##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-33609
 SUCAMPO PHARMACEUTICALS, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    30-0520478(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)4520 East-West Highway, Suite 300
    
    (301) 961-3400Bethesda, MD 20814
    
    (Registrants telephone number,(Address of principal executive offices,
    
    including area code)including zip code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



Sucampo Pharmaceuticals, Inc.
  
 Form 10-Q Index
 PagePart I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three
and Six Months Ended June 30, 2009 and 2008
    
    
    2Condensed Consolidated Statement of Changes in Stockholders Equity for the Six Months Ended
June 30, 2009
    
    
    3Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other InformationItem 6. Exhibits
    
    
    33SIGNATURES
    
    
    34INDEX TO EXHIBITS
    
    
    35Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements (Unaudited)
 SUCAMPO PHARMACEUTICALS, INC.
 
 Condensed Consolidated Balance Sheets (Unaudited)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETS:Current assets:Cash and cash equivalents
    
    $
    41,737
    
    
    $
    11,536Investments, current
    
    
    68,435
    
    
    
    93,776Product royalties receivable
    
    
    8,913
    
    
    
    9,725Unbilled accounts receivable
    
    
    3,623
    
    
    
    4,373Accounts receivable
    
    
    889
    
    
    
    878Prepaid and income taxes receivable
    
    
    1,069
    
    
    
    133Deferred tax assets, net
    
    
    291
    
    
    
    963Prepaid expenses and other current assets
    
    
    2,965
    
    
    
    3,641Total current assets
    
    
    127,922
    
    
    
    125,025Investments, non-current
    
    
    21,330
    
    
    
    16,222Property and equipment, net
    
    
    2,330
    
    
    
    2,275Deferred tax assets, non-current
    
    
    4,002
    
    
    
    4,026Other assets
    
    
    4,354
    
    
    
    3,246Total assets
    
    $
    159,938
    
    
    $
    150,794LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilities:Accounts payable
    
    $
    2,029
    
    
    $
    1,433Accrued expenses
    
    
    10,770
    
    
    
    9,764Deferred revenue, current
    
    
    21,305
    
    
    
    15,599Total current liabilities
    
    
    34,104
    
    
    
    26,796Deferred revenue, non-current
    
    
    11,771
    
    
    
    8,061Other liabilities
    
    
    2,024
    
    
    
    2,147Total liabilities
    
    
    47,899
    
    
    
    37,004Commitments (Note 6)Stockholders equity:Preferred stock, $0.01 par value;
$5,000,000 shares authorized at June 30,
2009 and December 31, 2008; no shares
issued and outstanding at June 30, 2009 and
December 31, 2008
    
    
    
    
    
    
    Class A common stock, $0.01 par value;
270,000,000 shares authorized at June 30,
2009 and December 31, 2008; 15,653,375 and
15,651,849 shares issued and outstanding at
June 30, 2009 and December 31, 2008,
respectively
    
    
    156
    
    
    
    156Class B common stock, $0.01 par value;
75,000,000 shares authorized at June 30,
2009 and December 31, 2008; 26,191,050
shares issued and outstanding at June 30,
2009 and
December 31, 2008
    
    
    262
    
    
    
    262Additional paid-in capital
    
    
    98,440
    
    
    
    98,243Accumulated other comprehensive income
    
    
    419
    
    
    
    354Retained earnings
    
    
    12,762
    
    
    
    14,775Total stockholders equity
    
    
    112,039
    
    
    
    113,790Total liabilities and stockholders equity
    
    $
    159,938
    
    
    $
    150,794
   1




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 
 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Research and development revenue
    
    $
    7,395
    
    
    $
    55,436
    
    
    $
    12,921
    
    
    $
    61,546Product royalty revenue
    
    
    8,914
    
    
    
    10,901
    
    
    
    17,860
    
    
    
    16,981Co-promotion revenue
    
    
    1,244
    
    
    
    1,236
    
    
    
    2,140
    
    
    
    2,458Contract and collaboration revenue
    
    
    152
    
    
    
    141
    
    
    
    298
    
    
    
    283Total revenues
    
    
    17,705
    
    
    
    67,714
    
    
    
    33,219
    
    
    
    81,268Operating expenses:Research and development
    
    
    9,621
    
    
    
    12,931
    
    
    
    19,586
    
    
    
    24,147General and administrative
    
    
    2,924
    
    
    
    3,561
    
    
    
    6,379
    
    
    
    6,728Selling and marketing
    
    
    2,188
    
    
    
    2,870
    
    
    
    4,700
    
    
    
    5,718Milestone royalties  related parties
    
    
    375
    
    
    
    2,500
    
    
    
    875
    
    
    
    3,531Product royalties  related parties
    
    
    1,583
    
    
    
    1,951
    
    
    
    3,173
    
    
    
    3,032Total operating expenses
    
    
    16,691
    
    
    
    23,813
    
    
    
    34,713
    
    
    
    43,156Income (loss) from operations
    
    
    1,014
    
    
    
    43,901
    
    
    
    (1,494
    )
    
    
    38,112Non-operating income (expense):Interest income
    
    
    219
    
    
    
    565
    
    
    
    531
    
    
    
    1,207Other income (expense), net
    
    
    (608
    )
    
    
    (13
    )
    
    
    214
    
    
    
    (1
    )Total non-operating income (expense), net
    
    
    (389
    )
    
    
    552
    
    
    
    745
    
    
    
    1,206Income (loss) before income taxes
    
    
    625
    
    
    
    44,453
    
    
    
    (749
    )
    
    
    39,318Income tax provision
    
    
    (863
    )
    
    
    (14,577
    )
    
    
    (1,264
    )
    
    
    (8,937
    )Net income (loss)
    
    $
    (238
    )
    
    $
    29,876
    
    
    $
    (2,013
    )
    
    $
    30,381Net income (loss) per share:Basic net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.72
    
    
    $
    (0.05
    )
    
    $
    0.73Diluted net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.71
    
    
    $
    (0.05
    )
    
    $
    0.72Weighted average common shares outstanding  basic
    
    
    41,844
    
    
    
    41,757
    
    
    
    41,844
    
    
    
    41,745Weighted average common shares outstanding  diluted
    
    
    41,844
    
    
    
    42,038
    
    
    
    41,844
    
    
    
    42,026Comprehensive income (loss):Net income (loss)
    
    $
    (238
    )
    
    $
    29,876
    
    
    $
    (2,013
    )
    
    $
    30,381Other comprehensive income (loss):Unrealized loss on investments, net of tax effect
    
    
    (7
    )
    
    
    (616
    )
    
    
    (72
    )
    
    
    (1,456
    )Foreign currency translation
    
    
    340
    
    
    
    (325
    )
    
    
    137
    
    
    
    5Comprehensive income (loss)
    
    $
    95
    
    
    $
    28,935
    
    
    $
    (1,948
    )
    
    $
    28,930
   2




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SUCAMPO PHARMACEUTICALS, INC.
 
 Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited)
 AccumulatedClass A
    
    
    Class B
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    EquityBalance at December 31, 2008
    
    
    15,651,849
    
    
    $
    156
    
    
    
    26,191,050
    
    
    $
    262
    
    
    $
    98,243
    
    
    $
    354
    
    
    $
    14,775
    
    
    $
    113,790Employee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    
    
    
    
    
    
    
    
    188Stock issued under employee stock purchase plan
    
    
    1,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    137Unrealized loss on investments, net of tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72
    )
    
    
    
    
    
    
    (72
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,013
    )
    
    
    (2,013
    )Balance at June 30, 2009
    
    
    15,653,375
    
    
    $
    156
    
    
    
    26,191,050
    
    
    $
    262
    
    
    $
    98,440
    
    
    $
    419
    
    
    $
    12,762
    
    
    $
    112,039
   3




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SUCAMPO PHARMACEUTICALS, INC.
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Six Months Ended June 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (2,013
    )
    
    $
    30,381Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    309
    
    
    
    212Deferred tax provision (benefit)
    
    
    738
    
    
    
    (4,543
    )Stock-based compensation
    
    
    188
    
    
    
    440Amortization of premiums (accretion of discounts) on investments
    
    
    508
    
    
    
    (122
    )Unrealized gain on trading securities
    
    
    (2,611
    )
    
    
    Unrealized loss on settlement rights on auction rate securities
    
    
    2,362
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (26
    )
    
    
    (1,336
    )Unbilled accounts receivable
    
    
    750
    
    
    
    204Product royalties receivable
    
    
    812
    
    
    
    (1,616
    )Prepaid and income taxes receivable and payable, net
    
    
    (936
    )
    
    
    15,213Accounts payable
    
    
    601
    
    
    
    53Accrued expenses
    
    
    1,009
    
    
    
    1,732Deferred revenue
    
    
    9,445
    
    
    
    9,521Other assets and liabilities, net
    
    
    (123
    )
    
    
    462Net cash provided by operating activities
    
    
    11,013
    
    
    
    50,601Cash flows from investing activities:Purchases of investments
    
    
    (139,824
    )
    
    
    (111,304
    )Proceeds from the sales of investments
    
    
    99,782
    
    
    
    38,950Maturities of investments
    
    
    62,264
    
    
    
    22,500Purchases of property and equipment
    
    
    (308
    )
    
    
    (302
    )Purchase of intangible assets
    
    
    (2,919
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    18,995
    
    
    
    (50,156
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    404Excess tax benefits from share-based payments
    
    
    
    
    
    
    71Proceeds from employee stock purchase plan
    
    
    9
    
    
    
    Net cash provided by financing activities
    
    
    9
    
    
    
    475Effect of exchange rates on cash and cash equivalents
    
    
    184
    
    
    
    4Net increase in cash and cash equivalents
    
    
    30,201
    
    
    
    924Cash and cash equivalents at beginning of period
    
    
    11,536
    
    
    
    25,559Cash and cash equivalents at end of period
    
    $
    41,737
    
    
    $
    26,483Supplemental disclosure of non-cash investing and financing activities:Purchase of intangible assets in accrued expenses
    
    $
    500
    
    
    $
    
   4




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SUCAMPO PHARMACEUTICALS, INC.
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1. Business Organization and Basis of Presentation
 Description of the Business
  ®
  ®
   Basis of Presentation
    5




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 2. Summary of Significant Accounting Policies
 Cash and Cash Equivalents
  Current and Non-current Investments
 , Accounting for Certain Investments in
Debt and Equity Securities
 Fair Value
 Fair Value Measurements
 Revenue Recognition
 Revenue Recognition Reporting Revenue Gross as a Principal Versus Net as an Agent Accounting for Revenue Arrangements with Multiple Deliverables
     6




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
      Certain Risks, Concentrations and Uncertainties
      7




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
     Recent Accounting Pronouncements
 Accounting for Collaborative
Arrangements ( The Equity Method of Accounting for Investments in Common Stock
 Effective
Date of FASB Statement No. 157,
 Determining the Fair Value of a Financial
Asset in a Market That is Not Active ( Accounting Changes and Error Corrections
  8




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 Determining Fair Value when the Volume and Level
of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions
that are not Orderly
 Subsequent Events
 Amendments to FASB Interpretation No. 46(R)
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No.162
 3. Earnings per Share
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Basic net income (loss) per share:Net income (loss)
    
    $
    (238
    )
    
    $
    29,876
    
    
    $
    (2,013
    )
    
    $
    30,381Weighted average class A and B
common shares outstanding
    
    
    41,844
    
    
    
    41,757
    
    
    
    41,844
    
    
    
    41,745Basic net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.72
    
    
    $
    (0.05
    )
    
    $
    0.73Diluted net income (loss) per share:Net income (loss)
    
    $
    (238
    )
    
    $
    29,876
    
    
    $
    (2,013
    )
    
    $
    30,381Weighted average class A and B
common shares outstanding for
diluted net income per share
    
    
    41,844
    
    
    
    41,757
    
    
    
    41,844
    
    
    
    41,745Assumed exercise of stock options
under the treasury stock method
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    28141,844
    
    
    
    42,038
    
    
    
    41,844
    
    
    
    42,026Diluted net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.71
    
    
    $
    (0.05
    )
    
    $
    0.72
  9




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  June 30,(In thousands)
    
    2009
    
    
    2008Employee stock options
    
    
    
    
    
    
    583Non-employee stock options
    
    
    
    
    
    
    470
  June 30,(In thousands)
    
    2009
    
    
    2008Employee stock options
    
    
    670
    
    
    
    260Non-employee stock options
    
    
    450
    
    
    
    
 4. Current and Non-Current Investments
  June 30, 2009Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCurrent:U.S. Treasury bills and notes
    
    $
    23,991
    
    
    $
    3
    
    
    $
    
    
    
    $
    23,994Money market funds
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    186Municipal securities
    
    
    19,585
    
    
    
    
    
    
    
    (1
    )
    
    
    19,584U.S. government agencies
    
    
    21,413
    
    
    
    11
    
    
    
    (2
    )
    
    
    21,422U.S. corporate commercial paper
    
    
    3,248
    
    
    
    1
    
    
    
    
    
    
    
    3,249Total
    
    $
    68,423
    
    
    $
    15
    
    
    $
    (3
    )
    
    $
    68,435Non-current:Municipal securities
    
    $
    10,821
    
    
    $
    3
    
    
    $
    
    
    
    $
    10,824U.S. government agencies
    
    
    1,071
    
    
    
    2
    
    
    
    
    
    
    
    1,073Auction rate securities
    
    
    10,000
    
    
    
    
    
    
    
    (567
    )
    
    
    9,433Total
    
    $
    21,892
    
    
    $
    5
    
    
    $
    (567
    )
    
    $
    21,330
 December 31, 2008Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCurrent:U.S. Treasury bills and notes
    
    $
    42,620
    
    
    $
    130
    
    
    $
    
    
    
    $
    42,750Money market funds
    
    
    51,026
    
    
    
    
    
    
    
    
    
    
    
    51,026Total
    
    $
    93,646
    
    
    $
    130
    
    
    $
    
    
    
    $
    93,776Non-current:Auction rate securities
    
    $
    19,400
    
    
    $
    
    
    
    $
    (3,178
    )
    
    $
    16,222
   10




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    Unobservable
    
    
    Total as ofIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    June 30,(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2009U.S. Treasury bills and notes
    
    $
    23,994
    
    
    $
    
    
    
    $
    
    
    
    $
    23,994U.S. government agencies
    
    
    22,495
    
    
    
    
    
    
    
    
    
    
    
    22,495U.S. corporate commercial paper
    
    
    
    
    
    
    3,249
    
    
    
    
    
    
    
    3,249Municipal securities
    
    
    30,408
    
    
    
    
    
    
    
    
    
    
    
    30,408Auction rate securities
    
    
    
    
    
    
    
    
    
    
    9,433
    
    
    
    9,433Settlement rights for auction rate securities*
    
    
    
    
    
    
    
    
    
    
    456
    
    
    
    456Money market funds
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    186Total assets measured at fair value
    
    $
    77,083
    
    
    $
    3,249
    
    
    $
    9,889
    
    
    $
    90,221Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    Unobservable
    
    
    Total as ofIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    December 31,(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2008U.S. Treasury bills and notes
    
    $
    42,750
    
    
    $
    
    
    
    $
    
    
    
    $
    42,750Auction rate securities
    
    
    
    
    
    
    
    
    
    
    16,222
    
    
    
    16,222Settlement rights for auction rate securities*
    
    
    
    
    
    
    
    
    
    
    2,818
    
    
    
    2,818Other available-for-sale securities
    
    
    51,026
    
    
    
    
    
    
    
    
    
    
    
    51,026Total assets measured at fair value
    
    $
    93,776
    
    
    $
    
    
    
    $
    19,040
    
    
    $
    112,816
 *
    
    included in non-current other assets in the accompanying condensed consolidated balance sheets.  Auction RateSecuritiesand RelatedSettlement(In thousands)
    
    RightsBalance at December 31, 2008
    
    $
    19,040Total net unrealized gains
included in earnings
    
    
    249Settlements
    
    
    (9,400
    )Balance at June 30, 2009
    
    $
    9,889
 5. Accrued Expenses
  June 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Research and development costs
    
    $
    6,627
    
    
    $
    7,086Employee compensation
    
    
    913
    
    
    
    1,748Selling and marketing costs
    
    
    90
    
    
    
    346Product royalty liability  related party
    
    
    1,584
    
    
    
    Other accrued expenses
    
    
    1,556
    
    
    
    584Total
    
    $
    10,770
    
    
    $
    9,764
  11




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 6. Commitments
 Operating Leases
  (In thousands)2009 (July-December)
    
    $
    7532010
    
    
    1,1432011
    
    
    1,0022012
    
    
    9632013
    
    
    9922014 and thereafter
    
    
    3,297Total minimum lease payments
    
    $
    8,150
  Research and Development Costs
  7. Related Party Transactions
 R-Tech Ueno, Ltd.
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,(In thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Clinical supplies
    
    $
    577
    
    
    $
    127
    
    
    $
    1,620
    
    
    $
    515Other research and development services
    
    
    3,034
    
    
    
    39
    
    
    
    3,039
    
    
    
    49$
    3,611
    
    
    $
    166
    
    
    $
    4,659
    
    
    $
    564
  12




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  June 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Deferred revenue, current
    
    $
    430
    
    
    $
    419Deferred revenue, non  current
    
    
    6,449
    
    
    
    6,444$
    6,879
    
    
    $
    6,863
    Sucampo AG License Agreements
  
    
    the patent royalty on net sales, due until the expiration of the last patent covering
lubiprostone that existed at the time of the Companys initial public offering, was reduced
from 4.5% to 2.2%;
 
    
    the patent royalty on net sales, due thereafter until all other patents covering
lubiprostone have expired in the relevant country, was reduced from 2.25% to 1.1%; and
 
    
    the know-how royalty on net sales, due until the fifteenth anniversary of the first
commercial sale of lubiprostone, was reduced from 2.0% to 1.0%.
   13




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
   8. Collaboration and License Agreements
 Abbott license and commercialization and supply agreement
       14




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  RevenueCash Received
    
    
    Recognized
    
    
    Foreignfor the
    
    
    for the
    
    
    Currency EffectsAmount
    
    
    Six Months
    
    
    Six Months
    
    
    for the Six
    
    
    AmountDeferred at
    
    
    Ended
    
    
    Ended
    
    
    Months Ended
    
    
    Deferred atDecember 31,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,(In thousands)
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Collaboration revenue:Up-front payment associated with
the Companys obligation to
participate in joint
commercialization and steering
committee with Abbott
    
    $
    
    
    
    $
    677
    
    
    $
    16
    
    
    $
    23
    
    
    $
    638Research and development revenue:Up-front payment
    
    $
    
    
    
    $
    9,323
    
    
    $
    2,136
    
    
    $
    349
    
    
    $
    6,838Development milestone payment
    
    
    
    
    
    
    7,500
    
    
    
    1,808
    
    
    
    (72
    )
    
    
    5,764Total
    
    $
    
    
    
    $
    16,823
    
    
    $
    3,944
    
    
    $
    277
    
    
    $
    12,602
 Takeda commercialization and license agreement
    Revenue
    
    
    Change inCash Received
    
    
    Recognized
    
    
    Accountsfor the
    
    
    for the
    
    
    ReceivableAmount
    
    
    Six Months
    
    
    Six Months
    
    
    for the Six
    
    
    AmountDeferred at
    
    
    Ended
    
    
    Ended
    
    
    Months Ended
    
    
    Deferred atDecember 31,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,(In thousands)
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009*
    
    
    2009Collaboration revenue:Up-front payment associated with
the Companys obligation to
participate in joint committees
with Takeda
    
    $
    1,764
    
    
    $
    
    
    
    $
    74
    
    
    $
    
    
    
    $
    1,690Research and development revenue:Reimbursement of research and
development expenses
    
    $
    14,755
    
    
    $
    6,243
    
    
    $
    8,977
    
    
    $
    (754
    )
    
    $
    11,267Product royalty revenue
    
    $
    
    
    
    $
    18,672
    
    
    $
    17,860
    
    
    $
    (812
    )
    
    $
    Co-promotion revenue
    
    $
    
    
    
    $
    2,086
    
    
    $
    2,140
    
    
    $
    54
    
    
    $
    
 
 *
    
    Includes billed and unbilled accounts receivable.  15




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  9. Stock Option Plan
  Weighted
    
    
    WeightedAverage
    
    
    Average Remaining
    
    
    AggregateExercise Price
    
    
    Contractual
    
    
    Intrinsic(In thousands, except share and per share data)
    
    Shares
    
    
    Per Share
    
    
    Term (Years)
    
    
    ValueOptions outstanding, December 31, 2008
    
    
    455,600
    
    
    $
    10.34Options forfeited
    
    
    (850
    )
    
    
    10.00Options expired
    
    
    (7,650
    )
    
    
    10.00Options outstanding, June 30, 2009
    
    
    447,100
    
    
    
    10.34
    
    
    
    3.74
    
    
    $
    Options exercisable, June 30, 2009
    
    
    447,100
    
    
    
    10.34
    
    
    
    3.74
    
    
    $
    
  Weighted
    
    
    WeightedAverage
    
    
    Average Remaining
    
    
    AggregateExercise Price
    
    
    Contractual
    
    
    Intrinsic(In thousands, except share and per share data)
    
    Shares
    
    
    Per Share
    
    
    Term (Years)
    
    
    ValueOptions outstanding, December 31, 2008
    
    
    275,000
    
    
    $
    13.86Options granted
    
    
    30,000
    
    
    
    6.45Options forfeited
    
    
    (46,750
    )
    
    
    13.38Options expired
    
    
    (2,000
    )
    
    
    14.12Options outstanding, June 30, 2009
    
    
    256,250
    
    
    
    13.08
    
    
    
    6.48
    
    
    $
    Options exercisable, June 30, 2009
    
    
    118,250
    
    
    
    14.34
    
    
    
    4.98
    
    
    $
    
   Weighted
    
    
    WeightedAverage
    
    
    Average Remaining
    
    
    AggregateExercise Price
    
    
    Contractual
    
    
    Intrinsic(In thousands, except share and per share data)
    
    Shares
    
    
    Per Share
    
    
    Term (Years)
    
    
    ValueOptions outstanding, December 31, 2008
    
    
    450,000
    
    
    $
    5.85Options outstanding, June 30, 2009
    
    
    450,000
    
    
    
    5.85
    
    
    
    5.84
    
    
    $
    216Options exercisable, June 30, 2009
    
    
    450,000
    
    
    
    5.85
    
    
    
    5.84
    
    
    $
    216
  Employee Stock Purchase Plan
   16




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 10. Income Taxes
  Interim Financial
Reporting
 Uncertain Tax Positions
 Accounting for
Uncertainty in Income Taxes
    17




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 11. Segment Reporting
  Intercompany(In thousands)
    
    Americas
    
    
    Europe
    
    
    Asia
    
    
    Eliminations
    
    
    ConsolidatedThree Months Ended June 30, 2009Research and development revenue
    
    $
    3,825
    
    
    $
    
    
    
    $
    3,570
    
    
    $
    
    
    
    $
    7,395Product royalty revenue
    
    
    8,914
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,914Co-promotion revenue
    
    
    1,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,244Contract and collaboration revenue
    
    
    142
    
    
    
    
    
    
    
    220
    
    
    
    (210
    )
    
    
    152Total revenues
    
    
    14,125
    
    
    
    
    
    
    
    3,790
    
    
    
    (210
    )
    
    
    17,705Depreciation and amortization
    
    
    182
    
    
    
    3
    
    
    
    2
    
    
    
    
    
    
    
    187Other operating expenses
    
    
    12,018
    
    
    
    479
    
    
    
    4,274
    
    
    
    (210
    )
    
    
    16,561Income (loss) from operations
    
    
    1,982
    
    
    
    (482
    )
    
    
    (486
    )
    
    
    
    
    
    
    1,014Interest income
    
    
    292
    
    
    
    
    
    
    
    (1
    )
    
    
    (72
    )
    
    
    219Other non-operating expense, net
    
    
    (36
    )
    
    
    (334
    )
    
    
    (310
    )
    
    
    72
    
    
    
    (608
    )Income (loss) before income taxes
    
    $
    2,238
    
    
    $
    (816
    )
    
    $
    (797
    )
    
    $
    
    
    
    $
    625Capital expenditures
    
    $
    3,068
    
    
    $
    3
    
    
    $
    29
    
    
    $
    
    
    
    $
    3,100Three Months Ended June 30, 2008Research and development revenue
    
    $
    55,436
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    55,436Product royalty revenue
    
    
    10,901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,901Co-promotion revenue
    
    
    1,236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,236Contract and collaboration revenue
    
    
    141
    
    
    
    
    
    
    
    210
    
    
    
    (210
    )
    
    
    141Total revenues
    
    
    67,714
    
    
    
    
    
    
    
    210
    
    
    
    (210
    )
    
    
    67,714Depreciation and amortization
    
    
    108
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    110Other operating expenses
    
    
    20,561
    
    
    
    584
    
    
    
    2,768
    
    
    
    (210
    )
    
    
    23,703Income (loss) from operations
    
    
    47,045
    
    
    
    (584
    )
    
    
    (2,560
    )
    
    
    
    
    
    
    43,901Interest income
    
    
    590
    
    
    
    1
    
    
    
    
    
    
    
    (26
    )
    
    
    565Other non-operating expense, net
    
    
    (6
    )
    
    
    (32
    )
    
    
    (1
    )
    
    
    26
    
    
    
    (13
    )Income (loss) before income taxes
    
    $
    47,629
    
    
    $
    (615
    )
    
    $
    (2,561
    )
    
    $
    
    
    
    $
    44,453Capital expenditures
    
    $
    128
    
    
    $
    
    
    
    $
    3
    
    
    $
    
    
    
    $
    131
  18




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 Intercompany(In thousands)
    
    Americas
    
    
    Europe
    
    
    Asia
    
    
    Eliminations
    
    
    ConsolidatedSix Months Ended June 30, 2009Research and development revenue
    
    $
    8,977
    
    
    $
    
    
    
    $
    3,944
    
    
    $
    
    
    
    $
    12,921Product royalty revenue
    
    
    17,860
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,860Co-promotion revenue
    
    
    2,140
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,140Contract and collaboration revenue
    
    
    283
    
    
    
    
    
    
    
    435
    
    
    
    (420
    )
    
    
    298Total revenues
    
    
    29,260
    
    
    
    
    
    
    
    4,379
    
    
    
    (420
    )
    
    
    33,219Depreciation and amortization
    
    
    299
    
    
    
    6
    
    
    
    4
    
    
    
    
    
    
    
    309Other operating expenses
    
    
    26,476
    
    
    
    959
    
    
    
    7,446
    
    
    
    (420
    )
    
    
    34,461Income (loss) from operations
    
    
    2,542
    
    
    
    (965
    )
    
    
    (3,071
    )
    
    
    
    
    
    
    (1,494
    )Interest income
    
    
    651
    
    
    
    
    
    
    
    2
    
    
    
    (122
    )
    
    
    531Other non-operating income (expense), net
    
    
    208
    
    
    
    (370
    )
    
    
    254
    
    
    
    122
    
    
    
    214Income (loss) before income taxes
    
    $
    3,401
    
    
    $
    (1,335
    )
    
    $
    (2,815
    )
    
    $
    
    
    
    $
    (749
    )Capital expenditures
    
    $
    3,195
    
    
    $
    3
    
    
    $
    29
    
    
    $
    
    
    
    $
    3,227Six Months Ended June 30, 2008Research and development revenue
    
    $
    61,546
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    61,546Product royalty revenue
    
    
    16,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,981Co-promotion revenue
    
    
    2,458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,458Contract and collaboration revenue
    
    
    283
    
    
    
    
    
    
    
    417
    
    
    
    (417
    )
    
    
    283Total revenues
    
    
    81,268
    
    
    
    
    
    
    
    417
    
    
    
    (417
    )
    
    
    81,268Depreciation and amortization
    
    
    208
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    212Other operating expenses
    
    
    37,505
    
    
    
    2,422
    
    
    
    3,437
    
    
    
    (420
    )
    
    
    42,944Income (loss) from operations
    
    
    43,555
    
    
    
    (2,422
    )
    
    
    (3,024
    )
    
    
    3
    
    
    
    38,112Interest income
    
    
    1,246
    
    
    
    5
    
    
    
    3
    
    
    
    (47
    )
    
    
    1,207Other non-operating income (expense), net
    
    
    (33
    )
    
    
    (13
    )
    
    
    1
    
    
    
    44
    
    
    
    (1
    )Income (loss) before income taxes
    
    $
    44,768
    
    
    $
    (2,430
    )
    
    $
    (3,020
    )
    
    $
    
    
    
    $
    39,318Capital expenditures
    
    $
    299
    
    
    $
    
    
    
    $
    3
    
    
    $
    
    
    
    $
    302As of June 30, 2009Property and equipment, net
    
    $
    2,168
    
    
    $
    41
    
    
    $
    121
    
    
    $
    
    
    
    $
    2,330Identifiable assets
    
    $
    141,350
    
    
    $
    1,857
    
    
    $
    17,350
    
    
    $
    (619
    )
    
    $
    159,938As of December 31, 2008Property and equipment, net
    
    $
    2,134
    
    
    $
    39
    
    
    $
    102
    
    
    $
    
    
    
    $
    2,275Identifiable assets, net of intercompany
loans and investments
    
    $
    146,074
    
    
    $
    568
    
    
    $
    4,469
    
    
    $
    (317
    )
    
    $
    150,794
 12. Subsequent Events
 Subsequent Events
  19




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##### Table of Contents



Item 2.

    Managements Discussion and Analysis of Financial Condition and Results of Operations
 This Quarterly Report on Form 10-Q contains forward-looking statements regarding Sucampo
Pharmaceuticals, Inc. (the Company, we, us, or our) and our business, financial condition,
results of operations and prospects within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements include those that express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are not statements of
historical fact. These forward-looking statements are based on our current expectations and
projections about future events and they are subject to risks and uncertainties known and unknown
that could cause actual results and developments to differ materially from those expressed or
implied in such statements. You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our consolidated financial statements as of
and for the year ended December 31, 2008 included in our Annual Report on Form 10-K .
 Overview
 ®
   ®
   20




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##### Table of Contents



Our Clinical Development Programs
  Amitiza (lubiprostone) in the United States and Canada.
  
    
    In study OBD0631, which we refer to as the 631 trial, the primary endpoint of a
statistically significant change from baseline in the frequency of spontaneous bowel
movements, or SBMs, at week 8 of treatment was met when lubiprostone was compared to
placebo. Additionally, statistical significance was achieved for eight of the twelve
secondary endpoints, including key symptoms associated with OBD. Study OBD0632, or the 632
trial, did not achieve statistical significance for the same primary endpoint.
Statistically significant improvements with lubiprostone were achieved for two of the
secondary endpoints and positive trends were observed in four of the other secondary
endpoints in the 632 trial. Without comparing the results to placebo, subjects treated with
lubiprostone in both trials showed a statistically significant increase in the frequency of
SBMs at week 8 from their baseline, from 1.42 to 4.54 SBMs in the 631 trial and from 1.60
to 4.10 SBMs in the 632 trial. The increase for placebo over their baseline was from 1.46
to 3.81 SBMs for the 631 trial and 1.60 to 3.95 SBMs for the 632 trial.
 
    
    There was a high rate of response in the placebo arm of the 632 trial. Approximately 58%
of subjects treated with placebo in the 632 trial experienced more than three SBMs per week
during each week of the trial.
 
    
    In both trials, a post-hoc sub-analysis showed that subjects on methadone treatment
regimens who were randomized to receive lubiprostone showed a lower SBM response when
compared to lubiprostone patients treated with other opioid medications. Additionally, in
the 631 and 632 trials, methadone subjects treated with lubiprostone did not show
improvement in OBD symptomatic endpoints while lubiprostone subjects treated with other
opioids showed statistically significant improvement in both studies in abdominal
discomfort and pain, constipation severity, stool consistency and straining over the
placebo.
 
    
    The overall adverse event rate for the combined trials was 54.9% for lubiprostone and
51.6% for placebo. The most common adverse events were nausea, 15% for lubiprostone
compared to 7.5% for placebo, and diarrhea, 8.5% for lubiprostone compared 3.7% for
placebo.
  21




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##### Table of Contents



Amitiza (lubiprostone) in other countries.
   Rescula.
 Cobiprostone.
     22




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##### Table of Contents



SPI-017.
 Results of Operations
 Comparison of three months ended June 30, 2009 and June 30, 2008
 Revenues
  Three Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Research and development revenue
    
    $
    7,395
    
    
    $
    55,436Product royalty revenue
    
    
    8,914
    
    
    
    10,901Co-promotion revenue
    
    
    1,244
    
    
    
    1,236Contract and collaboration revenue
    
    
    152
    
    
    
    141Total
    
    $
    17,705
    
    
    $
    67,714
      23




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##### Table of Contents



Research and Development Expenses
  Three Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Direct costs:Amitiza
    
    $
    7,579
    
    
    $
    10,040Cobiprostone
    
    
    687
    
    
    
    1,276SPI - 017
    
    
    679
    
    
    
    937Rescula
    
    
    58
    
    
    
    Other
    
    
    110
    
    
    
    164Total
    
    
    9,113
    
    
    
    12,417Indirect costs
    
    
    508
    
    
    
    514Total
    
    $
    9,621
    
    
    $
    12,931
  General and Administrative Expenses
  Three Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Salaries, benefits and related costs
    
    $
    751
    
    
    $
    1,206Legal and consulting expenses
    
    
    911
    
    
    
    595Other operating expenses
    
    
    1,262
    
    
    
    1,760Total
    
    $
    2,924
    
    
    $
    3,561
  Selling and Marketing Expenses
  Milestone Royalties  Related Parties
   24




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##### Table of Contents



Product Royalties  Related Parties
  Non-Operating Income and Expense
  Three Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Interest income
    
    $
    219
    
    
    $
    565Other expense, net
    
    
    (608
    )
    
    
    (13
    )Total non-operating income (expense), net
    
    $
    (389
    )
    
    $
    552
  Income Taxes
  Comparison of six months ended June 30, 2009 and June 30, 2008
 Revenues
  Six Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Research and development revenue
    
    $
    12,921
    
    
    $
    61,546Product royalty revenue
    
    
    17,860
    
    
    
    16,981Co-promotion revenue
    
    
    2,140
    
    
    
    2,458Contract and collaboration revenue
    
    
    298
    
    
    
    283Total
    
    $
    33,219
    
    
    $
    81,268
    25




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##### Table of Contents



Research and Development Expenses
  Six Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Direct costs:AMITIZA
    
    $
    14,350
    
    
    $
    19,026Cobiprostone
    
    
    1,577
    
    
    
    2,270SPI - 017
    
    
    2,316
    
    
    
    1,616Rescula
    
    
    58
    
    
    
    Other
    
    
    254
    
    
    
    299Total
    
    
    18,555
    
    
    
    23,211Indirect costs
    
    
    1,031
    
    
    
    936Total
    
    $
    19,586
    
    
    $
    24,147
  General and Administrative Expenses
  Six Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Salaries, benefits and related costs
    
    $
    1,909
    
    
    $
    2,121Legal and consulting expenses
    
    
    1,989
    
    
    
    1,249Other operating expenses
    
    
    2,481
    
    
    
    3,358Total
    
    $
    6,379
    
    
    $
    6,728
  Selling and Marketing Expenses
   26




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##### Table of Contents



Milestone Royalties  Related Parties
  Product Royalties  Related Parties
  Non-Operating Income and Expense
  Six Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Interest income
    
    $
    531
    
    
    $
    1,207Other income (expense), net
    
    
    214
    
    
    
    (1
    )Total non-operating income, net
    
    $
    745
    
    
    $
    1,206
  Income Taxes
  Cost Reduction Initiatives
  Reportable Geographic Segments
   27




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##### Table of Contents



Intercompany(In thousands)
    
    Americas
    
    
    Europe
    
    
    Asia
    
    
    Eliminations
    
    
    ConsolidatedThree Months Ended June 30, 2009Total revenues
    
    $
    14,125
    
    
    $
    
    
    
    $
    3,790
    
    
    $
    (210
    )
    
    $
    17,705Income (loss) before taxes
    
    
    2,238
    
    
    
    (816
    )
    
    
    (797
    )
    
    
    
    
    
    
    625Three Months Ended June 30, 2008Total revenues
    
    $
    67,714
    
    
    $
    
    
    
    $
    210
    
    
    $
    (210
    )
    
    $
    67,714Income (loss) before taxes
    
    
    47,629
    
    
    
    (616
    )
    
    
    (2,560
    )
    
    
    
    
    
    
    44,453Six Months Ended June 30, 2009Total revenues
    
    $
    29,260
    
    
    $
    
    
    
    $
    4,379
    
    
    $
    (420
    )
    
    $
    33,219Income (loss) before taxes
    
    
    3,401
    
    
    
    (1,335
    )
    
    
    (2,815
    )
    
    
    
    
    
    
    (749
    )Six Months Ended June 30, 2008Total revenues
    
    $
    81,268
    
    
    $
    
    
    
    $
    417
    
    
    $
    (417
    )
    
    $
    81,268Income (loss) before taxes
    
    
    44,767
    
    
    
    (2,430
    )
    
    
    (3,019
    )
    
    
    
    
    
    
    39,318Identifiable AssetsAt June 30, 2009
    
    $
    141,350
    
    
    $
    1,857
    
    
    $
    17,350
    
    
    $
    (619
    )
    
    $
    159,938At December 31, 2008
    
    
    146,074
    
    
    
    568
    
    
    
    4,469
    
    
    
    (317
    )
    
    
    150,794
 Liquidity and Capital Resources
 Sources of Liquidity
   June 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Cash and cash equivalents
    
    $
    41,737
    
    
    $
    11,536Investments, current
    
    
    68,435
    
    
    
    93,776Investments, non-current
    
    
    21,330
    
    
    
    16,222$
    131,502
    
    
    $
    121,534
   28




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##### Table of Contents



Cash Flows
  Six Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Cash provided by (used in):Operating activities
    
    $
    11,013
    
    
    $
    50,601Investing activities
    
    
    18,995
    
    
    
    (50,156
    )Financing activities
    
    
    9
    
    
    
    475Effect of exchange rates
    
    
    184
    
    
    
    4Net increase in cash and cash equivalents
    
    $
    30,201
    
    
    $
    924
 Six Months Ended June 30, 2009
    Six Months Ended June 30, 2008
    Off-Balance Sheet Arrangements
   29




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##### Table of Contents



Funding Requirements
  
    
    fund our share of the ongoing development program of Amitiza in the United States;
    
    fund development and regulatory efforts in Europe and Japan for Amitiza;
    
    fund development and regulatory activities for Rescula in the United States and
Canada;
    
    fund research and development activities for other prostone compounds, including
cobiprostone and SPI-017;
    
    fund the expansion of our commercialization activities in the United States and the
initiation of commercialization efforts in non-U.S. markets;
    
    fund costs for capital expenditures to support the growth of our business; and
    
    fund the purchase of shares of our class A common stock up to $10.0 million, if we
elect to do so, pursuant to our board-approved stock repurchase program.
  
    
    the revenue from Amitiza;
    
    the future expenditures we may incur to increase revenue from Amitiza;
    
    the cost and time involved to pursue our research and development programs;
    
    our ability to establish collaborative arrangements and to enter into licensing
agreements and contractual arrangements with others; and
    
    any future change in our business strategy.
  Fair Value Estimates
 Fair
Value Measurement
  Recent Accounting Pronouncements
   30




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##### Table of Contents



Item 3.

    Quantitative and Qualitative Disclosures about Market Risk
 Foreign Exchange Risk
  Interest Rate Risk
   Credit Risk
   
 Item 4.

    Controls and Procedures
 a) Evaluation of Disclosure Controls and Procedures
  b) Changes in Internal Controls
   31




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##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  We have exercised our right to a performance audit of Takedas sales efforts with respect to
Amitiza; if our dispute with Takeda continues or escalates, we could be required to commit
significant financial resources and management time and could ultimately face termination of our
Takeda contract and market Amitiza through other means.
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.

    Defaults Upon Senior Securities.
  
 Item 4.

    Submission of Matters to a Vote of Security Holders
  (a)
    
    To elect seven nominees to serve as directors and hold officer for a term of one year.
Our stockholders voted to elect all seven nominees to serve as directors. Votes recorded,
by nominee, were as follows:
 Nominee
    
    For
    
    Against/WithheldRyuji Ueno, M.D., Ph.D., Ph.D.
    
    272,698,755
    
    7,359Anthony C. Celeste
    
    272,705,378
    
    736Gayle R. Dolecek
    
    272,634,460
    
    71,654Andrew J. Ferrara
    
    272,705,452
    
    662Sachiko Kuno
    
    272,634,534
    
    71,580Timothy I. Maudlin
    
    272,705,452
    
    662John C. Wright
    
    272,705,378
    
    736
 (b)
    
    To consider and vote upon a proposal to ratify the selection of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2009. Votes recorded were as follows:
 For
    
    Against
    
    Abstain272,700,251
    
    5,801
    
    62
  32




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##### Table of Contents



Item 6. Exhibits
 (a) Exhibits
 ExhibitNumber
    
    Description
    
    Reference3.1
    
    Certificate of Incorporation
    
    Exhibit 3.1 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)3.2
    
    Certificate of Amendment
    
    Exhibit 3.2 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)3.3
    
    Restated Bylaws
    
    Exhibit 3.3 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)4.1
    
    Specimen Stock Certificate
evidencing the shares of class A
common stock
    
    Exhibit 4.1 to
Registration Statement
No. 333-135133, Amendment
No. 5 (filed February 1,
2007)10.1*
    
    Unoprostone Exclusive
Manufacturing and Supply
Agreement between R-Tech Ueno,
Ltd. and Sucampo Pharma Americas,
Inc.
    
    Exhibit 10.1 to the
Companys Quarterly
Report on Form 10-Q for
the quarter ended March
31, 2009 (filed May 11,
2009)10.2*
    
    Unoprostone NDA Transfer, Patent
and Know-how Licensing, and Data
Sharing Agreement between R-Tech
Ueno, Ltd. and Sucampo Pharma
Americas, Inc.
    
    Exhibit 10.2 to the
Companys Quarterly
Report on Form 10-Q for
the quarter ended March
31, 2009 (filed May 11,
2009)31.1
    
    Certification of the Principal
Executive Officer, as required by
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    Included herewith31.2
    
    Certification of the Principal
Financial Officer, as required by
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    Included herewith32.1
    
    Certification of the Principal
Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Included herewith32.2
    
    Certification of the Principal
Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Included herewith
 *
    
    Confidential treatment has been requested for portions of this exhibit.  33




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##### Table of Contents



SIGNATURES
  Sucampo Pharmaceuticals, Inc.August 7, 2009
    By:
    /s/  RYUJI UENORyuji Ueno, M.D., Ph.D., Ph.D.Chief Executive Officer, Chief
Scientific Officer and 
Chairman of
the Board of Directors
(Principal Executive Officer)August 7, 2009
    By:
    /s/  JAN SMILEKJan SmilekChief Financial Officer
(Principal Financial and Accounting
Officer)  34




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##### Table of Contents



Sucampo Pharmaceuticals, Inc.
 
 Exhibit Index
 ExhibitNumber
    
    Description
    
    Reference3.1
    
    Certificate of Incorporation
    
    Exhibit 3.1 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)3.2
    
    Certificate of Amendment
    
    Exhibit 3.2 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)3.3
    
    Restated Bylaws
    
    Exhibit 3.3 to the
Companys Current Report
on Form 8-K (filed
December 29, 2008)4.1
    
    Specimen Stock Certificate
evidencing the shares of class A
common stock
    
    Exhibit 4.1 to
Registration Statement
No. 333-135133, Amendment
No. 5 (filed February 1,
2007)10.1*
    
    Unoprostone Exclusive
Manufacturing and Supply
Agreement between R-Tech Ueno,
Ltd. and Sucampo Pharma Americas,
Inc.
    
    Exhibit 10.1 to the
Companys Quarterly
Report on Form 10-Q for
the quarter ended March
31, 2009 (filed May 11,
2009)10.2*
    
    Unoprostone NDA Transfer, Patent
and Know-how Licensing, and Data
Sharing Agreement between R-Tech
Ueno, Ltd. and Sucampo Pharma
Americas, Inc.
    
    Exhibit 10.2 to the
Companys Quarterly
Report on Form 10-Q for
the quarter ended March
31, 2009 (filed May 11,
2009)31.1
    
    Certification of the Principal
Executive Officer, as required by
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    Included herewith31.2
    
    Certification of the Principal
Financial Officer, as required by
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    Included herewith32.1
    
    Certification of the Principal
Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Included herewith32.2
    
    Certification of the Principal
Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Included herewith
 *
    
    Confidential treatment has been requested for portions of this exhibit.  35