SuperGen, Inc. (NASDAQ: SUPG) today reported financial results for the second quarter ended June 30, 2011. The Company reported net income for the 2011 second quarter of $903,000, or $0.01 per basic and diluted share, compared with $961,000, or $0.02 per basic and diluted share, for the same prior year period. The Company reported net income for the six months ended June 30, 2011 of $6.4 million, or $0.11 per basic and $0.10 per diluted share, compared with a net income of $5.6 million, or $0.09 per basic and diluted share, for the same prior year period.
"We are pleased with our second quarter financial results. We reported another quarter of profitability and ended the quarter with approximately $129 million in cash, cash equivalents and current and non-current marketable securities. In July 2011, we completed the acquisition of Astex Therapeutics Limited and our partners, Eisai and Johnson & Johnson, submitted regulatory filings in the US and Europe seeking approval of Dacogen® (decitabine) for Injection in the treatment of acute myeloid leukemia (AML)," said James S.J. Manuso, Ph.D., chairman and chief executive officer of SuperGen. "As part of the process of merging SuperGen and Astex assets, projects and people to become Astex Pharmaceuticals, Inc., we are targeting to exit the Salt Lake City and Pleasanton research hubs by year end. Thereafter, we anticipate all research will be conducted in our Cambridge, UK facility and all clinical and regulatory development functions will continue to be located in our Dublin, California headquarters. Taking into account all estimated one-time charges and incremental recurring future non-cash charges attendant with the acquisition of Astex, we expect to operate the Company on a cash flow neutral basis for the second half of 2011, after giving effect to a portfolio rationalization now underway."
Total revenues for the 2011 second quarter were $11.7 million compared with $9.9 million for the same prior year period. Total revenues for the 2011 second quarter include royalty revenue of $11.5 million compared with $9.8 million for the same prior year period. Royalty revenue is earned pursuant to the license agreement entered into with MGI PHARMA (acquired by Eisai Corporation of North America in January 2008) during 2004, which granted MGI PHARMA exclusive rights to the development, manufacture, commercialization and distribution of Dacogen. The Company generally recognizes royalty revenue when it is received. Total revenues for the 2011 second quarter also include development and license revenue of $127,000 compared to a similar amount for the same prior year period. Development and license revenue represents the amortization of deferred revenue relating to payments received pursuant to the collaborative research and license arrangement entered into with GlaxoSmithKline (GSK) during October 2009.
Excluding gain on sale of products, total operating expenses for the 2011 second quarter were $11.5 million, compared with $9.7 million for the same prior year period. The primary reasons for the increase in total operating expenses for the 2011 second quarter were higher research and development expenses due to increased activities for product development and clinical trial programs associated with SGI-110, incremental transaction costs associated with the acquisition of Astex Therapeutics, and an increase in stock-based compensation expense. Approximately $1.3 million of additional expenses associated with the acquisition were charged to general and administrative expenses during the 2011 second quarter. Stock-based compensation expense, a non-cash expense that is included in operating expenses, was $744,000 for the 2011 second quarter, compared with $488,000 for the same prior year period.
The gain on sale of products for the 2011 second quarter was $700,000 compared with a similar amount for the same prior year period. The gain on sale of products relates to the receipt of additional contractual payments resulting from the 2007 sale of the worldwide rights for Nipent® (pentostatin for injection) to Mayne Pharma (acquired by Hospira, Inc. in February 2007).