EX-99.1 2 scln-20141110ex9916af904.htm EX-99.1 Exhibit 99.1 Q314 Financial Results

Exhibit 99.1

Picture 2

 

Corporate Contacts

 

 

 

Wilson W. Cheung

Jane Green

Chief Financial Officer

Investors/Media

650.358.3434

650.358.1447

wcheung@sciclone.com 

jgreen@sciclone.com

 

 

SCICLONE REPORTS FINANCIAL RESULTS FOR THE THIRD QUARTER 2014

 

2014 EPS Guidance Revised Upward;

ZADAXIN® Leads Continued Growth of Core Business in 2014

 

FOSTER CITY, CA – November 10, 2014 – SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported financial results for the third quarter 2014.

·

Revenues: Revenues in the third quarter of 2014 were $34.3 million, compared to $35.2 million for the same period in 2013.

·

GAAP Basic EPS: GAAP basic earnings per share were $0.16 for both the third quarters of 2014 and 2013.

·

Non-GAAP Basic EPS: Non-GAAP basic earnings per share in the third quarter of 2014 were $0.17, compared to $0.18 for the same period in 2013.

 

Revenues in the third quarter of 2014 were $34.3 million, a $0.9 million or 2.6% decrease, compared to $35.2 million for the same period in 2013. For the nine months ended September 30, 2014, revenues were $93.4 million, compared to revenues of $94.3 million for the same period in 2013. ZADAXIN® revenues were $32.1 million in the third quarter of 2014, a $7.1 million or 28.4%, increase, compared to $25.0 million for the same period in 2013. Promotion services revenues were $0.7 million for the third quarter of 2014, a $9.3 million or 93.3% decrease, compared to $10.0 million in the same period in 2013. SciClone’s promotion services revenues for the nine months ended September 30, 2014 were negatively affected by the expiration of the promotion agreements with Sanofi Aventis S.A. (“Sanofi”) at the end of their terms on December 31, 2013.

 

On a GAAP basis, SciClone reported net income in the third quarter of 2014 of $7.9 million, or $0.16 and $0.15 per share on a basic and diluted basis, respectively, compared to net income of $8.7 million, or $0.16 per share on both a basic and diluted basis, for the same period in 2013. SciClone’s net income for the nine months ended September 30, 2014 was $21.7 million, or $0.42 and $0.41 per share on a basic and diluted basis, respectively, compared with net income of $10.9 million, or $0.20 per share on both a basic and diluted basis, for the same period in 2013.

 

SciClone’s non-GAAP net income in the third quarter of 2014 was $8.7 million, or $0.17 per share on both a basic and diluted basis, compared with non-GAAP net income of $10.0 million, or $0.18

 


 

 

per share on both a basic and diluted basis, for the same period of the prior year. SciClone’s non-GAAP net income for the nine months ended September 30, 2014, was $24.3 million, or $0.47 and $0.46 per share on a basic and diluted basis, respectively, compared with non-GAAP net income of $19.1 million, or $0.35 per share on both a basic and diluted basis, for the same period of last year.

 

Friedhelm Blobel, PhD., SciClone Chief Executive Officer commented: “We are very pleased with the continued strong performance of our core business this quarter, as well as year-to-date, led by continued strong ZADAXIN® sales. We are confident that we are on track to meet our revenue guidance for the year, while our continued cost reductions will have a positive effect on our projected EPS.

 

“One of our proudest achievements in the third quarter was securing the approval of DC Bead® by the China Food and Drug Administration, predominantly for the treatment of liver cancer, a large and growing indication in China. DC Bead is a great addition to our oncology portfolio. We  have established high quality relationships with medical professionals and institutions that specialize in cancer treatment, which we believe will be valuable assets as we prepare for the commercial launch, anticipated in the first half of 2015.

 

“Our business development strategy is to ensure that we have a steady stream of products coming online to drive revenue and profitability in the near, medium and long term. The in-licensing of Neucardin® and ProFlow® to strengthen our cardiovascular franchise were key steps in this strategy, and represent commercial opportunities within the next few years. We are further looking at very interesting prospects that could fill our portfolio with additional revenue-generating opportunities staged over various points in time.

 

“We intend to continue to strengthen our position as a US-based, China-focused specialty pharma company, with a focus on providing high quality medical products to patients, and a strong commitment to compliance in all aspects of our operations.”

 

For the third quarter of 2014, sales and marketing (S&M) expenses were $13.9 million, compared with $16.5 million for the same period in 2013. As a result of the expiration of the Sanofi promotion agreements, the Company restructured its sales force at the end of 2013, and by September 30, 2014 had reduced headcount by approximately 150 salespersons, compared to September 30, 2013. Other S&M expenses also decreased for the third quarter of 2014 as a result of no marketing costs for the promotion of Sanofi products. For the nine months ended September 30, 2014, S&M expenses were $35.0 million, compared with $42.0 million, for the same period last year.

 

For the third quarter of 2014, research and development (R&D) expenses were $0.7 million, compared with $0.6 million of R&D expenses for the same period of 2013. For the nine months ended September 30, 2014, R&D expenses were $2.9 million, compared with $6.3 million, for the same period of last year.

 

For the third quarter of 2014, general and administrative (G&A) expenses were $5.6 million, compared with $8.2 million for the same period in 2013, primarily related to lower legal costs associated with the ongoing government investigations and other legal matters and lower bad debt expense. For the nine months ended September 30, 2014, G&A expenses were $17.5 million, compared with $24.8 million, for the same period last year.

 

 


 

 

As of September 30, 2014, cash and cash equivalents and restricted cash totaled $96.9 million, compared to $85.9 million as of December 31, 2013. SciClone has a share repurchase program under which its Board of Directors has authorized $65.5 million, of which approximately $55.4 million had been utilized through September 30, 2014. Approximately $10.1 million remained available in this program. 

 

SciClone has presented non-GAAP information above as the Company 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 are provided in the accompanying table titled “Reconciliation of GAAP to Non-GAAP Net Income.”

 

Updated Guidance for 2014

 

In light of the Company’s continuing reduced marketing and general and administrative expenses, non-GAAP EPS guidance for 2014 is being revised upwards. The Company now projects non-GAAP EPS of $0.64 to $0.68. The prior projection announced in August 2014 was non-GAAP EPS of $0.51 to $0.57. SciClone continues to project revenue of $130 million to $135 million.

 

Conference Call Today

 

SciClone is hosting a conference call today at 4:30 pm ET (1:30 pm PT) to provide a financial update. The call will be hosted by Friedhelm Blobel, Ph.D., President and CEO, and Wilson W. Cheung, Senior Vice President and CFO.

 

 

 

LIVE CALL:

877.674.6420 (US/Canada)

 

920.663.6281 (International)

 

Passcode: 21643721

 

 

 

REPLAY:    

855.859.2056 (US/Canada)

 

404.537.3406 (International)

 

Passcode: 21643721

 

(Replay available from November 10, 2014 at 7:30 pm

 

ET until 11:59 pm ET on November 16, 2014)

 

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, specialty pharmaceutical company with a substantial commercial business in China and a product portfolio spanning major therapeutic markets including oncology, infectious diseases and cardiovascular disorders. SciClone’s proprietary lead product, ZADAXIN® (thymalfasin), is approved in over 30 countries and may be used for the

 


 

 

treatment of hepatitis B (HBV), hepatitis C (HCV), and certain cancers, and as a vaccine adjuvant, according to the local regulatory approvals. Through its promotion business with pharmaceutical partners, SciClone markets multiple branded products in China which are therapeutically differentiated. The Company has successfully in-licensed products with the potential to become future market leaders and to drive the Company's long-term growth, including DC Bead®, a novel treatment for liver cancer, which was approved earlier this year by the China FDA. SciClone is a publicly-held corporation based in Foster City, California, and trades on the NASDAQ Global Select Market under the symbol SCLN. 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 risks and uncertainties relating to: the course, cost and outcome of regulatory matters, including future pricing decisions by authorities in China; the on-going regulatory investigations and expenses related thereto, including potential fines and/or other remedies; the Company’s ability to execute on its goals in China and on its objectives for revenue in fiscal 2014; the Company’s ability to implement and maintain controls over its financial reporting and effectively remediate any identified material weakness; the dependence of its current and future revenue and prospects on third-party license, promotion or distribution agreements, including the need to renew such agreements, enter into similar agreements, or end arrangements that the Company does not believe are beneficial; operating an international business; uncertainty in the prospects for unapproved products, including ProFlow® and Neucardin™, including uncertainties as to pricing and competition and risks relating to the clinical trial process and related regulatory approval process and the process of initiating trials at, and enrolling patients at, clinical sites; and 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 ongoing 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 substantial additional expense, and the investigations could result in fines that exceed the minimum amount accrued and further changes in its internal control or other remediation measures that could adversely affect its financial results. 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. 

 

SciClone, SciClone Pharmaceuticals, the SciClone Pharmaceuticals design, the SciClone logo and ZADAXIN are registered trademarks of SciClone Pharmaceuticals, Inc. in the United States and numerous other countries. 

 

 


 

 

SCICLONE PHARMACEUTICALS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

 

2014

 

2013

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

33,621 

 

$

25,273 

 

$

91,236 

 

$

67,489 

Promotion services

 

 

666 

 

 

9,953 

 

 

2,129 

 

 

26,835 

Total net revenues

 

 

34,287 

 

 

35,226 

 

 

93,365 

 

 

94,324 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

6,005 

 

 

3,808 

 

 

15,577 

 

 

11,631 

Sales and marketing

 

 

13,911 

 

 

16,498 

 

 

34,987 

 

 

41,966 

Research and development

 

 

653 

 

 

550 

 

 

2,933 

 

 

6,321 

General and administrative

 

 

5,611 

 

 

8,238 

 

 

17,460 

 

 

24,792 

Total operating expenses

 

 

26,180 

 

 

29,094 

 

 

70,957 

 

 

84,710 

Income from operations

 

 

8,107 

 

 

6,132 

 

 

22,408 

 

 

9,614 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest and investment income

 

 

31 

 

 

31 

 

 

73 

 

 

62 

Interest and investment expense

 

 

 —

 

 

(13)

 

 

(48)

 

 

(95)

Other income, net

 

 

108 

 

 

2,711 

 

 

19 

 

 

2,775 

Income before provision for income tax

 

 

8,246 

 

 

8,861 

 

 

22,452 

 

 

12,356 

Provision for income tax

 

 

331 

 

 

153 

 

 

763 

 

 

1,428 

Net income

 

$

7,915 

 

$

8,708 

 

$

21,689 

 

$

10,928 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.16 

 

$

0.16 

 

$

0.42 

 

$

0.20 

Diluted net income per share

 

$

0.15 

 

$

0.16 

 

$

0.41 

 

$

0.20 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

 

51,032 

 

 

53,591 

 

 

51,533 

 

 

53,931 

Diluted shares outstanding

 

 

52,393 

 

 

55,070 

 

 

52,799 

 

 

55,330 

 

SCICLONE PHARMACEUTICALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

 

2014

 

2013

GAAP net income

 

$

7,915 

 

$

8,708 

 

$

21,689 

 

$

10,928 

Non-GAAP adjustment

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock-based compensation

 

 

834 

 

 

945 

 

 

2,609 

 

 

3,208 

In-license upfront costs

 

 

 —

 

 

 —

 

 

 —

 

 

5,000 

Non-GAAP net income

 

$

8,749 

 

$

9,653 

 

$

24,298 

 

$

19,136 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP basic net income per share

 

$

0.17 

 

$

0.18 

 

$

0.47 

 

$

0.35 

Non-GAAP diluted net income per share

 

$

0.17 

 

$

0.18 

 

$

0.46 

 

$

0.35 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP basic net income per share

 

 

51,032 

 

 

53,591 

 

 

51,533 

 

 

53,931 

Non-GAAP diluted net income per share

 

 

52,393 

 

 

55,070 

 

 

52,799 

 

 

55,330 

 

 


 

 

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.

·

In-license upfront costs. SciClone recorded $5.0 million to research and development expense related to upfront payments made under the Zensun and TLC licensing agreements, established in the second quarter of 2013.

 

SCICLONE PHARMACEUTICALS, INC.

UNAUDITED SELECTED BALANCE SHEET DATA

(in thousands)

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2014

 

2013

Cash, cash equivalents, and restricted cash

 

$

96,906 

 

$

85,878 

Accounts receivable, net

 

 

33,928 

 

 

40,008 

Inventories

 

 

14,197 

 

 

15,238 

Goodwill

 

 

34,886 

 

 

35,357 

Total assets

 

 

186,199 

 

 

179,859 

Total current liabilities

 

 

25,955 

 

 

33,220 

Short-term borrowings

 

 

 —

 

 

1,651 

Total shareholders' equity

 

 

160,189 

 

 

146,595