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Santarus, Inc. (SNTS)

Bank of America/Merrill Lynch Health Care Conference Call

May 16, 2013 2:20 PM ET


Gerald Proehl - Director, President and Chief Executive Officer


Greg Fraser - Bank of America/Merrill Lynch


Greg Fraser - Bank of America/Merrill Lynch

Good morning, everyone. Welcome to the tail end of the third day of our conference. Thanks everyone for sticking around this long. My name is Greg Fraser. I help cover specialty pharmaceutical at the BofA/Merrill Lynch on are Greg Gilbert's team.

It's my pleasure to introduce our next presenting company, Santarus. And presenting for Santarus is President and CEO, Jerry Proehl. And without further a due, I'll turn it over to Jerry.

Gerald Proehl

Thanks, Greg. I appreciate everybody coming to the presentation. The money you're saving not been at the tables, you can invest in Santarus. I will be making some forward-looking statements, so I will refer you to our SEC fillings.

Santarus is a biospecialty pharmaceutical company. We call ourselves biospecialty pharmaceutical, because we have a combination for small molecule and biologic products. I'll talk a little bit more about that.

We currently have five products that are on the market and three that are in development. Two are late-stage products. One is, BLA is already filed. The other one we've completed one Phase III study. And then we have an earlier stage biologic product that's ready to move into Phase II.

Here, recently in January, we did get approval for Uceris for a treatment of ulcerative colitis. And last year in September, we actually won an appellate court decision with Zegerid, our first product we launched. That product is now selling both on authorized generic and brand product, and the generic company Par has stopped shipping their product. And I'll talk a little bit more about all of those.

And then the last thing, with regards to one of our other product, Cycloset, which is for Type 2 diabetes, we did get a new patent issued that actually gives us 20 years from the time we filed, which was 2012, so it goes until 2032. It gives us a lot more opportunities to do some other things with Cycloset.

Last year, we had revenues of $218 million, nice growth over the previous year and we expect to continue to see that growth. In the end of our first quarter call, we provided guidance from $330 million to $340 million in revenues. So we expect to see continue growth both on the topline and the bottomline.

This is our portfolio, you can see on the left are the marketed products. We've estimated peak sales for our five products between $650 million and $750 million. We do think there is a significant growth potential, particularly with Uceris and Glumetza, big markets and big opportunity to see continued growth.

With our late-stage products both Ruconest and Rifamycin, we've estimated peak sales of about $200 million. With one caveat on Ruconest that's really for acute treatment of hereditary angioedema. We do plan on looking at two other indications. We're going to look at prophylactic treatment of HAE, which we think could provide much bigger upside potential.

And we also plan on looking at Ruconest in acute pancreatitis, which has no approved product is a big disease area. And if we can demonstrate efficacy there, we think it has really huge upside potential. And then our early-stage program is anti-VLA-1 antibody program that was licensed out of Biogen, we call it SAN-300.

We completed the Phase I program both within IV and a subcu dosage formulation. And we plan on taking the subcu dosage formulation into a Phase IIa study in RA. We also plan on doing some additional work both in preclinical talks and the next year in inflammatory bowel disease.

If you think about the company and strategically what we're trying to do, and we began this a number of years ago. When we launched Zegerid, while it's a GI product and it is prescribed by gastroenterologist, it's also prescribed by most primary care doctors. And so we found ourselves with 300 reps competing against companies like AstraZeneca, J&J, Wyeth that had 2,000 or 3,000 reps, and it's very difficult to be really competitive in that type of market.

So strategically what we said is, as we look to bring in additional product, we're really going to look to bring in products that are much more targeted to a specialty audience. And try to slowly evolve out of a primary care company to more of a specialty company. And that's what we've tried to do, with when we brought in Uceris and Rifamycin, really specifically focused on the gastroenterologist.

We brought in Ruconest, initially focused on a subset of allergist, about a 1,000 allergists and even with the acute pancreatitis, the primary treatment for that disease are the gastroenterologist. And then with SAN-300, it will be specifically rheumatologist and then also the gastroenterologist, so really trying to focus our efforts.

By doing that, what we think we can do is, over a period of years, you're going to see our SG&A as a percentage of revenue continue to go down. That allows us then to fund R&D and continue to develop our pipeline, but at the same time drive overall profitability. And that's strategically what we're trying to do.

We want to grow our topline. We want to continue to grow bottomline. But also we want to develop our pipeline, so we have nice long growth. The growth strategies we have are, number one, maximize our current portfolio, and I mentioned we have lots of different indications. I'll talk about each of those in a little bit.

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