,000 $ 31,817,000
Restricted short-term investments 70,000 72,000
Other short-term investments 146,000 3,392,000
Accounts receivable, net of allowance of $0
at September 30, 2008 and $15,000 at
December 31, 2007 17,826,000 12,650,000
Inventories 5,961,000 5,579,000
Prepaid expenses and other current assets 2,648,000 2,949,000
------------ ------------
Total current assets 50,813,000 56,459,000
Property and equipment, net 684,000 774,000
Intangible assets, net 280,000 332,000
Restricted long-term investment 405,000 -
Long-term investments 1,629,000 -
Other assets 462,000 1,094,000
------------ ------------
Total assets $ 54,273,000 $ 58,659,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,738,000 $ 1,937,000
Accrued compensation and employee benefits 2,021,000 1,758,000
Accrued professional fees 940,000 699,000
Other accrued expenses 1,957,000 3,394,000
Accrued clinical trials expense 401,000 1,614,000
Accrued clinical trials expense due to
related party 1,385,000 1,620,000
Deferred revenue 770,000 37,000
------------ ------------
Total current liabilities 10,212,000 11,059,000
Other long-term liabilities 613,000 341,000
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.001 par value; 10,000,000
shares authorized; no shares outstanding - -
Common stock; $0.001 par value; 75,000,000
shares authorized; 46,219,562 and 46,121,562
shares issued and outstanding at September
30, 2008 and December 31, 2007, respectively 46,000 46,000
Additional paid-in capital 217,232,000 215,633,000
Accumulated other comprehensive (loss) income (123,000) 82,000
Accumulated deficit (173,707,000) (168,502,000)
------------ ------------
Total stockholders' equity 43,448,000 47,259,000
------------ ------------
Total liabilities and stockholders' equity $ 54,273,000 $ 58,659,000
============ ============
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended
September 30,
2008 2007*
------------ ------------
(Unaudited) (Unaudited)
Operating activities:
Net loss $ (5,205,000) $ (6,336,000)
Adjustments to reconcile net loss
to net cash used in operating activities:
Non cash expense related to employee stock
options 1,414,000 1,712,000
Amortization of interest on investments
held-to-maturity - 48,000
Depreciation and amortization 243,000 176,000
Changes in operating assets and liabilities:
Accounts receivable, net (5,176,000) (442,000)
Inventories (346,000) (883,000)
Prepaid expenses and other assets 933,000 (50,000)
Accounts payable and other accrued expenses (636,000) 1,005,000
Accrued compensation and employee benefits 263,000 (327,000)
Accrued clinical trials expenses (1,213,000) 463,000
Accrued clinical trials expense due to
related party (235,000) (106,000)
Accrued professional fees 241,000 217,000
Deferred revenue 733,000 (62,000)
Long-term liabilities 272,000 96,000
------------ ------------
Net cash used in operating activities (8,712,000) (4,489,000)
------------ ------------
Investing activities:
Purchases of property and equipment (103,000) (391,000)
Sales (purchases) of short-term investments,
net 1,393,000 9,929,000
Purchase of restricted long-term investment (448,000) -
------------ ------------
Net cash provided by investing activities 842,000 9,538,000
------------ ------------
Financing activities:
Proceeds from issuances of common stock 149,000 225,000
------------ ------------
Net cash provided by financing activities 149,000 225,000
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 66,000 17,000
------------ ------------
Net (decrease) increase in cash and cash
equivalents (7,655,000) 5,291,000
Cash and cash equivalents, beginning of period 31,817,000 25,615,000
------------ ------------
Cash and cash equivalents, end of period $ 24,162,000 $ 30,906,000
============ ============
* The Company reclassified $400,000 from net cash used in investing
activities related to the purchase of restricted long-term investment to
cash and cash equivalents, end of period in its condensed consolidated
statement of cash flows for the nine months ended September 30, 2007 to
conform to the current year presentation.
Corporate Contact:
Ana Kapor
SciClone Pharmaceuticals, Inc.
650.358.3437
investorrelations@sciclone.com
