DUBLIN, Calif., Aug. 4 /PRNewswire-FirstCall/ -- SuperGen, Inc. , a pharmaceutical company dedicated to the discovery, rapid development and commercialization of therapies for solid tumors and hematological malignancies, today announced financial results for the second quarter and six months ended June 30, 2008.
Total revenues for the 2008 second quarter were $8.1 million, compared with $4.6 million for the same prior year period. Total revenues for the 2008 second quarter and same prior year period consisted entirely of royalty revenue. Royalty revenue is earned pursuant to the license agreement entered into with MGI PHARMA (acquired by Eisai Co., Ltd. in January 2008) during 2004, which granted MGI PHARMA exclusive rights to the development, manufacture, commercialization and distribution of Dacogen(R) (decitabine) for Injection. The Company recognizes royalty revenue on a cash basis when it is received.
Excluding gain on sale of products, total costs and operating expenses for the 2008 second quarter were $11.0 million, compared with $19.6 million for the same prior year period. The primary reason for the decrease in total costs and operating expenses for the 2008 second quarter were lower acquired in-process research and development costs, a reduction in general corporate expenses and lower stock-based compensation expense offset in part by higher research and development costs related to increased product development activities including ongoing clinical operations and accrual of estimated severance costs in the amount of $322,000 related to the anticipated closure of our European operation later this year. Closure of the European operation is anticipated to reduce operating expenses in future periods up to $1 million annually. Stock-based compensation expense, which is included in operating expenses, was $670,000 for the 2008 second quarter, compared with $1.1 million for the same prior year period.
The gain on sale of products for the 2008 second quarter was $560,000 compared with $25.8 million for the same prior year period. The gain on sale of products for the 2008 second quarter represents the receipt of an annual payment in the amount of $400,000 paid by Mayne Pharma (acquired by Hospira, Inc. in February 2007) related to the sale of Nipent(R) (pentostatin for injection) and the reversal of a residual product returns reserve for Nipent no longer required due to the expiration of the contractual return period in the amount of $160,000. The gain on sale of products for the same prior year period related primarily to the sale of Nipent and SurfaceSafe(R) representing the initial recognition of the deferred gain on sale of products to Mayne Pharma and also the recognition of gains on the sale of other products to Intas Pharmaceuticals.
Loss from operations for the 2008 second quarter was $2.3 million compared with income from operations of $10.9 million for the same prior year period. The Company reported a net loss for the 2008 second quarter of $4.9 million, or $0.08 per share, compared with net income of $11.1 million, or $0.19 per share, for the same prior year period. The net loss for the 2008 second quarter includes a non-operating charge of $3.1 million that reflects an other than temporary decline in value in the Company’s equity investment in AVI BioPharma. There was no similar non-operating charge in the same prior year period.
Total revenues for the six months ended June 30, 2008 were $16.3 million, compared with $9.0 million for the same prior year period. Total revenues for the six months ended June 30, 2008 consisted of $16.3 million in royalty revenue, compared with $8.4 million for the same prior year period. Royalty revenue is earned pursuant to the license agreement entered into with MGI PHARMA. The Company recognizes royalty revenue on a cash basis when it is received. There was no net product revenue for the six months ended June 30, 2008, compared with $621,000 for the same prior year period. The decrease in net product revenue during 2008 is due to the sale of the Company’s worldwide rights for Nipent to Mayne Pharma in a prior period.
Excluding gain on sale of products, total costs and operating expenses for the six months ended June 30, 2008 were $22.0 million, compared with $28.5 million for the same prior year period. The primary reason for the decrease in total costs and operating expenses for the six months ended June 30, 2008 were lower acquired in-process research and development costs and a reduction in stock-based compensation expense offset in part by higher research and development costs related to increased product development activities including ongoing clinical operations and accrual of estimated severance costs related to the anticipated closure of our European operation later this year. Stock-based compensation expense, which is included in operating expenses, was $1.4 million for the six months ended June 30, 2008, compared with $2.3 million for the same prior year period.
The gain on sale of products for the six months ended June 30, 2008 was $1.6 million compared with $25.8 million for the same prior year period. The gain on sale of products for the six months ended June 30, 2008 represents the receipt of multiple payments totaling $1.4 million paid by Mayne Pharma that related to the sale of Nipent and SurfaceSafe and the reversal of a residual product returns reserve for Nipent no longer required due to the expiration of the contractual return period in the amount of $160,000. The gain on sale of products for the same prior year period related primarily to the sale of Nipent and SurfaceSafe representing the initial recognition of the deferred gain on sale of products to Mayne Pharma and also the recognition of gains on the sale of other products to Intas Pharmaceuticals.
Loss from operations for the six months ended June 30, 2008 was $4.2 million compared with income from operations of $6.4 million for the same prior year period. The Company reported a net loss for the six months ended June 30, 2008 of $5.9 million, or $0.10 per share, compared with net income of $7.7 million, or $0.14 per share, for the same prior year period. The net loss for the six months ended June 30, 2008 includes a non-operating charge of $3.1 million that reflects an other than temporary decline in value of the Company’s equity investments. There was no similar non-operating charge in the same prior year period.
As of June 30, 2008, the Company had approximately $87.6 million in current and non-current unrestricted cash, cash equivalents and marketable securities.
2008 Revised Annual Financial Guidance
The Company has not changed significantly its annual financial guidance from the 2008 first quarter conference call. Selected elements of our revised annual financial guidance include the following:
-- Royalty revenue for 2008 remains unchanged and is forecasted in a range from $32 million to $35 million.
-- Research and development expenses remain unchanged for 2008 and are expected to total approximately $34 million to $36 million.
-- Selling, general and administrative expenses have been reduced slightly from the previous annual guidance and are expected to total approximately $13 million for 2008.
-- The Company is forecasting to record a non-cash charge in the amount of $5.2 million to acquired in-process research and development during 2008 representing a potential milestone payment to the former Montigen stockholders. This payment made in the form of equity is contingent on the filing of an Investigational New Drug (IND) application with the Food and Drug Administration (FDA) of a second drug emanating from the acquired technology.
-- Additional receipts related to the sale of products to be paid by Mayne Pharma are anticipated during 2008 in a range from $1.6 million to $2.6 million. These payments will be classified as gain on sale of products.
-- Included in total operating expenses for 2008 is a reduced amount from previous guidance for non-cash stock-based compensation expense estimated at $3.5 million annually.
-- Based on the revised 2008 financial guidance loss from operations is estimated in a range from $16.6 million to $18.6 million.
-- Revised weighted average shares outstanding for 2008 are estimated at 58.1 million common shares.
Conference Call Information
SuperGen will host a conference call to discuss the results of the 2008 second quarter financial results today at 1:30 p.m. PT / 4:30 p.m. ET. The webcast will be accessible via the Investor Relations section of the Company’s Web site at www.supergen.com. A webcast replay of the live conference call will be available shortly following the event. Alternatively, you may access a replay of the conference call by dialing 1-888-286-8010 (domestic) and 1-617-801-6888 (international); replay passcode number is 85497056. The webcast replay and conference call replay will be available for 90 days.
About SuperGen
Based in Dublin, California, SuperGen, Inc. is a pharmaceutical company dedicated to the discovery, rapid development and commercialization of therapies for solid tumors and hematological malignancies. SuperGen is developing a number of therapeutic anticancer products focused on kinase and cell signaling inhibitors and DNA methyltransferase inhibitors. For more information about SuperGen, please visit http://www.supergen.com.
Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of Section 21A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created thereby. The actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These forward-looking statements include statements regarding SuperGen’s expectation that it will receive the balance of the purchase price for Nipent from Mayne Pharma, expectations regarding the various abilities of MP-470, including its multi-arm Phase 1b clinical trial, expectations about the efficacy of S-110, expectations about revenue, gains from sales of non-core assets and operating expenses, expectations regarding the anticipated reduction in operating expenses as a result of the anticipated closure of SuperGen’s European operations, expectations regarding the filing of a second IND with the FDA, as well as SuperGen’s expectations and successful development of all its pipeline products. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, risks and uncertainties related to the achievement of developmental milestones with respect to the compounds acquired in the Montigen acquisition, the research and development of MP-470, S-110 or SGI-1776, the satisfaction of the contingencies related to the sale of the worldwide rights to Nipent to Mayne Pharma, and the ability of MGI to generate global sales of Dacogen. In general, our future success is dependent upon numerous factors, including our ability to generate pre-clinical development candidates for selection into clinical testing, obtaining regulatory approval of product development programs, conducting and completing clinical trials and obtaining regulatory approval of our products and product candidates, and creating opportunities for future commercialization of compounds. Our future revenue and operating and net income or loss could be worse than anticipated if demand for our products is less than expected, or if the introduction of new products is delayed, for any reason, including regulatory delay. References made to the discussion of risk factors are detailed in the Company’s filings with the Securities and Exchange Commission including reports on its most recently filed Form 10-K and Form 10-Q. These forward-looking statements are made only as of the date hereof, and we disclaim any obligation to update or revise the information contained in any such forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Timothy L. Enns, SVP, Corporate Communications & Business
Development, +1-925-560-0100, tenns@supergen.com, or Mary M. Vegh, Manager,
Investor Relations, +1-925-560-2845, mary.vegh@supergen.com, both of
SuperGen, Inc.
Web site: http://www.supergen.com/
