EX-99.1 2 scln-20160310ex99178d863.htm EX-99.1 Exhibit 991 Q415 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 2015 FINANCIAL RESULTS

 

Results Achieve Revenue and Exceed EPS Expectations;

SEC and DOJ Investigations Fully Resolved;

Company Undertaking Strategic Review to Maximize Shareholder Value

 

FOSTER CITY, CA – March 10, 2016 – SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported financial results for the quarter and year ended December 31, 2015.

 

·

Revenues: Revenues for the full year 2015 were $157.3 million, compared to $134.8 million for the full year of 2014. In the fourth quarter of 2015, revenues were $42.9 million, compared to $41.4 million for the same period in 2014. 

·

GAAP Diluted EPS: GAAP diluted earnings per share for the full year 2015 were $0.56, compared to $0.48 for the full year of 2014.  In the fourth quarter of 2015, GAAP diluted earnings per share were $0.24, compared to $0.07 for the same period in 2014.

·

Non-GAAP Diluted EPS: Non-GAAP diluted earnings per share for the full year 2015 were $1.00, compared to $0.75 for the full year of 2014. In the fourth quarter of 2015, non-GAAP diluted earnings per share were $0.30, compared to $0.29 for the same period in 2014.

 

For the year ended December 31, 2015, SciClone reported revenues of $157.3 million, a 17% increase compared to $134.8 million for the same period last year. ZADAXIN® revenues were $146.1 million for the year ended December 2015, a $20.0 million or 16% increase, compared to $126.1 million last year. Promotion services revenues were $2.9 million for the year ended December 31, 2015, a $0.1 million or 4% increase, compared to $2.8 million last year. Revenues in the fourth quarter of 2015 were $42.9 million, a $1.4 million or 3% increase, compared to $41.4 million for the same period in 2014. ZADAXIN revenues were $40.2 million in the fourth quarter of 2015, a $1.2 million or 3% increase, compared to $39.0 million for the same period in 2014. Promotion services revenues were $0.9 million for the fourth quarter of 2015, a $0.2 million or 29% increase, compared to $0.7 million in the same period in 2014.

 

On a GAAP basis, SciClone reported net income for the year ended December 31, 2015 of $29.5 million, or $0.59 and $0.56 per share on a basic and diluted basis, respectively, after deducting $10.8 million in settlement expense for the US Securities and Exchange Commission (SEC) investigation recorded in the second quarter of 2015, compared with net income of $25.2 million, or $0.49 and $0.48 on a basic and diluted basis, respectively, for the same period in 2014. SciClone’s net income in the fourth quarter of 2015 was $12.5 million, or $0.25 and $0.24 per share on a basic and diluted

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basis, respectively, compared to net income of approximately $3.5 million, or $0.07 per share on a basic and diluted basis for the same period in 2014.

 

As previously disclosed, in February 2016, SciClone entered into a settlement agreement with the SEC that fully resolved the SEC’s investigation. Under the terms of the settlement agreement, SciClone paid a total of $12.8 million, including disgorgement, prejudgment interest, and a penalty. The payment is in line with the charges SciClone previously recorded and disclosed in its Form 10-Q filed with the SEC on August 10, 2015. As part of the agreement, the Company neither admits nor denies it engaged in any wrongdoing. The Department of Justice (DOJ) has also completed its related investigation and has declined to pursue any action.

 

SciClone reported non-GAAP net income for the year ended December 31, 2015 of $52.2 million, or $1.05 and $1.00 per share on a basic and diluted basis, respectively, compared with non-GAAP net income of $39.7 million, or $0.77 and $0.75 on a basic and diluted basis, respectively, for the prior year. SciClone’s non-GAAP net income in the fourth quarter of 2015 was $15.5 million, or $0.31 and $0.30 per share on a basic and diluted basis, respectively, compared with non-GAAP net income of $15.4 million, or $0.30 and $0.29 per share on a basic and diluted basis, respectively, for the same period of the prior year.

 

Friedhelm Blobel, PhD, SciClone’s Chief Executive Officer commented: “We are very pleased with our overall 2015 financial results, including the continuing success and growth of ZADAXIN, as well as the full resolution of the SEC and DOJ investigations. These important accomplishments position us well to continue our growth trajectory in 2016. We are especially pleased with the continued strong demand for ZADAXIN, which grew 16% over the prior year and thus clearly faster than its generic competitors, and remains a major growth driver for our company. DC Bead® continues to gain traction in the marketplace, supported by successful implementation of academic marketing strategies, as does our overall oncology portfolio and our promoted products.”

 

“Despite macro-economic variables, the China pharmaceutical market grew about 8% to 9% in 2015, still significantly outpacing Western market growth rates, and continuing to represent meaningful opportunities for SciClone to continue to expand our business. The extensive regulatory reforms underway in China are showing signs of increasing the speed and efficiency of drug reviews and approvals. We anticipate that this trend will continue, and have a beneficial impact on our ability to advance our development portfolio.”  

 

“We are looking forward to conducting a full review of strategic alternatives with the goal of maximizing shareholder value. We continue to believe that SciClone represents a unique opportunity in the China pharma market, and that our commercial experience, reputation for high quality products, industry-leading compliance and partner-of-choice status should translate into opportunities to benefit our stakeholders.”

For the year ended December 31, 2015, SciClone reported sales and marketing (S&M) expenses of $54.0 million, compared with $48.5 million for last year. For the fourth quarter of 2015, S&M expenses were $14.9 million, compared with $13.5 million for the same period in 2014. The increase in S&M for the fourth quarter of 2015, compared to the same period in 2014, related to increases in our sales and marketing efforts for ZADAXIN and DC Bead.

 

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For the year ended December 31, 2015, SciClone reported research and development (R&D) expenses of $12.3 million, which included $7.5 million in upfront and milestone payments related to new in-license arrangements, primarily with Theravance Biopharma, Inc., compared with $14.6 million for last year, which included $11.0 million in upfront payments under our in-license arrangement primarily related to The Medicines Company for two cardiovascular products, Angiomax® (bivalirudin) and Cleviprex® (clevidipine). R&D expenses for the three months ended December 31, 2015 were $3.6 million which included $2.0 million in milestone payments under our in-license arrangements, compared with $11.6 million for the same period last year, which included $11.0 million in upfront payments as noted above which were recorded in the fourth quarter of 2014.  

 

For the year ended December 31, 2015, SciClone reported general and administrative (G&A) expenses of $27.9 million, compared with $22.7 million for last year. For the fourth quarter of 2015, G&A expenses were $6.5 million, compared with $5.3 million for the same period in 2014, an increase of $1.2 million primarily related to our China entity restructuring, higher professional consulting fees for business development strategy, higher stock-based compensation expense, and lower credits to bad debt expense for recovery of previously written-off accounts receivable.

 

As of December 31, 2015, cash, cash equivalents and short-term investments totaled $101.4 million excluding the $12.8 million of restricted cash held in escrow as of December 31, 2015 for the SEC settlement which was released and paid in February 2016, compared to $86.3 million as of December 31, 2014.

 

SciClone has had a share repurchase program under which its Board of Directors had authorized $80.5 million, of which approximately $78.1 million had been utilized through December 31, 2015. The share repurchase program expired on December 31, 2015 and is currently under strategic review by the Board.

 

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.”

 

In light of the strategic review underway at SciClone, the Company does not plan to provide revenue and earnings per share guidance for 2016.

 

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: 52882776

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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 an immune system enhancer, according to the local regulatory approvals. The Company has successfully in-licensed and commercialized 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. Through its promotion business with pharmaceutical partners, SciClone also markets multiple branded products in China which are therapeutically differentiated. 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 future events and SciClone’s financial results and expectations, including, without limitation, statements regarding SciClone’s business strategy and growth, product and development portfolios, market opportunities, the final resolution of the SEC and DOJ investigations and statements regarding the exploration of strategic alternatives.  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 dependence of SciClone’s sales of ZADAXIN in China; SciClone’s ability to execute on its goals in China and on its objectives for revenue in fiscal 2016; SciClone’s ability to implement and maintain controls over its financial reporting;  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 SciClone does not believe are beneficial; operating an international business, including currency exchange fluctuations; uncertainty in the prospects for unapproved products, 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. 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. 

 

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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

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2014

 

2015

 

2014

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

41,973 

 

$

40,737 

 

$

154,329 

 

$

131,973 

Promotion services

 

 

890 

 

 

688 

 

 

2,928 

 

 

2,817 

Total net revenues

 

 

42,863 

 

 

41,425 

 

 

157,257 

 

 

134,790 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

5,217 

 

 

7,425 

 

 

22,348 

 

 

23,002 

Sales and marketing

 

 

14,863 

 

 

13,490 

 

 

53,961 

 

 

48,477 

Research and development

 

 

3,606 

 

 

11,648 

 

 

12,314 

 

 

14,581 

General and administrative

 

 

6,487 

 

 

5,286 

 

 

27,897 

 

 

22,746 

SEC settlement expense

 

 

 —

 

 

 —

 

 

10,826 

 

 

 —

Total operating expenses

 

 

30,173 

 

 

37,849 

 

 

127,346 

 

 

108,806 

Income from operations

 

 

12,690 

 

 

3,576 

 

 

29,911 

 

 

25,984 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest and investment income

 

 

255 

 

 

88 

 

 

869 

 

 

161 

Interest and investment expense

 

 

 —

 

 

 —

 

 

 —

 

 

(48)

Other income (expense), net

 

 

(205)

 

 

261 

 

 

(510)

 

 

280 

Income before provision for income tax

 

 

12,740 

 

 

3,925 

 

 

30,270 

 

 

26,377 

Provision for income tax

 

 

196 

 

 

406 

 

 

807 

 

 

1,169 

Net income

 

$

12,544 

 

$

3,519 

 

$

29,463 

 

$

25,208 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.25 

 

$

0.07 

 

$

0.59 

 

$

0.49 

Diluted net income per share

 

$

0.24 

 

$

0.07 

 

$

0.56 

 

$

0.48 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

 

49,433 

 

 

50,515 

 

 

49,797 

 

 

51,277 

Diluted shares outstanding

 

 

51,657 

 

 

52,774 

 

 

52,173 

 

 

52,684 

 

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SCICLONE PHARMACEUTICALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2014

 

2015

 

2014

GAAP net income

 

$

12,544 

 

$

3,519 

 

$

29,463 

 

$

25,208 

Non-GAAP adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock-based compensation

 

 

1,004 

 

 

856 

 

 

4,441 

 

 

3,465 

In-license costs

 

 

2,000 

 

 

11,000 

 

 

7,500 

 

 

11,000 

SEC settlement expense

 

 

 —

 

 

 —

 

 

10,826 

 

 

 —

Non-GAAP net income

 

$

15,548 

 

$

15,375 

 

$

52,230 

 

$

39,673 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP basic net income per share

 

$

0.31 

 

$

0.30 

 

$

1.05 

 

$

0.77 

Non-GAAP diluted net income per share

 

$

0.30 

 

$

0.29 

 

$

1.00 

 

$

0.75 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP basic net income per share

 

 

49,433 

 

 

50,515 

 

 

49,797 

 

 

51,277 

Non-GAAP diluted net income per share

 

 

51,657 

 

 

52,774 

 

 

52,173 

 

 

52,684 

 

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 costs. SciClone recorded $7.5 million to R&D expense related to upfront and milestone payments incurred under licensing agreements in 2015 including $2.0 million in the fourth quarter of 2015, and $11.0 million to R&D expense related to upfront payments incurred under licensing agreements established in the fourth quarter of 2014.

·

SEC settlement expense: The Company recorded additional expense in 2015 related to its settlement with the SEC.

 

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SCICLONE PHARMACEUTICALS, INC.

UNAUDITED SELECTED BALANCE SHEET DATA

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2015

 

2014

Cash, cash equivalents, and short-term investment

 

$

101,403 

 

$

86,303 

Accounts receivable, net

 

 

39,363 

 

 

40,268 

Inventories

 

 

10,976 

 

 

10,703 

Short-term restricted cash

 

 

12,826 

 

 

 —

Goodwill

 

 

32,979 

 

 

34,521 

Total assets

 

 

216,619 

 

 

181,831 

Total current liabilities

 

 

36,820 

 

 

26,443 

Total shareholders' equity

 

 

179,712 

 

 

155,274 

 

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