SciClone Pharmaceuticals, Inc.
SCICLONE PHARMACEUTICALS INC (Form: 8-K, Received: 05/10/2017 16:16:18)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________________________________

FORM 8-K

__________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.

Date of Report:  May 10 , 201 7
(Date of earliest event reported)

___________________________________________

SciClone Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)

___________________________________________





 

 



 Delaware
(State or other jurisdiction
of incorporation)  

0-19825
(Commission File Number)  

94-3116852
(IRS Employer
Identification Number)  



950 Tower Lane, Suite 900, Foster City, CA
(Address of principal executive offices)  

 

94404
(Zip Code)  


( 650) 358-3456
(Registrant's telephone number, including area code)  



Not Applicable
(Former Name or Former Address, if changed since last report)

___________________________________________



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 40 5 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  


 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the exte nded transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


 

 

Item 2.02          Results of Operations and Financial Condition    



On May 10 , 201 7 , SciClone Pharmaceuticals, Inc. issued a press release announcing final financial results for the first quarter ended March 31, 201 7 . The press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein in its entirety.  



The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.





Item 9.01          Financial Statements and Exhibits

 

(d) The following exhibits are filed herewith:





 

Exhibit 99.1

Press release dated May 10 , 201 7





 

 


 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.





 

 

Dated: May 10 , 201 7

SCICLONE PHARMACEUTICALS, INC.



 

 



By:

/s/ Wilson W. Cheung



 

Wilson W. Cheung  



 

Chief Financial Officer and

Senior Vice President, Finance





 


 

 

Exhibit Index

 





Exhibit No.       Description

99.1                    Press release dated May 10 , 201 7 .






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



SCI CLONE REPORTS FIRST QUARTER 2017 FINANCIAL RESULTS



Strong ZADAXIN® Growth Continue s in 2017





FOSTER CITY, CA – May 10, 2017  – SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported financial results for the quarter ended March 31, 2017 .



·

Revenues: In the first quarter 2017 , SciClone reported revenues of $ 42.9 million, compared to $36.5 mil lion for the same period in 2016 .

·

GAAP Diluted EPS: In the first quarter 2017 , SciClone reported GAAP diluted earnings per s hare of $0. 28 , compared to $0.15 for the same period in 2016 .  

·

Non-GAAP Diluted EPS: In the first quarter 2017 , SciClone reported non-GAAP diluted earnings per share of $0. 3 1 , compared to $ 0.19 for the same period in 2016 .



Reven ues in the first quarter of 2017 were $ 42.9 million, a $ 6.4 million o r   18 % increase, compared to $36.5 mil lion for the same period in 2016 .   ZADAXIN ® revenues were $ 39.5 mill ion in the first quarter of 2017 , a $ 5.9 million or 1 7% increase, compared to $33.6 mil lion for the same period in 2016 .   Of the $39.5 million in ZADAXIN revenues, $4.2 million was attributed to revenues from sales generated in the fourth quarter of 2016 but   r ecognized in the first quarter of 2017. This $4.2 million of revenue is a result of fourth quarter sales that were above the reference tender price under a provision in the agreement with the Company’s China distributor to share, in part, in the burden of price reductions. Promo tion services revenue s were $1.3 milli on for the first quarter of 2017 , a $ 0 .1   million or   6 %   in crease, compared to $1.2 mi llion for the same period in 2016 .  



On a GAAP basis, SciClone reported net inc ome in the first quarter of 2017 of $ 14.6 million, or $0. 28 and $0. 28 per share on a basic and diluted basis, respectively, compared to net income of approximately $7.9 million, or $0.16 and $0.15 per share on a basic and diluted basis, respectiv ely, for the same period in 2016 .  



SciClone’s non-GAAP net inc ome in the first quarter of 2017 was $ 16. 6 million, or $0. 3 2 and $0. 3 1   per share on a basic and diluted basis, respectively, compared with non-GAAP net income of $9. 7 milli on, or $0.20 and $0.19 per share on a basic and diluted basis, respectively, for the same period of the prior year. Both GAAP and non-GAAP net income were favorably impacted by the additional revenue recognition for ZADAXIN fourth quarter sales and a Chinese   government subsidy in the first quarter of 2017.

 


 



Friedhelm Blobel, PhD, SciClone’s Chief Executive Officer commented: “ W e delivered a strong first quarter performance , in line with our expectations, and reflecting the continued demand for, and growth potential of, ZADAXIN and ou r core business. ZADAXIN’s competitive position remains strong, with continued volume growth  d espite generic competition. ZADAXIN’s double digit volume gr owth rate continued this quarter ,   underscoring its strength as the leading branded thymalfasin, with a 17% volume share and more than a 40% value share. We do face continued pricing pressure, with tenders in two provinces recently announced at prices lower than the referenc e price with our distributor. We cannot determine at this time with certainty when these prices will take effect, or when they will impact prices in other provinces, but we are likely to experience some effect of those lower prices at s ome point during the next few quarters.  We may also see some pressure on unit volumes in some areas as a result of reduced national-level reimbursement for thymalfasins.



We have demonstrated our ability to manage the various challenges of the China market effectively to date, and we are continuing to focus on strategies to expand the market for ZADAXIN, manage the impact of p otential reimbursement changes and provincial pricing pressures and actively seek to participate in the provincial reimbursement negotiations for thymalfasins to maximize future reimbursement for ZADAXIN . We further expect that pricing pressures on revenue in 2017 will be offset, at least in part, through continued sharing of the burden with our China distributor and potentially through volume increases. We are confident that ZADAXIN has significant growth potential as a differentiated, high quality, Western-manufactured brand.”



We were pleased to see continued strong growth in our oncology portfolio in the first quarter. T he market introduction of DC Bead®   to treat liver cancer is continuing to progress, although slower than anticipated. We are continuing implementation of our academic-focused marketing effort to build the market for DC Bead as an alternative to conventional TACE procedures using gels. Our development portfolio continue to advance, led by Angiomax® (bivalirudin) for which we expect to file the NDA in the coming month s .”



As we near the mid-year mark for 2017, we have confidence that our core strategies to grow our commercial business, advance and expand our development portfolio through creative partnering, maintain high levels of fiscal responsibility , and strong compliance are on track. We believe we are well positioned to continue to build our reputation and standing as a key player in the evolving China pharma market.”



For the first quarter of 2017 , sales and mar keting (S&M) expenses were $ 12.8 million, compared with $12 .4 million for the same period in 2016 . The increase in S&M expenses for first quarter of 2017 , com pared to the same period in 2016 , related to increases in salaries and benefits, mainly from annual increases, and to increased sales commissions b ased on increased ZADAXIN sales .



For the first quarter of 2017 , research and deve lopment (R&D) expenses were $ 2.5 mil lion, compared with $1.5 million of R&D expe nses for the same period of 2016 . R&D expenses were high er for the first quarter of 2017 , compa red to the first quarter of 2016 , related to R&D activities in China that relate to development expenses of product candidates in-licens ed from certain business partners .



For the first quarter of 2017 , general and administrative (G&A) expenses were $7. 2 million, compared with $7. 4 mil lion for the same period in 2016 . G&A expenses were   low er for the first quarter of 2017 , compa red to the first quarter of 2016 ,   due to a foreign currency gain of $615

2

 


 

thousand on re-measuring operational monetary assets partially offset by an increase in salaries and benefi ts mainly from annual increases .



For the first quarter of 2017, other income, net was  $ 1.0 million, compared with $ 0.1 million for the same period in 2016. Other income, net was   highe r   principally for the first quarter of 2017, compared to the first quarter of 2016, as a result of a $1.0 million government subsidy related to the Company’s China operations which had no future performance obligations and was recognized upon receipt as other income.



For the first quarter of 2017 ,   income tax provision   was   approximately $ 1.0 million , compared wi th $1.9 million for the same period in 2016 . The $1.9 million income tax provision for the f irst quarter of 2016 included $1.2 million in additional tax expense representing the correction of an error related to   a previously unrecognized liability for an u ncertain tax provision   in China .



As of March 31, 2017 , cash and cash equival ents tot aled $1 4 1.3 million, compared to $134 .4 million as of December 31, 2016 .  



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.”



Conference Call Today



SciClone is hosting a confere nce call today at 4:30 pm ET (1:30 p m PT) to provide a financial update. The call will be hosted by Friedhelm Blobel, Ph.D., President and Chief Executive Officer, and Wilson W. Cheung, Senior Vice President and Chief Financial Officer.



 

LIVE CALL: 

877.674.6420 (US/Canada)



920.663.6281



Passcode: 11577623



 

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

3

 


 

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 now approved in China, and several other products in late stage development in China. 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 and forecasted financial results .  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,” “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 and reimbursement 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 earnings and revenue in fiscal 2017; 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.



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.

4

 


 

SCICLONE PHARMACEUTICALS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

 

 

 

 

 



 

2017

 

2016

Revenues:

 

 

 

 

 

 

Product sales, net

 

$

41,637 

 

$

35,320 

Promotion services

 

 

1,255 

 

 

1,179 

Total net revenues

 

 

42,892 

 

 

36,499 

Operating expenses:

 

 

 

 

 

 

Cost of product sales

 

 

6,165 

 

 

5,813 

Sales and marketing

 

 

12,765 

 

 

12,352 

Research and development

 

 

2,495 

 

 

1,467 

General and administrative

 

 

7,230 

 

 

7,443 

Total operating expenses

 

 

28,655 

 

 

27,075 

Income from operations

 

 

14,237 

 

 

9,424 

Non-operating income:

 

 

 

 

 

 

Interest and investment income

 

 

296 

 

 

259 

Other income, net

 

 

1,075 

 

 

128 

Income before provision for income tax

 

 

15,608 

 

 

9,811 

Provision for income tax

 

 

1,012 

 

 

1,947 

Net income

 

$

14,596 

 

$

7,864 



 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

0.28 

 

$

0.16 

Diluted

 

$

0.28 

 

$

0.15 



 

 

 

 

 

 

Weighted average shares used in computing net income per share:

 

 

 

 

 

 

Basic

 

 

51,437 

 

 

49,589 

Diluted

 

 

53,009 

 

 

51,955 



5

 


 

SCICLONE PHARMACEUTICALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)





 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

 

 

 

 

 



 

2017

 

2016

GAAP net income

 

$

14,596 

 

$

7,864 

Non-GAAP adjustments:

 

 

 

 

 

 

Employee stock-based compensation

 

 

1,671 

 

 

1,293 

Strategic review expense

 

 

377 

 

 

547 

Non-GAAP net income

 

$

16,644 

 

$

9,704 



 

 

 

 

 

 



 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

Basic

 

$

0.32 

 

$

0.20 

Diluted

 

$

0.31 

 

$

0.19 



 

 

 

 

 

 

Non-GAAP weighted average shares used in computing net income per share:

 

 

 

 

 

 

Basic

 

 

51,437 

 

 

49,589 

Diluted

 

 

53,009 

 

 

51,955 



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.

·

Strategic review expense. The effects of costs incurred related to the Company’s strategic review for the purpose of maximizing shareholder value.

6

 


 

S CICLONE PHARMACEUTICALS, INC.

UNAUDITED SELECTED BALANCE SHEET DATA

(in thousands)

75



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2017

 

2016

Cash and cash equivalents

 

$

141,346 

 

$

134,395 

Accounts receivable, net

 

 

46,624 

 

 

41,510 

Inventories

 

 

15,331 

 

 

16,587 

Goodwill

 

 

31,097 

 

 

30,838 

Total assets

 

 

253,478 

 

 

241,898 

Total current liabilities

 

 

20,015 

 

 

26,441 

Total stockholders' equity

 

 

233,376 

 

 

215,365 



7