UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

SUCAMPO PHARMACEUTICALS, INC.

Delaware (State or other jurisdiction of incorporation or organization)		13-3929237 (I.R.S. employer identification no.)
4520 East-West Highway, Suite 300 Bethesda, MD 20814 (Address of principal executive offices, including zip code)		(301) 961-3400 (Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of August 6, 2008, there were 15,607,989 shares of the registrant’s class A common stock outstanding and 26,191,050 shares of the registrant’s class B common stock outstanding.

 

 

Sucampo Pharmaceuticals, Inc.

Form 10-Q Index

				Page
		Part I. FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements (unaudited)			1
		Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007			1
		Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2008 and 2007			2
		Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2008			3
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007			4
		Notes to Condensed Consolidated Financial Statements			5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			29
Item 4.		Controls and Procedures			29
		Part II. OTHER INFORMATION
Item 1.		Legal Proceedings			29
Item 1A.		Risk Factors			29
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 4.		Submission of Matters to a Vote of Security Holders			31
Item 6.		Exhibits			32
SIGNATURES					33
INDEX TO EXHIBITS					34

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

SUCAMPO PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)

		June 30,				December 31,
		2008				2007
ASSETS:
Current assets:
Cash and cash equivalents		$	26,483			$	25,559
Investments, current			87,615				51,552
Product royalties receivable			10,283				8,667
Unbilled accounts receivable			5,679				5,883
Accounts receivable			2,910				1,525
Prepaid and income taxes receivable			119				1,922
Deferred tax assets, net			1,394				88
Prepaid expenses and other current assets			1,811				2,222
Total current assets			136,294				97,418
Investments, non-current			20,932				9,400
Property and equipment, net			2,355				2,265
Deferred tax assets — noncurrent, net			4,713				551
Other assets			401				393
Total assets		$	164,695			$	110,027
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable		$	3,524			$	3,313
Accrued expenses			10,404				8,730
Deferred revenue — current			10,867				1,062
Income taxes payable			13,409				—
Total current liabilities			38,204				13,105
Deferred revenue, net of current portion			8,344				8,626
Other liabilities			1,774				1,768
Total liabilities			48,322				23,499
Commitments (Note 7)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized at June 30, 2008 and December 31, 2007; no shares issued and outstanding at June 30, 2008 and December 31, 2007			—				—
Class A common stock, $0.01 par value; 270,000,000 shares authorized at June 30, 2008 and December 31, 2007; 15,595,518 and 15,538,518 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively			156				155
Class B common stock, $0.01 par value; 75,000,000 shares authorized at June 30, 2008 and December 31, 2007; 26,191,050 shares issued and outstanding at June 30, 2008 and December 31, 2007			262				262
Additional paid-in capital			97,594				96,680
Accumulated other comprehensive loss			(1,844	)			(393	)
Retained earnings (accumulated deficit)			20,205				(10,176	)
Total stockholders’ equity			116,373				86,528
Total liabilities and stockholders’ equity		$	164,695			$	110,027

The accompanying notes are an integral part of these condensed consolidated financial statements.

SUCAMPO PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In thousands, except per share data)

		Three Months Ended June 30,								Six Months Ended June 30,
		2008				2007				2008				2007
Revenues:
Research and development revenue		$	55,436			$	38,087			$	61,546			$	47,453
Product royalty revenue			10,901				9,562				16,981				11,871
Co-promotion revenue			1,236				1,134				2,458				2,267
Contract and collaboration revenue			141				151				283				304
Total revenues			67,714				48,934				81,268				61,895
Operating expenses:
Research and development			12,931				8,082				24,147				14,690
General and administrative			3,561				13,017				6,728				15,170
Selling and marketing			2,870				3,776				5,718				7,026
Milestone royalties — related parties			2,500				1,500				3,531				1,500
Product royalties — related parties			1,951				1,700				3,032				2,111
Total operating expenses			23,813				28,075				43,156				40,497
Income from operations			43,901				20,859				38,112				21,398
Non-operating income (expense):
Interest income			565				471				1,207				795
Other (expense) income, net			(13	)			42				(1	)			36
Total non-operating income, net			552				513				1,206				831
Income before income taxes			44,453				21,372				39,318				22,229
Income tax provision			(14,577	)			(7,489	)			(8,937	)			(7,829	)
Net income		$	29,876			$	13,883			$	30,381			$	14,400
Net income per share:
Basic net income per share		$	0.72			$	0.40			$	0.73			$	0.41
Diluted net income per share		$	0.71			$	0.39			$	0.72			$	0.41
Weighted average common shares outstanding — basic			41,757				34,990				41,745				34,990
Weighted average common shares outstanding — diluted			42,038				35,505				42,026				35,505
Comprehensive income:
Net income		$	29,876			$	13,883			$	30,381			$	14,400
Other comprehensive (loss) income:
Unrealized loss on investments, net of tax effect			(616	)			—				(1,456	)			—
Foreign currency translation			(325	)			(101	)			5				(81	)
Comprehensive income		$	28,935			$	13,782			$	28,930			$	14,319

The accompanying notes are an integral part of these condensed consolidated financial statements.

SUCAMPO PHARMACEUTICALS, INC.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
(In thousands, except share data)

																						Accumulated				Retained
		Class A								Class B								Additional				Other				Earnings				Total
		Common Stock								Common Stock								Paid-In				Comprehensive				(Accumulated				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Loss				Deficit)				Equity
Balance at December 31, 2007			15,538,518			$	155				26,191,050			$	262			$	96,680			$	(393	)		$	(10,176	)		$	86,528
Stock issued upon exercise of stock options			57,000				1				—				—				403				—				—				404
Employee stock option expense, net of tax benefit			—				—				—				—				511				—				—				511
Foreign currency translation			—				—				—				—				—				5				—				5
Unrealized loss on investments, net of tax effect			—				—				—				—				—				(1,456	)			—				(1,456	)
Net income			—				—				—				—				—				—				30,381				30,381
Balance at June 30, 2008			15,595,518			$	156				26,191,050			$	262			$	97,594			$	(1,844	)		$	20,205			$	116,373

The accompanying notes are an integral part of these condensed consolidated financial statements.

SUCAMPO PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

		Six Months Ended June 30,
		2008				2007
Cash flows from operating activities:
Net income		$	30,381			$	14,400
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			212				60
Deferred tax (benefit) provision			(4,543	)			4,367
Stock-based compensation			440				6,071
Accretion of discounts on investments			(122	)			—
Changes in operating assets and liabilities:
Accounts receivable			(1,336	)			(31,379	)
Unbilled accounts receivable			204				—
Product royalties receivable			(1,616	)			(7,532	)
Prepaid and income taxes receivable and payable, net			15,213				3,454
Accounts payable			53				659
Accrued expenses			1,732				4,321
Deferred revenue			9,521				(11,234	)
Other assets and liabilities, net			462				3,989
Net cash provided by (used in) operating activities			50,601				(12,824	)
Cash flows from investing activities:
Purchases of investments			(111,304	)			—
Proceeds from the sales of investments			38,950				24
Maturities of investments			22,500				—
Purchases of property and equipment			(302	)			(1,340	)
Excess tax benefits from share-based payments			71				—
Net cash used in investing activities			(50,085	)			(1,316	)
Cash flows from financing activities:
Proceeds from exercise of stock options			404				—
Payments of initial public offering costs			—				(632	)
Net cash provided by (used in) financing activities			404				(632	)
Effect of exchange rates on cash and cash equivalents			4				(69	)
Net increase (decrease) in cash and cash equivalents			924				(14,841	)
Cash and cash equivalents at beginning of period			25,559				22,481
Cash and cash equivalents at end of period		$	26,483			$	7,640

The accompanying notes are an integral part of these condensed consolidated financial statements.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Business Organization and Basis of Presentation

Description of the Business

     Sucampo Pharmaceuticals, Inc. (Sucampo or the Company) is a specialty biopharmaceutical company focused on the discovery, development and commercialization of proprietary drugs based on prostones, a class of compounds derived from functional fatty acids that occur naturally in the human body. Sucampo is focused on developing prostones for the treatment of gastrointestinal, respiratory, vascular and central nervous system diseases and disorders.

     The Company is party to a collaboration and license agreement with Takeda Pharmaceutical Company Limited (Takeda) to jointly develop and commercialize AMITIZA^® (lubiprostone) for chronic idiopathic constipation, irritable bowel syndrome with constipation, opioid-induced bowel dysfunction and other gastrointestinal indications in the United States and Canada. In January 2006, the Company received marketing approval from the U.S. Food and Drug Administration (FDA) for AMITIZA’s first indication to treat chronic idiopathic constipation in adults. Commercialization of AMITIZA began in April 2006 throughout the United States. On April 29, 2008, the Company received marketing approval from the FDA for AMITIZA to treat irritable bowel syndrome with constipation in women 18 years of age or older. Commercialization for this indication began in May 2008 throughout the United States. The Company is currently conducting Phase III pivotal clinical trials of AMITIZA for the treatment of opioid-induced bowel dysfunction.

     The Company’s founders own directly or indirectly the majority holdings in multiple companies. One of the Company’s founders serves as the Chairman of the Board of Directors, Chief Executive Officer and Chief Scientific Officer of the Company.

     The Company’s international operations are conducted through its subsidiaries in the United Kingdom and Japan.

Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements as of and for the year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K. The financial information as of June 30, 2008 and for the three and six months ended June 30, 2008 and 2007 is unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments or accruals, considered necessary for a fair statement of the results of these interim periods have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year.

     The condensed consolidated financial statements include the accounts of Sucampo and its wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated in the consolidated accounts.

2. Summary of Significant Accounting Policies

Current and Non-Current Investments

     Current and non-current investments consist primarily of U.S. Treasury bills and notes and auction rate securities. The Company’s investments in these securities are classified as available-for-sale securities under Statement of Financial Accounting Standards (SFAS) No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (SFAS 115). Although the auction rate securities have variable interest rates which typically reset every seven to 49 days through a competitive bidding process known as a “Dutch auction”, they have long-term contractual maturities usually exceeding ten years, and therefore are not classified as cash equivalents. These investments have historically been classified within current assets because the holder of the auction rate security has had the ability to liquidate these securities if needed within a short time frame, usually at the next auction. However, as a result of liquidity issues related to the auction rate security market during 2008, the Company has classified $20.9 million of its auction rate securities as non-current as of June 30, 2008. The Company classified $3.9 million of its auction rate securities as current investments as of June 30, 2008 due to its redemption at par value on July 2, 2008.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

     The available-for-sale securities are accounted for at fair market value and unrealized gains and losses on these securities, if any, are included in accumulated other comprehensive loss in stockholders’ equity. The fair value of the securities is measured in accordance with SFAS No. 157, “Fair Value Measurements” (SFAS 157), which was adopted by the Company on January 1, 2008. SFAS 157 addresses how companies should measure fair value when they are required to use a fair value measure for recognition and disclosure purposes under generally accepted accounting principles. The Company assesses the recoverability of its available-for-sale securities and, if impairment is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value. Other-than-temporary impairments are included in the condensed consolidated statement of operations and comprehensive income. Any future fluctuation in fair value related to these instruments that the Company deems to be temporary, including any recoveries of previous write-downs, would be recorded to other comprehensive income.

     Interest and dividend income is recorded when earned and included in interest income. Premiums and discounts on investments, if any, are amortized or accreted to maturity and included in interest income. The Company uses the specific identification method in computing realized gains and losses on sale of its securities. During the three and six months ended June 30, 2008 and 2007, there were no gains or losses realized on the sale of investments.

     The adoption of SFAS 157 did not materially affect the Company’s financial condition, results of operations, or cash flow. The Company is now required to provide additional disclosures as part of its financial statements. SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. See additional disclosures related to the determination of the fair value of the Company’s investments in Note 4.

     The Company also adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115” (SFAS 159), which permits entities to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis, on January 1, 2008. The adoption of SFAS 159 did not materially affect the Company’s financial condition, results of operations, or cash flows.

Certain Risks, Concentrations and Uncertainties

     Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments and receivables. The Company places its cash and cash equivalents, restricted cash and investments with highly rated financial institutions. At June 30, 2008 and December 31, 2007, the Company had approximately $133.0 million and $85.9 million, respectively, of cash and cash equivalents, restricted cash and investments in excess of government insured limits. The Company has not experienced any losses on these accounts related to amounts in excess of insured limits.

     As of June 30, 2008, all of the Company’s auction rate securities consisted of AAA rated non-mortgage related auction rate securities which are insured against loss of principal and interest by bond insurers. During the three and six months ended June 30, 2008, the Company reduced its investment in auction rate securities by either redeeming or selling $625,000 and $33.9 million, respectively, of investments at par value, net of purchases. At June 30, 2008, the Company continues to hold $24.8 million of investments in auction rate securities at fair value. As a result of the disruptions and failures in the auction rate securities market, the Company recorded an unrealized loss of $844,000, or $453,000 net of tax effect, for the three months ended June 30, 2008, and $2.2 million, or $1.3 million net of tax effect, for the six months ended June 30, 2008, related to its investment in auction rate securities. This unrealized loss was recorded as other comprehensive loss during the three and six months ended June 30, 2008. Although recent actions initiated primarily by the issuers of the auction rate securities led to redemptions and successful auctions of certain securities, it remains uncertain as to when the liquidity issues relating to these investments will be fully resolved. Therefore, the Company classified all of its investments in auction rate securities as non-current investments as of June 30, 2008, with the exception of the $3.9 million investment that was redeemed at par value in July 2008. The Company does not anticipate having to sell the remaining securities in order to operate its business. If this changes, however, the Company may be unable to liquidate some holdings of the auction rate securities and, as a result, may suffer losses from these investments. Although a very limited secondary market exists for these securities, the Company does not currently intend to use the secondary market to dispose of the auction rate securities. In addition, given the complexity of auction rate securities and their valuations, the Company’s estimates of their fair value may differ from the actual amount that the Company would be able to collect in an ultimate sale.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

     The Company’s product, AMITIZA, and other candidates under development require approval from the FDA or other international regulatory agencies prior to commercial sales. For those product candidates that have not yet been approved by the FDA, or international regulatory agencies, there can be no assurance the products will receive the necessary approval. If the Company is denied approval or approval is delayed, it may have a material adverse impact on the Company.

     The Company’s product, AMITIZA, competes in a rapidly changing, highly competitive market, which is characterized by advances in scientific discovery, changes in customer requirements, evolving regulatory requirements and developing industry standards. Any failure by the Company to anticipate or to respond adequately to scientific developments in its industry, changes in customer requirements or changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of products or services could have a material adverse effect on the Company’s business, operating results and future cash flows.

     The Company’s expected activities will necessitate significant uses of working capital throughout 2008 and beyond. The Company’s working capital requirements will depend on many factors, including the successful sales of AMITIZA, research and development efforts to develop new products, payments received under contractual agreements with other parties, the status of competitive products and market acceptance of the Company’s new products by physicians and patients. The Company plans to continue financing operations in part with cash received from its initial public offering, from milestones and other revenue related to its joint collaboration and license agreement and the supplemental agreement entered into with Takeda (see Note 9), as well as continued product royalties.

     The Company depends significantly upon the collaboration with Takeda and the Company’s activities may be affected if this relationship is disrupted. Revenues from Takeda accounted for more than 99% of the Company’s total revenues for the three months ended June 30, 2008 and 2007 and the six months ended June 30, 2008 and 2007. Accounts receivable, unbilled accounts receivable and product royalties receivable from Takeda accounted for 91% and 99% of the Company’s accounts receivable, unbilled accounts receivable and product royalties receivable at June 30, 2008 and December 31, 2007, respectively (see Note 9).

     The Company has an exclusive supply arrangement with R-Tech Ueno, Ltd (R-Tech), an affiliate, to provide it with commercial and clinical supplies of its product and product candidates. Any difficulties or delays in performing the services under this exclusive supply arrangement may cause the Company to lose revenues, delay research and development activities or otherwise disrupt the Company’s operations (see Note 8).

     The Company has previously entered into a restated license agreement with Sucampo AG (SAG) to grant the Company a royalty-bearing, exclusive, worldwide license to develop prostone compounds, including AMITIZA and cobiprostone. SAG is a Swiss-patent holding company and an affiliate. The Company’s success depends, in part, on SAG’s ability to obtain and maintain proprietary protection for the intellectual property rights relating to the prostone technology and products (see Note 8).

Deferred Revenue

     Consistent with the Company’s policy on revenue recognition, deferred revenue represents payments received or receivables for licensing fees, option fees, consulting, research and development contracts and related cost sharing and supply agreements that are reflected as deferred revenue until revenue can be recognized under the Company’s revenue recognition policy. Deferred revenue is classified as current if management believes the Company will be able to recognize the deferred amount as revenue within 12 months of the balance sheet date. During the three months ended June 30, 2008, the Company agreed to receive quarterly prepayments from Takeda for its research and development expenses under the agreements with Takeda. As of June 30, 2008, approximately $8.1 million of deferred revenue relates to these prepayments (see Note 6).

Cumulative Out-of-Period Adjustment

     The Company recorded a cumulative adjustment of approximately $871,000 and $148,000 during the three and six months ended June 30, 2008, respectively, to recognize additional research and development expenses that had not been recorded in prior periods. The error resulted from incorrect accounting for investigator services for the Phase 2b study of lubiprostone for adult chronic idiopathic constipation initiated in Japan in the fourth quarter of 2007. The effect of this adjustment on the consolidated financial statements was not material for the year ended December 31, 2007, for the three months ended March 31, 2008 or for the period in which it was recorded, as the adjustment consisted of insignificant amounts related to each of these periods.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Reclassifications

     Certain amounts in the previously issued financial statements have been reclassified to conform with the current presentation. The Company reclassified expenses that have been previously included within general and administrative expenses to research and development expenses. Such expenses primarily include salaries and other employee benefits of personnel who oversee the research and development process, and allocated depreciation and rent expenses and insurance costs. The Company also reclassified allocated depreciation and rent expenses and insurance costs from general and administrative expenses to selling and marketing expenses. During the three months ended June 30, 2007, the Company reclassified $734,000 and $51,000 of general and administrative expenses to research and development expenses and selling and marketing expenses, respectively. During the six months ended June 30, 2007, the Company reclassified approximately $1.4 million and $69,000 of general and administrative expenses to research and development expenses and selling and marketing expenses, respectively.

Change in Estimate

     In June 2006, a joint committee comprised of representatives of the Company and Takeda (the Joint Commercialization Committee) granted approval for the Company and Takeda to begin three studies related to funding arrangements discussed in the collaboration and license agreement and its supplement. The Company accounts for these three required deliverables as a single unit of accounting for revenue recognition purposes. Effective April 1, 2008, as a result of lower-than-expected patient enrollment in one of the studies, the Joint Commercialization Committee approved an increase in funding for patient recruitment. Additionally, the Company concluded that the estimated completion of these trials would be extended from June 2009 to December 2009. As such, the Company determined that the recognition period for associated research and development revenue should be extended. The related research and development revenue is limited to the lesser of the actual cumulative reimbursable costs incurred or the cumulative straight-line amount of revenue recognized over the estimated performance period. As a result of the extended completion date and an increase of total expected reimbursable costs, the Company deferred approximately $1.7 million in research and development revenue as of June 30, 2008. Under the provision of SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3” (SFAS 154), the Company will recognize this as a change in estimate on a prospective basis from April 1, 2008. This change in estimate has the following impact on net income and basic and diluted net income per share for the three and six months ended June 30, 2008:

(In thousands, except per share data)
Decrease in revenue and income before income taxes		$	(1,693	)
Impact on basic net income per share			(0.04	)
Impact on diluted net income per share			(0.04	)

Recent Accounting Pronouncements

     In June 2007, the Emerging Issues Task Force (EITF) issued EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities” (EITF 07-3), which provides guidance to research and development companies on how to account for the nonrefundable portion of an advance payment made for research and development activities. The Company adopted EITF 07-3 as of January 1, 2008 and there was no material impact upon its adoption.

     In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 (revised 2007), “Business Combinations” (SFAS 141R) and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51” (SFAS 160). SFAS 141R will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 141R and SFAS 160 will be applied to acquisitions that close in years beginning after December 15, 2008. Early adoption is not permitted. SFAS 141R and SFAS 160 will not have any impact on the Company’s future consolidated financial statements unless it undertakes an acquisition in the future.

     In December 2007, the FASB ratified EITF Issue No. 07-1, “Accounting for Collaborative Arrangements” (EITF 07-1). The consensus prohibits the equity method of accounting for collaborative arrangements under Accounting Principles Board No. 18, “The Equity Method of Accounting for Investments in Common Stock”, unless a legal entity exists. Payments between the collaborative partners will be evaluated and reported in the income statement based on applicable GAAP. Absent specific GAAP, the participants to

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

the arrangement will apply other existing GAAP by analogy or apply a reasonable and rational accounting policy consistently. The guidance in EITF 07-1 is effective for periods that begin after December 15, 2008 and will apply to arrangements in existence as of the effective date. The effect of the new consensus will be accounted for as a change in accounting principle through retrospective application. The Company is assessing EITF 07-1 and its impact on the consolidated financial statements upon adoption.

     In February 2008, the FASB agreed to delay the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, to fiscal years beginning after November 15, 2008. The Company adopted SFAS 157 with respect to its financial assets and liabilities as of January 1, 2008 and does not expect that the adoption of SFAS 157 for its nonfinancial assets and liabilities will have a significant impact on its financial position or results from operations.

     In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. The GAAP hierarchy previously resided in the American Institute of Certified Public Accountants’ statements on auditing standards, which are directed to the auditor rather than the reporting entity. SFAS 162 moves the GAAP hierarchy to the accounting literature, thereby directing it to reporting entities since it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the Securities and Exchange Commission’s (SEC) approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” SFAS 162 will not have any impact on the Company’s consolidated financial statements.

3. Earnings per Share

     Basic net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted average class A and B common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted average common shares and potential dilutive common shares outstanding. Diluted net loss per share, when applicable, is computed by dividing net loss by the weighted average common shares outstanding without the impact of potential dilutive common shares outstanding because they would have an anti-dilutive impact on diluted net loss per share.

     The computation of net income per share for the three and six months ended June 30, 2008 and 2007 is shown below:

		Three Months Ended June 30,								Six Months Ended June 30,
(In thousands, except per share data)		2008				2007				2008				2007
Basic net income per share:
Net income		$	29,876			$	13,883			$	30,381			$	14,400
Weighted average class A and B common shares outstanding			41,757				34,990				41,745				34,990
Basic net income per share		$	0.72			$	0.40			$	0.73			$	0.41
Diluted net income per share:
Net income		$	29,876			$	13,883			$	30,381			$	14,400
Weighted average class A and B common shares outstanding for diluted net income per share			41,757				34,990				41,745				34,990
Assumed exercise of stock options under the treasury stock method			281				515				281				515
			42,038				35,505				42,026				35,505
Diluted net income per share		$	0.71			$	0.39			$	0.72			$	0.41

     For the periods listed above, the potentially dilutive securities used in the calculations of diluted historical net income per share as of June 30, 2008 and 2007 are as follows:

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

		June 30,
(In thousands)		2008				2007
Employee stock options			583				641
Non-employee stock options			470				510

     For the periods listed above, the following securities were excluded from the computation of diluted net income per share as their effect would be anti-dilutive as of June 30, 2008 and 2007:

		June 30,
(In thousands)		2008				2007
Employee stock options			260				—

4. Current and Non-Current Investments

     At June 30, 2008 and December 31, 2007, current and non-current available-for-sale investments consisted of the following securities:

		June 30, 2008
						Unrealized				Unrealized
(In thousands)		Cost				Gains				Losses				Fair Value
Current:
U.S. Treasury bills and notes		$	83,826			$	3			$	(166	)		$	83,663
Auction rate securities			3,900				—				—				3,900
Money market funds			52				—				—				52
Total		$	87,778			$	3			$	(166	)		$	87,615
Non-current:
Auction rate securities		$	23,150			$	—			$	(2,218	)		$	20,932

		December 31, 2007
						Unrealized				Unrealized
(In thousands)		Cost				Gains				Losses				Fair Value
Current:
Auction rate securities		$	51,500			$	—			$	—			$	51,500
Money market funds			52				—				—				52
Total		$	51,552			$	—			$	—			$	51,552
Non-current:
Auction rate securities		$	9,400			$	—			$	—			$	9,400

     The Company’s assets measured at fair value on a recurring basis, which are subject to the disclosure requirements of SFAS 157, at June 30, 2008 were as follows:

		Fair Value Measurements at Reporting Date Using
		Quoted Prices in								Significant
		Active Markets for				Significant Other				Unobservable
		Identical Assets				Observable Inputs				Inputs				Total as of
(In thousands)		(Level 1)				(Level 2)				(Level 3)				June 30, 2008
U.S. Treasury bills and notes		$	83,663			$	—			$	—			$	83,663
Auction rate securities			—				3,900				20,932				24,832
Other available-for-sale securities			52				—				—				52
Total assets measured at fair value		$	83,715			$	3,900			$	20,932			$	108,547

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

     Based on market conditions, the Company changed its valuation methodology for auction rate securities to a valuation method that includes market and income approaches during the first quarter of 2008. Accordingly, these securities changed from Level 1 to Level 3 within SFAS 157’s valuation hierarchy since the Company’s initial adoption of SFAS 157 at January 1, 2008. The Level 2 securities consist of the auction rate security that was redeemed at par subsequent to June 30, 2008.

     The following table presents the Company’s assets measured at fair value on a recurring basis using significant observable inputs (Level 2) and significant unobservable inputs (Level 3) as defined in SFAS 157 during the six months ended June 30, 2008:

		Auction Rate
(In thousands)		Securities
Balance at January 1, 2008		$	9,400
Transfers to Level 2			3,900
Transfers to Level 3			51,500
Total gains (losses) (realized or unrealized):
Included in earnings			—
Included in other comprehensive loss			(2,218	)
Purchases			5,100
Settlements			(38,950	)
Balance at June 30, 2008		$	24,832

5. Accrued Expenses

     Accrued expenses consist of the following as of:

		June 30,				December 31,
(In thousands)		2008				2007
Research and development costs		$	5,266			$	4,422
Selling and marketing costs			245				384
Employee compensation			1,556				1,867
Legal service fees			179				226
Product royalty liability — related party			1,952				1,536
Other accrued expenses			1,206				295
		$	10,404			$	8,730

6. Deferred Revenue

     At June 30, 2008 and December 31, 2007, total deferred revenue was approximately $19.2 million and $9.7 million, respectively.

     Total deferred revenue consists of the following as of:

		June 30,				December 31,
(In thousands)		2008				2007
Deferred revenue — current		$	10,867			$	1,062
Deferred revenue, net of current portion			8,344				8,626
		$	19,211			$	9,688

     During the three months ended June 30, 2008, the Company began receiving quarterly prepayments for its research and development expenses under the agreement with Takeda. As of June 30, 2008, approximately $8.1 million of deferred revenue relates to these prepayments.

7. Commitments

Operating Leases

     The Company leases office space in the United States, United Kingdom and Japan under operating leases through 2017. Total future minimum, non-cancelable lease payments under operating leases are as follows as of June 30, 2008:

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(In thousands)
2008		$	759
2009			1,421
2010			969
2011			938
2012			963
2013 and thereafter			4,243
Total minimum lease payments		$	9,293

     Rent expense for all operating leases was $292,000 and $297,000 for the three months ended June 30, 2008 and 2007, respectively, and $577,000 and $464,000 for the six months ended June 30, 2008 and 2007, respectively.

Research and Development Costs

     The Company routinely enters into agreements with third-party clinical research organizations (CROs) to oversee clinical research and development studies provided on an outsourced basis. The Company is not generally contractually obligated to pay the CRO if the service or reports are not provided. Total future estimated costs under these agreements as of June 30, 2008 were approximately $18.4 million.

8. Related Party Transactions

R-Tech Ueno, Ltd.

     The Company is a party to multiple exclusive supply agreements with R-Tech, whereby R-Tech manufactures and supplies AMITIZA and other prostone compounds for Sucampo. During the three months ended June 30, 2008 and 2007, the Company purchased from R-Tech $127,000 and $402,000, respectively, and $525,000 and $1.6 million for the six months ended June 30, 2008 and 2007, respectively, of clinical supplies under the terms of these agreements.

     The following table summarizes the amounts included in deferred revenue resulting from the deferral of upfront payments relating to the exclusive supply agreements with R-Tech:

		June 30,				December 31,
(In thousands)		2008				2007
Deferred revenue — current		$	419			$	419
Deferred revenue, net of current portion			6,653				6,862
		$	7,072			$	7,281

     The Company recognized approximately $105,000 of deferred revenue relating to its agreements with R-Tech for the three months ended June 30, 2008 and 2007 and approximately $209,000 for the six months ended June 30, 2008 and 2007, which was recorded as contract and collaboration revenue in the condensed consolidated statements of operations and comprehensive income.

Sucampo AG License Agreements

     During the first quarter of 2008, the Company submitted a Marketing Authorization Application (MAA) for lubiprostone, 24 micrograms, for the indication of chronic idiopathic constipation in adults in nine European countries using the decentralized procedure. The submission of the MAA triggered the obligation on the part of the Company under the license agreement with SAG to make a $1.0 million payment to SAG. The Company recorded the expense as milestone royalties — related parties in the first quarter of 2008 and paid the milestone in the second quarter of 2008.

     The Company expensed approximately $1.9 million and $1.7 million in product royalties — related parties under the license agreement with SAG for the three months ended June 30, 2008 and 2007, respectively, and approximately $3.0 million and $2.1 million for the six months ended June 30, 2008 and 2007, respectively.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

9. Collaboration and License Agreements with Takeda

     On October 29, 2004, the Company entered into a 16-year collaboration and license agreement with Takeda (Takeda Agreement) to exclusively co-develop, commercialize and sell products that contain lubiprostone for gastroenterology indications in the United States and Canada. Payments to the Company under the Takeda Agreement include a non-refundable up-front payment, non-refundable development and commercial milestone payments, reimbursement of certain development and co-promotion costs and product royalties.

     On February 1, 2006, the Company entered into the supplemental agreement with Takeda, which amended the responsibilities of both the Company and Takeda for the co-promotion of AMITIZA and clarified the responsibilities and funding arrangements for other marketing services to be performed by both parties.

     Takeda made an up-front payment of $20.0 million in 2004 and, upon its receipt, the Company deferred approximately $2.4 million because the amount was associated with the Company’s obligation to participate in joint committees with Takeda. Approximately $1.8 million of the initial up-front payment remains deferred as of June 30, 2008, and is being recognized on a straight-line basis over the remaining life of the Takeda Agreement through 2020.

     The Company has also received a total of $80.0 million in development milestone payments through June 30, 2008 for this development work. In June 2007, the Company submitted the supplemental new drug application (sNDA) to the FDA for irritable bowel syndrome with constipation and received a $30.0 million milestone from Takeda that was recognized as revenue in the second quarter of 2007. The Company received a $50.0 million milestone from Takeda as a result of the FDA’s approval on April 29, 2008 of the sNDA for irritable bowel syndrome with constipation in women 18 years of age and older and recognized the payment as research and development revenue in the second quarter of 2008. Subject to future development and commercial milestones, the Company is potentially entitled to receive up to $10.0 million in additional development milestone payments and up to $50.0 million in commercial milestone payments, under the collaboration and license agreements with Takeda, although there can be no assurance that the Company will receive any such payments.

     The following table summarizes the cash streams and related collaboration and research and development revenue recognized under the collaboration and license agreements with Takeda for the six months ended June 30, 2008:

										Revenue				Change in
						Cash Received				Recognized				Accounts
						for the				for the				Receivable
		Amount				Six Months				Six Months				for the Six				Amount
		Deferred at				Ended				Ended				Months Ended				Deferred at
		December 31,				June 30,				June 30,				June 30,				June 30,
(In thousands)		2007				2008				2008				2008				2008
Collaboration revenue:
Up-front payment associated with the Company’s obligation to participate in joint committees with Takeda		$	1,911			$	—			$	74			$	—			$	1,837
Research and development revenue:
Development milestones		$	—			$	50,000			$	50,000			$	—			$	—
Reimbursement of research and development expenses			—				20,545				11,546				(881	)			8,118
Total		$	—			$	70,545			$	61,546			$	(881	)		$	8,118
Product royalty revenue		$	—			$	15,471			$	16,981			$	1,616			$	106

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

										Revenue
						Cash Received				Recognized
						for the				for the
		Accounts				Six Months				Six Months				Accounts				Amount
		Receivable at				Ended				Ended				Receivable at				Deferred at
		December 31,				June 30,				June 30,				June 30,				June 30,
(In thousands)		2007*				2008				2008				2008*				2008
Research and development revenue:
Development milestones		$	—			$	50,000			$	50,000			$	—			$	—
Reimbursement of research and development expenses		$	6,887			$	20,545			$	11,546			$	6,006			$	8,118
Product royalty revenue		$	8,667			$	15,471			$	16,981			$	10,283			$	106
Co-promotion revenue		$	360			$	2,442			$	2,458			$	376			$	—

     In connection with the Company’s MAA filing for lubiprostone in Europe, the Company agreed with Takeda to make a one-time payment of approximately $1.8 million, which will permit the Company to use in Europe, the Middle East and Africa certain data and information developed under the Takeda Agreement relating to the use of lubiprostone to treat chronic idiopathic constipation. The Company recognized this payment as a research and development expense in the first quarter of 2008.

10. Stock Option Plan

     The following table summarizes the employee stock option activity for the six months ended June 30, 2008 under the Company’s 2001 Incentive Plan:

										Weighted
						Weighted Average				Average Remaining				Aggregate
						Exercise Price				Contractual				Intrinsic
(In thousands, except share and per share data)		Shares				Per Share				Term (Years)				Value
Options outstanding, December 31, 2007			640,900			$	10.24
Options exercised			(17,000	)			10.00
Options forfeited			(34,850	)			10.00
Options expired			(21,250	)			10.00
Options outstanding, June 30, 2008			567,800				10.27				6.49			$	261
Options exercisable, June 30, 2008			552,925				10.28				6.45			$	251

     The following table summarizes the employee stock option activity for the six months ended June 30, 2008 under the Company’s 2006 Incentive Plan:

										Weighted
						Weighted Average				Average Remaining				Aggregate
						Exercise Price				Contractual				Intrinsic
(In thousands, except share and per share data)		Shares				Per Share				Term (Years)				Value
Options outstanding, December 31, 2007			267,500			$	14.44
Options granted			30,000				12.25
Options forfeited			(12,750	)			14.12
Options expired			(10,000	)			14.12
Options outstanding, June 30, 2008			274,750				14.09				8.47			$	—
Options exercisable, June 30, 2008			62,500				14.46				8.25			$	—

     The weighted average grant date fair value of options granted during the six months ended June 30, 2008 and the year ended December 31, 2007 were $6.15 and $7.19, respectively. As of June 30, 2008, approximately $1.4 million of total unrecognized compensation costs, net of estimated forfeitures, related to non-vested awards are expected to be recognized over a weighted average period of 2.47 years.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

     The following table summarizes the non-employee stock option activity for the six months ended June 30, 2008 under the Company’s 2001 Incentive Plan:

										Weighted
						Weighted Average				Average Remaining				Aggregate
						Exercise Price				Contractual				Intrinsic
(In thousands, except share and per share data)		Shares				Per Share				Term (Years)				Value
Options outstanding, December 31, 2007			510,000			$	5.85
Options exercised			(40,000	)			5.85
Options outstanding, June 30, 2008			470,000				5.85				6.83			$	2,294
Options exercisable, June 30, 2008			470,000				5.85				6.83			$	2,294

11. Income Taxes

     On January 1, 2007, the Company adopted FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. The adoption of FIN 48 as of January 1, 2007 did not impact the Company’s consolidated financial statements.

     For the three months ended June 30, 2008 and 2007, the Company’s consolidated effective tax rate was 32.8% and 35.0%, respectively. For the six months ended June 30, 2008 and 2007, the Company’s consolidated annualized effective tax rate was 22.7% and 35.2%, respectively. For the three months ended June 30, 2008 and 2007, the Company recorded a tax provision of $14.6 million and $7.5 million, respectively. For the six months ended June 30, 2008 and 2007, the Company recorded a tax provision of $8.9 million and $7.8 million, respectively. As a result of the FDA approval of the sNDA for irritable bowel syndrome with constipation and the related impact on projected income in 2008 and future years based on the $50.0 million milestone payment and expected product royalties, the Company believes that its U.S. deferred tax assets will likely be realized. Accordingly, the tax provision recorded during the six months ended June 30, 2008 reflects a discrete release of U.S. deferred tax asset valuation allowances of $4.8 million and a reduction in the projected 2008 effective tax rate applied to first and second quarter 2008 pre-tax income.

     As required under Accounting Principles Board Opinion No. 28, “Interim Financial Reporting”, the Company has estimated its annual effective tax rate for the full fiscal year 2008 and 2007 and applied that rate to its income before income taxes in determining its income tax provision for the interim periods.

12. Uncommitted Line of Credit

     On March 5, 2008, the Company entered into a line of credit providing for uncommitted borrowings of up to $30.0 million. The lender has no obligation to make advances under this line of credit but may do so in its sole discretion. The line of credit is collateralized by our current and non-current investments. Advances made under this line of credit will bear an interest rate based on LIBOR plus a predetermined percentage based on the amount of the advance and other conditions. Borrowings under this line of credit are due upon the demand of the lender and the lender can make a repayment demand at its sole option at any time for any or no reason. As of June 30, 2008, the Company had not drawn down any funds under this line of credit.

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

13. Segment Reporting

     The Company has determined that it has three reportable geographic segments based on the Company’s method of internal reporting, which disaggregates business by geographic location. These segments are the United States, Europe and Japan. The Company evaluates the performance of these segments based on income (loss) from operations, as well as other factors, including the progress of its research and development activities. The reportable segments have historically derived their revenue from joint collaboration and strategic alliance agreements. Transactions between the segments consist primarily of loans and the provision of research and development services by the European and Japanese entities to the United States entity. Following is a summary of financial information by reportable geographic segment.

														Intercompany
(In thousands)		United States				Europe				Japan				Eliminations				Consolidated
Three Months Ended June 30, 2008
Research and development revenue		$	55,436			$	—			$	—			$	—			$	55,436
Product royalty revenue			10,901				—				—				—				10,901
Co-promotion revenue			1,236				—				—				—				1,236
Contract and collaboration revenue			141				—				210				(210	)			141
Total revenues			67,714				—				210				(210	)			67,714
Depreciation and amortization			108				—				2				—				110
Other operating expenses			20,561				584				2,768				(210	)			23,703
Income (loss) from operations			47,045				(584	)			(2,560	)			—				43,901
Interest income			590				1				—				(26	)			565
Other non-operating expense, net			(6	)			(32	)			(1	)			26				(13	)
Income (loss) before income taxes		$	47,629			$	(615	)		$	(2,561	)		$	—			$	44,453
Capital expenditures		$	128			$	—			$	3			$	—			$	131
Three Months Ended June 30, 2007
Research and development revenue		$	38,087			$	—			$	—			$	—			$	38,087
Product royalty revenue			9,562				—				—				—				9,562
Co-promotion revenue			1,134				—				—				—				1,134
Contract and collaboration revenue			141				—				220				(210	)			151
Total revenues			48,924				—				220				(210	)			48,934
Depreciation and amortization			37				—				(1	)			—				36
Other operating expenses			27,409				144				696				(210	)			28,039
Income (loss) from operations			21,478				(144	)			(475	)			—				20,859
Interest income			471				—				—				—				471
Other non-operating income (expense), net			8				(5	)			39				—				42
Income (loss) before income taxes		$	21,957			$	(149	)		$	(436	)		$	—			$	21,372
Capital expenditures		$	1,244			$	—			$	—			$	—			$	1,244

SUCAMPO PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

														Intercompany
(In thousands)		United States				Europe				Japan				Eliminations				Consolidated
Six Months Ended June 30, 2008
Research and development revenue		$	61,546			$	—			$	—			$	—			$	61,546
Product royalty revenue			16,981				—				—				—				16,981
Co-promotion revenue			2,458				—				—				—				2,458
Contract and collaboration revenue			283				—				417				(417	)			283
Total revenues			81,268				—				417				(417	)			81,268
Depreciation and amortization			208				—				4				—				212
Other operating expenses			37,505				2,422				3,437				(420	)			42,944
Income (loss) from operations			43,555				(2,422	)			(3,024	)			3				38,112
Interest income			1,246				5				3				(47	)			1,207
Other non-operating (expense) income, net			(33	)			(13	)			1				44				(1	)
Income (loss) before income taxes		$	44,768			$	(2,430	)		$	(3,020	)		$	—			$	39,318
Capital expenditures		$	299			$	—			$	3			$	—			$	302
Six Months Ended June 30, 2007
Research and development revenue		$	47,453			$	—			$	—			$	—			$	47,453
Product royalty revenue			11,871				—				—				—				11,871
Co-promotion revenue			2,267				—				—				—				2,267
Contract and collaboration revenue			283				—				441				(420	)			304
Total revenues			61,874				—				441				(420	)			61,895
Depreciation and amortization			58				—				2				—				60
Other operating expenses			39,614				309				934				(420	)			40,437
Income (loss) from operations			22,202				(309	)			(495	)			—				21,398
Interest income			791				—				4				—				795
Other non-operating income (expense), net			5				(8	)			39				—				36
Income (loss) before income taxes		$	22,998			$	(317	)		$	(452	)		$	—			$	22,229
Capital expenditures		$	1,340			$	—			$	—			$	—			$	1,340
As of June 30, 2008
Property and equipment, net		$	2,268			$	—			$	87			$	—			$	2,355
Identifiable assets		$	173,195			$	471			$	3,070			$	(12,041	)		$	164,695
As of December 31, 2007
Property and equipment, net		$	2,182			$	—			$	83			$	—			$	2,265
Identifiable assets		$	114,490			$	2,381			$	1,987			$	(8,831	)		$	110,027