Santarus to Make Cash Milestone Payment - Analyst Blog


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Santarus Inc. ( SNTS ) was recently notified that Cosmo Technologies Limited, a subsidiary of Cosmo Pharmaceuticals S.p.A., agreed to receive a commercial milestone payment of $7.0 million in cash as per the collaboration agreement between Santarus and Cosmo. The milestone payment was related to the first commercial sale of Uceris in Feb 2013. Cosmo had the option to receive the payment either in cash or through the issuance of shares.

We note that previous milestone payments have been received by Cosmo through the issuance of shares. At the time of the commencement of the deal, Santarus made an upfront payment of $2.5 million in cash apart from issuing 6 million shares.

Santarus's collaboration agreement with Cosmo was signed in Dec 2008. As per the agreement, Santarus was given exclusive rights to develop and commercialize Uceris and rifamycin SV MMX in the US.

Santarus may have to pay up to $22.5 million for Uceris and $28 million for rifamycin SV MMX to Cosmo on the achievement of commercial milestones. Santarus is also liable to pay tiered loyalties of 12% (on annual net sales of each licensed product up to $120 million) and 14% (on annual net sales of each licensed product exceeding $120 million). Milestone payments will be made in cash or through additional share issuance as decided by Cosmo.

Santarus also has a commercial supply agreement with Cosmo for Uceris.

We note that in Jan 2013, Uceris received approval from the US Food and Drug Administration (FDA) for the induction of remission of active, mild to moderate ulcerative colitis. Uceris was launched in Feb 2013.

Santarus is focused on the commercialization of Uceris and is promoting the product to gastroenterologists, endocrinologists and other selected physicians.

Recently, results published in the journal Gut from the CORE II study showed that the 9 mg dose of Uceris had a statistically significant benefit over placebo in meeting the primary endpoint. The primary endpoint was the induction of combined clinical and endoscopic remission at week 8 in patients with active, mild to moderate ulcerative colitis.

However, we remind investors that companies like Salix Pharmaceuticals Ltd. ( SLXP ) and AstraZeneca ( AZN ) have a presence in the ulcerative colitis market.

Currently, Santarus carries a Zacks Rank #3 (Hold). Companies like UCB ( UCBJF ) look well-positioned with a Zacks Rank #1 (Strong Buy).

ASTRAZENECA PLC (AZN): Free Stock Analysis Report

SALIX PHARM-LTD (SLXP): Free Stock Analysis Report

SANTARUS INC (SNTS): Free Stock Analysis Report

UCB SA (UCBJF): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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