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Santarus (SNTS)

UBS Global Life Sciences Conference

September 19, 2012 4:00 p.m. ET


Gerald Proehl - President and CEO


Gerald Proehl - President and CEO

Good afternoon. Thanks for staying for the end of the day. Before I make any forward looking statements, I’ll just refer you to our SEC filings.

I’ll give you just a quick overview of Santarus. Number one, we are a specialty pharmaceutical company and we are profitable. We have four current products on the market, three of which we’re actively marketing, Glumetza, Cycloset, and Fenoglide, and Zegerid, which we don’t currently actively market.

We also have a nice development portfolio of four products that three of them are in late stage development: Uceris, which is currently at the FDA being reviewed; Rifamycin SV MMX, which we announced positive Phase III results in the first Phase III study within the last couple of weeks; and Ruconest, a recombinant C1 inhibitor. We expect to announce results from the Phase III study in the end of October or first half of November. And then we have an early stage antibody program. It’s an anti-VLA-1 antibody we call SAN-300, which is in Phase I. We expect to complete Phase I this year and then have results first half of next year.

This will give you a quick overview of the size of the opportunities. We think with Glumetza, Cycloset, and Fenoglide we’re looking at about $300-400 million peak sales. With regard to Zegerid, I’ll talk a little bit more about that. We just won an appeal on Zegerid, and so we don’t include that in that. Certainly we expect to see a nice increase in our sales from Zegerid over the next four years. On the development products, somewhere around $500 million in total sales, and I would say Uceris makes up at least $300 million of that.

We currently have 150 sales representatives. They’re calling on endocrinologists, about 2,500 endocrinologists, and about another 7,000-8,000 primary care physicians. These are physicians that are high prescribers of Type II diabetes products, and we promote Glumetza, Cycloset, and Fenoglide to those physicians.

With the approval of Uceris, we would look to add about 85 sales representatives. Our current plan is over the next three months to go through an interview process, identify those 85 reps, and provide them with contingent offers, and then based on approval of Uceris, we would go ahead and move forward with hiring those reps. Likely, then, bring them into a training and launch meeting in February and plan on launching the product late February early March.

With Ruconest, we’d need to call on a different target audience. We’d need to call on allergists and immunologists, and it’s going to require about 25 sales representatives. It’s a very specialized orphan drug type of indication. And then certainly down the road with SAN-300, we would look to add about 30 reps to call on rheumatologists.

The way to think about our company is really we’re continuing to look to leverage our sales organization. So in the case of our current sales reps, we initially had Glumetza, we added Cycloset, we added Fenoglide, and we’re still actively looking to probably add one additional marketed metabolic product. And we’re actively looking for products that would fit into the reps’ bag. In the case of the GI sales force, we’ll be selling Uceris, Zegerid, Rifamycin, and we’re actively looking for additional GI products.

The way to think about, longer term, how we’ll manage the business is as we move into more specialized markets our SG&A as a percentage of revenue will continue to go down. Our R&D as a percentage of revenue we expect to stay fairly flat. And the reason that the R&D will stay fairly flat as a percentage of revenue is our current development products we think have opportunities not only in the current indications, but second and third indications. And I’ll talk a little bit more about that when I get into the products.

Some of you might be aware that we had a positive outcome on the appellate court. These things don’t happen that often. We certainly thought we should have won at the lower court. We didn’t win at the lower court, and Par launched their generic product in 2010. We had our oral arguments in May of 2011 and 16 months later the appellate court overturned the lower court’s decision on 11 of the claims that cover our capsule and powder for oral suspension.

Fairly soon afterward, Par stopped shipping their generic product. I’m sure, based on what they’ve said publicly, that they will appeal to either the three judge panel on the appellate court or they’ll appeal en banc, or to the entire appellate court. About 3% of the cases the appellate court will actually hear on appeal. It’s usually within a 30-day period that companies have to appeal that decision.

So we’ll wait and see what happens there. We think the probability that the appellate court will hear the appeal is low, but in some cases they do. There is an option for Par to also appeal to the Supreme Court. We don’t believe that this is the type of case that the Supreme Court would likely take up.

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