##### 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 September 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 300Bethesda, MD 20814
    
    (301) 961-3400(Address of principal executive offices,
    
    (Registrants telephone number,including zip code)
    
    including area code)
 Yes þ No o
 Yes o No 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 September 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the
Three and Nine Months Ended September 30, 2009 and 2008
    
    
    2Condensed Consolidated Statement of Changes in Stockholders Equity for the Nine Months Ended
September 30, 2009
    
    
    3Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009
and 2008
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    34Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 3. Defaults Upon Senior Securities
    
    
    35Item 4. Submission of Matters to a Vote of Security Holders
    
    
    35Item 5. Other InformationItem 6. Exhibits
    
    
    36SIGNATURES
    
    
    37INDEX TO EXHIBITS38Exhibit 10.1Exhibit 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)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETS:Current assets:Cash and cash equivalents
    
    $
    31,751
    
    
    $
    11,536Investments, current
    
    
    53,038
    
    
    
    93,776Product royalties receivable
    
    
    9,368
    
    
    
    9,725Unbilled accounts receivable
    
    
    828
    
    
    
    4,373Accounts receivable
    
    
    1,350
    
    
    
    878Prepaid and income taxes receivable
    
    
    
    
    
    
    133Deferred tax assets, net
    
    
    190
    
    
    
    963Prepaid expenses and other current assets
    
    
    3,447
    
    
    
    3,641Total current assets
    
    
    99,972
    
    
    
    125,025Investments, non-current
    
    
    38,853
    
    
    
    16,222Property and equipment, net
    
    
    2,357
    
    
    
    2,275Deferred tax assets, non-current
    
    
    4,216
    
    
    
    4,026Other assets
    
    
    4,339
    
    
    
    3,246Total assets
    
    $
    149,737
    
    
    $
    150,794LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilities:Accounts payable
    
    $
    2,122
    
    
    $
    1,433Accrued expenses
    
    
    9,414
    
    
    
    9,764Deferred revenue, current
    
    
    13,499
    
    
    
    15,599Income taxes payable, net
    
    
    313
    
    
    
    Total current liabilities
    
    
    25,348
    
    
    
    26,796Deferred revenue, non-current
    
    
    10,217
    
    
    
    8,061Other liabilities
    
    
    2,110
    
    
    
    2,147Total liabilities
    
    
    37,675
    
    
    
    37,004Commitments (Note 6)Stockholders equity:Preferred stock, $0.01 par value; 5,000,000 shares authorized at September 30, 2009 and December
31, 2008; no shares issued and outstanding at September 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Class A common stock, $0.01 par value; 270,000,000 shares authorized at September 30, 2009 and
December 31, 2008; 15,654,258 and 15,651,849 shares issued and outstanding at September 30,
2009 and December 31, 2008, respectively
    
    
    156
    
    
    
    156Class B common stock, $0.01 par value; 75,000,000 shares authorized at September 30, 2009 and
December 31, 2008; 26,191,050 shares issued and outstanding at September 30, 2009 and
December 31, 2008
    
    
    262
    
    
    
    262Additional paid-in capital
    
    
    98,516
    
    
    
    98,243Accumulated other comprehensive income
    
    
    454
    
    
    
    354Retained earnings
    
    
    12,674
    
    
    
    14,775Total stockholders equity
    
    
    112,062
    
    
    
    113,790Total liabilities and stockholders equity
    
    $
    149,737
    
    
    $
    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 September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Research and development revenue
    
    $
    7,045
    
    
    $
    5,436
    
    
    $
    19,966
    
    
    $
    66,982Product royalty revenue
    
    
    9,367
    
    
    
    7,718
    
    
    
    27,227
    
    
    
    24,699Co-promotion revenue
    
    
    1,266
    
    
    
    1,185
    
    
    
    3,406
    
    
    
    3,643Contract and collaboration revenue
    
    
    153
    
    
    
    142
    
    
    
    451
    
    
    
    425Total revenues
    
    
    17,831
    
    
    
    14,481
    
    
    
    51,050
    
    
    
    95,749Operating expenses:Research and development
    
    
    7,383
    
    
    
    11,390
    
    
    
    26,969
    
    
    
    35,537General and administrative
    
    
    4,317
    
    
    
    3,863
    
    
    
    10,696
    
    
    
    10,591Selling and marketing
    
    
    3,047
    
    
    
    2,680
    
    
    
    7,747
    
    
    
    8,398Milestone royalties  related parties
    
    
    
    
    
    
    
    
    
    
    875
    
    
    
    3,531Product royalties  related parties
    
    
    1,664
    
    
    
    1,359
    
    
    
    4,837
    
    
    
    4,391Total operating expenses
    
    
    16,411
    
    
    
    19,292
    
    
    
    51,124
    
    
    
    62,448Income (loss) from operations
    
    
    1,420
    
    
    
    (4,811
    )
    
    
    (74
    )
    
    
    33,301Non-operating income (expense):Interest income
    
    
    211
    
    
    
    655
    
    
    
    742
    
    
    
    1,862Other expense, net
    
    
    (250
    )
    
    
    (15
    )
    
    
    (36
    )
    
    
    (16
    )Total non-operating income (expense), net
    
    
    (39
    )
    
    
    640
    
    
    
    706
    
    
    
    1,846Income (loss) before income taxes
    
    
    1,381
    
    
    
    (4,171
    )
    
    
    632
    
    
    
    35,147Income tax benefit (provision)
    
    
    (1,469
    )
    
    
    1,745
    
    
    
    (2,733
    )
    
    
    (7,192
    )Net income (loss)
    
    $
    (88
    )
    
    $
    (2,426
    )
    
    $
    (2,101
    )
    
    $
    27,955Net income (loss) per share:Basic net income (loss) per share
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.05
    )
    
    $
    0.67Diluted net income (loss) per share
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.05
    )
    
    $
    0.67Weighted average common shares outstanding  basic
    
    
    41,844
    
    
    
    41,813
    
    
    
    41,844
    
    
    
    41,768Weighted average common shares outstanding  diluted
    
    
    41,844
    
    
    
    41,813
    
    
    
    41,844
    
    
    
    42,022Comprehensive income (loss):Net income (loss)
    
    $
    (88
    )
    
    $
    (2,426
    )
    
    $
    (2,101
    )
    
    $
    27,955Other comprehensive income gain (loss):Unrealized gain (loss) on investments, net of tax effect
    
    
    20
    
    
    
    374
    
    
    
    (52
    )
    
    
    (1,082
    )Foreign currency translation
    
    
    15
    
    
    
    54
    
    
    
    152
    
    
    
    59Comprehensive income (loss)
    
    $
    (53
    )
    
    $
    (1,998
    )
    
    $
    (2,001
    )
    
    $
    26,932
   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
    
    
    Income
    
    
    Earnings
    
    
    EquityBalance at December 31, 2008
    
    
    15,651,849
    
    
    $
    156
    
    
    
    26,191,050
    
    
    $
    262
    
    
    $
    98,243
    
    
    $
    354
    
    
    $
    14,775
    
    
    $
    113,790Employee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    
    
    
    
    
    
    
    
    259Stock issued under employee stock purchase plan
    
    
    2,409
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    152Unrealized loss on investments, net of tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (52
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,101
    )
    
    
    (2,101
    )Balance at September 30, 2009
    
    
    15,654,258
    
    
    $
    156
    
    
    
    26,191,050
    
    
    $
    262
    
    
    $
    98,516
    
    
    $
    454
    
    
    $
    12,674
    
    
    $
    112,062
   3




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SUCAMPO PHARMACEUTICALS, INC.
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine Months Ended September 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (2,101
    )
    
    $
    27,955Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    532
    
    
    
    326Deferred tax provision (benefit)
    
    
    616
    
    
    
    (4,312
    )Stock-based compensation
    
    
    259
    
    
    
    567Amortization of premiums (accretion of discounts) on investments
    
    
    898
    
    
    
    (95
    )Unrealized gain on trading securities
    
    
    (2,601
    )
    
    
    Unrealized loss on settlement rights on auction rate securities
    
    
    2,352
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (472
    )
    
    
    493Unbilled accounts receivable
    
    
    3,545
    
    
    
    1,219Product royalties receivable
    
    
    357
    
    
    
    1,055Prepaid and income taxes receivable and payable, net
    
    
    441
    
    
    
    3,224Accounts payable
    
    
    643
    
    
    
    (415
    )Accrued expenses
    
    
    (520
    )
    
    
    3,815Deferred revenue
    
    
    (483
    )
    
    
    4,893Other assets and liabilities, net
    
    
    (501
    )
    
    
    (114
    )Net cash provided by operating activities
    
    $
    2,965
    
    
    $
    38,611Cash flows from investing activities:Purchases of investments
    
    
    (205,726
    )
    
    
    (135,584
    )Proceeds from the sales of investments
    
    
    127,092
    
    
    
    41,000Maturities of investments
    
    
    98,359
    
    
    
    43,125Purchases of property and equipment
    
    
    (463
    )
    
    
    (342
    )Purchase of intangible assets
    
    
    (2,915
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    16,347
    
    
    
    (51,801
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    870Excess tax benefits from share-based payments
    
    
    
    
    
    
    155Proceeds from employee stock purchase plan
    
    
    14
    
    
    
    Net cash provided by financing activities
    
    
    14
    
    
    
    1,025Effect of exchange rates on cash and cash equivalents
    
    
    889
    
    
    
    (30
    )Net increase (decrease) in cash and cash equivalents
    
    
    20,215
    
    
    
    (12,195
    )Cash and cash equivalents at beginning of period
    
    
    11,536
    
    
    
    25,559Cash and cash equivalents at end of period
    
    $
    31,751
    
    
    $
    13,364Supplemental disclosure of non-cash investing and financing activities:Purchase of intangible assets included in accrued expenses
    
    $
    500
    
    
    $
    
   4




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##### Table of Contents



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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##### Table of Contents



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
  Fair Value
  Revenue Recognition
      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
       8




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
    3. Earnings per Share
   9




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Basic net income (loss) per share:Net income (loss)
    
    $
    (88
    )
    
    $
    (2,426
    )
    
    $
    (2,101
    )
    
    $
    27,955Weighted average class A and B common shares
outstanding
    
    
    41,844
    
    
    
    41,813
    
    
    
    41,844
    
    
    
    41,768Basic net income (loss) per share
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.05
    )
    
    $
    0.67Diluted net income (loss) per share:Net income (loss)
    
    $
    (88
    )
    
    $
    (2,426
    )
    
    $
    (2,101
    )
    
    $
    27,955Weighted average class A and B common shares
outstanding for diluted net income per share
    
    
    41,844
    
    
    
    41,813
    
    
    
    41,844
    
    
    
    41,768Assumed exercise of stock options under the treasury
stock method
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25441,844
    
    
    
    41,813
    
    
    
    41,844
    
    
    
    42,022Diluted net income (loss) per share
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.05
    )
    
    $
    0.67
  September 30,(In thousands)
    
    2009
    
    
    2008Employee stock options
    
    
    
    
    
    
    381Non-employee stock options
    
    
    
    
    
    
    450
  September 30,(In thousands)
    
    2009
    
    
    2008Employee stock options
    
    
    778
    
    
    
    407Non-employee stock options
    
    
    450
    
    
    
    
  10




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SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 4. Current and Non-Current Investments
  September 30, 2009Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCurrent:U.S. Treasury bills and notes
    
    $
    2,999
    
    
    $
    
    
    
    $
    
    
    
    $
    2,999U.S. commercial paper
    
    
    750
    
    
    
    
    
    
    
    
    
    
    
    750U.S. government securities
    
    
    22,980
    
    
    
    20
    
    
    
    (1
    )
    
    
    22,999Municipal securities
    
    
    24,979
    
    
    
    2
    
    
    
    (8
    )
    
    
    24,973Certificates of deposits
    
    
    750
    
    
    
    
    
    
    
    (1
    )
    
    
    749Money market funds
    
    
    568
    
    
    
    
    
    
    
    
    
    
    
    568Total
    
    $
    53,026
    
    
    $
    22
    
    
    $
    (10
    )
    
    $
    53,038Non-current:U.S. government securities
    
    $
    9,721
    
    
    $
    13
    
    
    $
    (3
    )
    
    $
    9,731Municipal securities
    
    
    1,817
    
    
    
    1
    
    
    
    (3
    )
    
    
    1,815Certificates of deposits
    
    
    1,000
    
    
    
    
    
    
    
    (2
    )
    
    
    998Corporate bonds
    
    
    16,858
    
    
    
    28
    
    
    
    
    
    
    
    16,886Auction rate securities
    
    
    10,000
    
    
    
    
    
    
    
    (577
    )
    
    
    9,423Total
    
    $
    39,396
    
    
    $
    42
    
    
    $
    (585
    )
    
    $
    38,853
 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
   11




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor identical
    
    
    Observable
    
    
    UnobservableSeptember 30, 2009
    
    Assets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalU.S. Treasury bills and notes
    
    $
    2,999
    
    
    $
    
    
    
    $
    
    
    
    $
    2,999U.S. government securities
    
    
    32,730
    
    
    
    
    
    
    
    
    
    
    
    32,730U.S. commercial paper
    
    
    
    
    
    
    750
    
    
    
    
    
    
    
    750Corporate bonds
    
    
    16,886
    
    
    
    
    
    
    
    
    
    
    
    16,886Municipal securities
    
    
    26,788
    
    
    
    
    
    
    
    
    
    
    
    26,788Auction rate securities
    
    
    
    
    
    
    
    
    
    
    9,423
    
    
    
    9,423Settlement rights for auction rate securities*
    
    
    
    
    
    
    
    
    
    
    466
    
    
    
    466Money market funds
    
    
    568
    
    
    
    
    
    
    
    
    
    
    
    568Certificates of deposits
    
    
    
    
    
    
    1,747
    
    
    
    
    
    
    
    1,747Total assets measured at fair value
    
    $
    79,971
    
    
    $
    2,497
    
    
    $
    9,889
    
    
    $
    92,357
 Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableDecember 31, 2008
    
    Assets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalU.S. Treasury bills and notes
    
    $
    42,750
    
    
    $
    
    
    
    $
    
    
    
    $
    42,750Auction rate securities
    
    
    
    
    
    
    
    
    
    
    16,222
    
    
    
    16,222Settlement rights for auction rate securities*
    
    
    
    
    
    
    
    
    
    
    2,818
    
    
    
    2,818Money market funds
    
    
    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 RateSecurities andRelatedSettlement(In thousands)
    
    RightsBalance at December 31, 2008
    
    $
    19,040Total net unrealized gains included in earnings
    
    
    249Redemptions
    
    
    (9,400
    )Balance at September 30, 2009
    
    $
    9,889
  12




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 5. Accrued Expenses
  September 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Research and development costs
    
    $
    4,617
    
    
    $
    7,086Employee compensation
    
    
    897
    
    
    
    1,748Selling and marketing costs
    
    
    778
    
    
    
    346Product royalty liability-related
party
    
    
    1,663
    
    
    
    Other accrued expenses
    
    
    1,459
    
    
    
    584Total
    
    $
    9,414
    
    
    $
    9,764
  6. Commitments
 Operating Leases
  (In thousands)2009 (October-December)
    
    $
    3702010
    
    
    1,2042011
    
    
    1,0062012
    
    
    9632013
    
    
    9922014 and thereafter
    
    
    3,297Total minimum lease payments
    
    $
    7,832
  Research and Development Costs
  7. Related Party Transactions
 R-Tech Ueno, Ltd.
     13




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(In thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Clinical supplies
    
    $
    720
    
    
    $
    38
    
    
    $
    2,341
    
    
    $
    553Other research and development services
    
    
    7
    
    
    
    62
    
    
    
    3,046
    
    
    
    111$
    727
    
    
    $
    100
    
    
    $
    5,387
    
    
    $
    664
  September 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Deferred revenue, current
    
    $
    431
    
    
    $
    419Deferred revenue, non-current
    
    
    6,354
    
    
    
    6,444$
    6,785
    
    
    $
    6,863
   14




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
 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%.
    8. Collaboration and License Agreements
 Abbott license and commercialization and supply agreement
       15




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Cash Received
    
    
    Revenue
    
    
    Foreign CurrencyAmount
    
    
    for the Nine
    
    
    Recognized for the
    
    
    Effects for the
    
    
    AmountDeferred at
    
    
    Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months Ended
    
    
    Deferred atDecember 31,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(In thousands)
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Collaboration revenue:Up-front payment associated with the Companys
obligation to participate in joint committees
    
    $
    
    
    
    $
    677
    
    
    $
    27
    
    
    $
    (19
    )
    
    $
    669Research and development revenue:Up-front payment
    
    $
    
    
    
    $
    9,323
    
    
    $
    4,058
    
    
    $
    (40
    )
    
    $
    5,305Development milestone payment
    
    
    
    
    
    
    7,500
    
    
    
    3,369
    
    
    
    (262
    )
    
    $
    4,393Total
    
    $
    
    
    
    $
    16,823
    
    
    $
    7,427
    
    
    $
    (302
    )
    
    $
    9,698
 Takeda commercialization and license agreement
    16




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Cash Received
    
    
    Revenue
    
    
    Change in AccountsAmount
    
    
    for the Nine
    
    
    Recognized for the
    
    
    Receivable for the
    
    
    AmountDeferred at
    
    
    Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months Ended
    
    
    Deferred atDecember 31,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(In thousands)
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009*
    
    
    2009Collaboration revenue:Up-front payment associated with the Companys
obligation to participate in joint committees
    
    $
    1,764
    
    
    $
    
    
    
    $
    111
    
    
    $
    
    
    
    $
    1,653Research and development revenue:Reimbursement of research and development expenses
    
    $
    14,755
    
    
    $
    6,272
    
    
    $
    12,539
    
    
    $
    (3,578
    )
    
    $
    4,910Product royalty revenue
    
    $
    
    
    
    $
    27,584
    
    
    $
    27,227
    
    
    $
    (357
    )
    
    $
    Co-promotion revenue
    
    $
    
    
    
    $
    2,972
    
    
    $
    3,406
    
    
    $
    434
    
    
    $
    
 
 *
    
    Includes billed and unbilled accounts receivable.  9. Stock Option Plan
  Weighted AverageWeighted Average
    
    
    RemainingExercise Price Per
    
    
    Contractual Term
    
    
    AggregateShares
    
    
    Share
    
    
    (Years)
    
    
    Intrinsic ValueOptions outstanding, December 31, 2008
    
    
    455,600
    
    
    $
    10.34Options forfeited
    
    
    (850
    )
    
    
    10.00Options expired
    
    
    (96,050
    )
    
    
    10.00Options outstanding, September 30, 2009
    
    
    358,700
    
    
    
    10.43
    
    
    
    4.45
    
    
    $
    Options exercisable, September 30, 2009
    
    
    358,700
    
    
    
    10.43
    
    
    
    4.45
    
    
    $
    
  17




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Weighted AverageWeighted Average
    
    
    RemainingExercise Price Per
    
    
    Contractual Term
    
    
    AggregateShares
    
    
    Share
    
    
    (Years)
    
    
    Intrinsic ValueOptions outstanding, December 31, 2008
    
    
    275,000
    
    
    $
    13.86Options granted
    
    
    167,000
    
    
    
    5.37Options forfeited
    
    
    (38,950
    )
    
    
    13.07Options expired
    
    
    (32,250
    )
    
    
    14.12Options outstanding, September 30, 2009
    
    
    370,800
    
    
    
    10.19
    
    
    
    7.95
    
    
    $
    Options exercisable, September 30, 2009
    
    
    88,000
    
    
    
    14.42
    
    
    
    6.50
    
    
    $
    
   Weighted AverageWeighted Average
    
    
    RemainingExercise Price Per
    
    
    Contractual Term
    
    
    AggregateShares
    
    
    Share
    
    
    (Years)
    
    
    Intrinsic ValueOptions outstanding, December 31, 2008
    
    
    450,000
    
    
    $
    5.85Options outstanding, September 30, 2009
    
    
    450,000
    
    
    
    5.85
    
    
    
    5.58
    
    
    $
    Options exercisable, September 30, 2009
    
    
    450,000
    
    
    
    5.85
    
    
    
    5.58
    
    
    $
    
  Employee Stock Purchase Plan
  10. Income Taxes
   18




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##### Table of Contents



SUCAMPO PHARMACEUTICALS, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (Continued)
  Uncertain Tax Positions
     19




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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 September 30, 2009Research and development revenue
    
    $
    3,562
    
    
    $
    
    
    
    $
    3,483
    
    
    $
    
    
    
    $
    7,045Product royalty revenue
    
    
    9,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,367Co-promotion revenue
    
    
    1,266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,266Contract and collaboration revenue
    
    
    141
    
    
    
    
    
    
    
    282
    
    
    
    (270
    )
    
    
    153Total revenues
    
    
    14,336
    
    
    
    
    
    
    
    3,765
    
    
    
    (270
    )
    
    
    17,831Research and development expenses
    
    
    3,040
    
    
    
    459
    
    
    
    3,884
    
    
    
    
    
    
    
    7,383Depreciation and amortization
    
    
    213
    
    
    
    3
    
    
    
    7
    
    
    
    
    
    
    
    223Other operating expenses
    
    
    7,790
    
    
    
    1,029
    
    
    
    256
    
    
    
    (270
    )
    
    
    8,805Income (loss) from operations
    
    
    3,293
    
    
    
    (1,491
    )
    
    
    (382
    )
    
    
    
    
    
    
    1,420Interest income
    
    
    277
    
    
    
    
    
    
    
    2
    
    
    
    (68
    )
    
    
    211Other non-operating expense, net
    
    
    (17
    )
    
    
    (22
    )
    
    
    (279
    )
    
    
    68
    
    
    
    (250
    )Income (loss) before income taxes
    
    $
    3,553
    
    
    $
    (1,513
    )
    
    $
    (659
    )
    
    $
    
    
    
    $
    1,381Capital expenditures
    
    $
    64
    
    
    $
    
    
    
    $
    87
    
    
    $
    
    
    
    $
    151Three Months Ended September 30, 2008Research and development revenue
    
    $
    5,436
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,436Product royalty revenue
    
    
    7,718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,718Co-promotion revenue
    
    
    1,185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,185Contract and collaboration revenue
    
    
    142
    
    
    
    
    
    
    
    213
    
    
    
    (213
    )
    
    
    142Total revenues
    
    
    14,481
    
    
    
    
    
    
    
    213
    
    
    
    (213
    )
    
    
    14,481Research and development expenses
    
    
    10,217
    
    
    
    330
    
    
    
    843
    
    
    
    
    
    
    
    11,390Depreciation and amortization
    
    
    110
    
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    114Other operating expenses
    
    
    7,602
    
    
    
    139
    
    
    
    257
    
    
    
    (210
    )
    
    
    7,788Income (loss) from operations
    
    
    (3,448
    )
    
    
    (470
    )
    
    
    (890
    )
    
    
    (3
    )
    
    
    (4,811
    )Interest income
    
    
    678
    
    
    
    1
    
    
    
    2
    
    
    
    (26
    )
    
    
    655Other non-operating expense, net
    
    
    (6
    )
    
    
    (17
    )
    
    
    (21
    )
    
    
    29
    
    
    
    (15
    )Income (loss) before income taxes
    
    $
    (2,776
    )
    
    $
    (486
    )
    
    $
    (909
    )
    
    $
    
    
    
    $
    (4,171
    )Capital expenditures
    
    $
    5
    
    
    $
    35
    
    
    $
    
    
    
    $
    
    
    
    $
    40
  20




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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
    
    
    ConsolidatedNine Months Ended September 30, 2009Research and development revenue
    
    $
    12,539
    
    
    $
    
    
    
    $
    7,427
    
    
    $
    
    
    
    $
    19,966Product royalty revenue
    
    
    27,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,227Co-promotion revenue
    
    
    3,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,406Contract and collaboration revenue
    
    
    424
    
    
    
    
    
    
    
    717
    
    
    
    (690
    )
    
    
    451Total revenues
    
    
    43,596
    
    
    
    
    
    
    
    8,144
    
    
    
    (690
    )
    
    
    51,050Research and development expenses
    
    
    16,398
    
    
    
    788
    
    
    
    9,783
    
    
    
    
    
    
    
    26,969Depreciation and amortization
    
    
    512
    
    
    
    9
    
    
    
    11
    
    
    
    
    
    
    
    532Other operating expenses
    
    
    20,851
    
    
    
    1,659
    
    
    
    1,803
    
    
    
    (690
    )
    
    
    23,623Income (loss) from operations
    
    
    5,835
    
    
    
    (2,456
    )
    
    
    (3,453
    )
    
    
    
    
    
    
    (74
    )Interest income
    
    
    928
    
    
    
    
    
    
    
    4
    
    
    
    (190
    )
    
    
    742Other non-operating expense, net
    
    
    191
    
    
    
    (392
    )
    
    
    (25
    )
    
    
    190
    
    
    
    (36
    )Income (loss) before income taxes
    
    $
    6,954
    
    
    $
    (2,848
    )
    
    $
    (3,474
    )
    
    $
    
    
    
    $
    632Capital expenditures
    
    $
    3,259
    
    
    $
    3
    
    
    $
    116
    
    
    $
    
    
    
    $
    3,378Nine Months Ended September 30, 2008Research and development revenue
    
    $
    66,982
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    66,982Product royalty revenue
    
    
    24,699
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,699Co-promotion revenue
    
    
    3,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,643Contract and collaboration revenue
    
    
    425
    
    
    
    
    
    
    
    630
    
    
    
    (630
    )
    
    
    425Total revenues
    
    
    95,749
    
    
    
    
    
    
    
    630
    
    
    
    (630
    )
    
    
    95,749Research and development expenses
    
    
    29,976
    
    
    
    1,703
    
    
    
    3,858
    
    
    
    
    
    
    
    35,537Depreciation and amortization
    
    
    318
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    326Other operating expenses
    
    
    25,348
    
    
    
    1,188
    
    
    
    679
    
    
    
    (630
    )
    
    
    26,585Income (loss) from operations
    
    
    40,107
    
    
    
    (2,892
    )
    
    
    (3,914
    )
    
    
    
    
    
    
    33,301Interest income
    
    
    1,924
    
    
    
    6
    
    
    
    5
    
    
    
    (73
    )
    
    
    1,862Other non-operating expense, net
    
    
    (39
    )
    
    
    (30
    )
    
    
    (20
    )
    
    
    73
    
    
    
    (16
    )Income (loss) before income taxes
    
    $
    41,992
    
    
    $
    (2,916
    )
    
    $
    (3,929
    )
    
    $
    
    
    
    $
    35,147Capital expenditures
    
    $
    304
    
    
    $
    35
    
    
    $
    3
    
    
    $
    
    
    
    $
    342As of September 30, 2009Property and equipment, net
    
    $
    2,108
    
    
    $
    37
    
    
    $
    212
    
    
    $
    
    
    
    $
    2,357Identifiable assets, net of intercompany loans
and investments
    
    $
    134,692
    
    
    $
    1,281
    
    
    $
    14,836
    
    
    $
    (1,072
    )
    
    $
    149,737As of December 31, 2008Property and equipment, net
    
    $
    2,134
    
    
    $
    39
    
    
    $
    102
    
    
    $
    
    
    
    $
    2,275Identifiable assets, net of intercompany loansand investments
    
    $
    146,074
    
    
    $
    568
    
    
    $
    4,469
    
    
    $
    (317
    )
    
    $
    150,794
 12. Subsequent Events
    21




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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
 ®
   ®
   22




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##### Table of Contents



Our Clinical Development Programs
  Amitiza (lubiprostone) in the United States and Canada.
  
    
    The first study met the primary endpoint of a statistically significant change from
baseline in the frequency of spontaneous bowel movements, or SBMs, at week 8 of treatment
when lubiprostone was compared to placebo. Additionally, statistical significance was
achieved for eight of the twelve secondary endpoints, including key symptoms associated
with OBD. The second study 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 second trial. 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 first trial and from 1.60 to 4.10 SBMs in the second trial.
The increase for placebo over their baseline was from 1.46 to 3.81 SBMs for the first trial
and 1.60 to 3.95 SBMs for the second trial.
    
    There was a high rate of response in the placebo arm of the second trial. Approximately
58% of subjects treated with placebo in the second 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
both 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.
  23




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##### Table of Contents



Amitiza (lubiprostone) in other countries.
  Rescula.
 Cobiprostone.
     24




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##### Table of Contents



SPI-017.
 Results of Operations
 Comparison of three months ended September 30, 2009 and September 30, 2008
 Revenues
  Three Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Research and development revenue
    
    $
    7,045
    
    
    $
    5,436Product royalty revenue
    
    
    9,367
    
    
    
    7,718Co-promotion revenue
    
    
    1,266
    
    
    
    1,185Contract and collaboration revenue
    
    
    153
    
    
    
    142Total
    
    $
    17,831
    
    
    $
    14,481
      25




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##### Table of Contents



Research and Development Expenses
  Three Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Direct costs:Amitiza
    
    $
    5,721
    
    
    $
    8,166Cobiprostone
    
    
    568
    
    
    
    1,180SPI-017
    
    
    309
    
    
    
    616Rescula
    
    
    90
    
    
    
    Other
    
    
    184
    
    
    
    749Total
    
    $
    6,872
    
    
    $
    10,711Indirect costs
    
    
    511
    
    
    
    679Total
    
    $
    7,383
    
    
    $
    11,390
  General and Administrative Expenses
  Three Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Salaries, benefits and related costs
    
    $
    963
    
    
    $
    1,156Legal, consulting and other professional
expenses
    
    
    2,009
    
    
    
    852Other expenses
    
    
    1,345
    
    
    
    1,855Total
    
    $
    4,317
    
    
    $
    3,863
  Selling and Marketing Expenses
   26




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##### Table of Contents



Product Royalties  Related Parties
  Non-Operating Income and Expense
  Three Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Interest income
    
    $
    211
    
    
    $
    655Other expense, net
    
    
    (250
    )
    
    
    (15
    )Total
    
    $
    (39
    )
    
    $
    640
  Income Taxes
  Comparison of nine months ended September 30, 2009 and September 30, 2008
 Revenues
  Nine Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Research and development revenue
    
    $
    19,966
    
    
    $
    66,982Product royalty revenue
    
    
    27,227
    
    
    
    24,699Co-promotion revenue
    
    
    3,406
    
    
    
    3,643Contract and collaboration revenue
    
    
    451
    
    
    
    425Total
    
    $
    51,050
    
    
    $
    95,749
   27




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##### Table of Contents



Research and Development Expenses
  Nine Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Direct costs:Amitiza
    
    $
    20,071
    
    
    $
    27,192Cobiprostone
    
    
    2,145
    
    
    
    3,450SPI-017
    
    
    2,625
    
    
    
    2,232Rescula
    
    
    148
    
    
    
    Other
    
    
    438
    
    
    
    1,048Total
    
    $
    25,427
    
    
    $
    33,922Indirect costs
    
    
    1,542
    
    
    
    1,615Total
    
    $
    26,969
    
    
    $
    35,537
  General and Administrative Expenses
  Nine Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Salaries, benefits and related costs
    
    $
    2,873
    
    
    $
    3,277Legal, consulting and other professional
expenses
    
    
    3,998
    
    
    
    2,101Other expenses
    
    
    3,825
    
    
    
    5,213Total
    
    $
    10,696
    
    
    $
    10,591
  28




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##### Table of Contents



Selling and Marketing Expenses
  Milestone Royalties  Related Parties
  Product Royalties  Related Parties
  Non-Operating Income and Expense
  Nine Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Interest income
    
    $
    742
    
    
    $
    1,862Other expense, net
    
    
    (36
    )
    
    
    (16
    )Total
    
    $
    706
    
    
    $
    1,846
  Income Taxes
   29




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##### Table of Contents



Cost Reduction Initiatives
  Reportable Geographic Segments
     Intercompany(In thousands)
    
    Americas
    
    
    Europe
    
    
    Asia
    
    
    Eliminations
    
    
    ConsolidatedThree Months Ended September 30,
2009Total revenues
    
    $
    14,336
    
    
    $
    
    
    
    $
    3,765
    
    
    $
    (270
    )
    
    $
    17,831Income (loss) before taxes
    
    
    3,553
    
    
    
    (1,513
    )
    
    
    (659
    )
    
    
    
    
    
    
    1,381Three Months Ended September 30,
2008Total revenues
    
    $
    14,481
    
    
    $
    
    
    
    $
    213
    
    
    $
    (213
    )
    
    $
    14,481Income (loss) before taxes
    
    
    (2,775
    )
    
    
    (487
    )
    
    
    (909
    )
    
    
    
    
    
    
    (4,171
    )Nine Months Ended September 30, 2009Total revenues
    
    $
    43,596
    
    
    $
    
    
    
    $
    8,144
    
    
    $
    (690
    )
    
    $
    51,050Income (loss) before taxes
    
    
    6,954
    
    
    
    (2,848
    )
    
    
    (3,474
    )
    
    
    
    
    
    
    632Nine Months Ended September 30, 2008Total revenues
    
    $
    95,749
    
    
    $
    
    
    
    $
    630
    
    
    $
    (630
    )
    
    $
    95,749Income (loss) before taxes
    
    
    41,992
    
    
    
    (2,916
    )
    
    
    (3,929
    )
    
    
    
    
    
    
    35,147Identifiable AssetsAs of September 30, 2009
    
    $
    134,692
    
    
    $
    1,281
    
    
    $
    14,836
    
    
    $
    (1,072
    )
    
    $
    149,737As of December 31, 2008
    
    $
    146,074
    
    
    $
    568
    
    
    $
    4,469
    
    
    $
    (317
    )
    
    $
    150,794
  30




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##### Table of Contents



Liquidity and Capital Resources
 Sources of Liquidity
   September 30,
    
    
    December 31,(In thousands)
    
    2009
    
    
    2008Cash and cash equivalents
    
    $
    31,751
    
    
    $
    11,536Investments, current
    
    
    53,038
    
    
    
    93,776Investments, non-current
    
    
    38,853
    
    
    
    16,222Total
    
    $
    123,642
    
    
    $
    121,534
   Cash Flows
  Nine Months Ended September 30,(In thousands)
    
    2009
    
    
    2008Cash provided by (used in):Operating activities
    
    $
    2,965
    
    
    $
    38,611Investing activities
    
    
    16,347
    
    
    
    (51,801
    )Financing activities
    
    
    14
    
    
    
    1,025Effect of exchange rates
    
    
    889
    
    
    
    (30
    )Net increase (decrease) in cash
and cash equivalents
    
    $
    20,215
    
    
    $
    (12,195
    )
 Nine Months Ended September 30, 2009
     31




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##### Table of Contents



Nine Months Ended September 30, 2008
    Off-Balance Sheet Arrangements
  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 lubiprostone;
    
    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 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 and Rescula;
    
    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
   32




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##### Table of Contents



Recent Accounting Pronouncements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Foreign Exchange Risk
  Interest Rate Risk
   Credit Risk
    33




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 a) Evaluation of Disclosure Controls and Procedures
  b) Changes in Internal Controls
   34




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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
   35




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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
    *
    
    Form of Nonstatutory Stock
Option Agreement for
Non-Employee Directors
    
    Included herewith31.1
    
    
    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.  36




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##### Table of Contents



SIGNATURES
  Sucampo Pharmaceuticals, Inc.November 6, 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)November 6, 2009
    By:
    /s/  JAN SMILEKJan SmilekChief Financial Officer
(Principal Financial and Accounting Officer)  37




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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
    *
    
    Form of Nonstatutory Stock
Option Agreement for
Non-Employee Directors
    
    Included herewith31.1
    
    
    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.  38