Santarus, Inc. (SNTS)
Q3 2012 Earnings Call
November 07, 2012, 04:30 pm ET
Martha Hough - VP Finance & Investor Relations
Gerry Proehl - President & CEO
Debbie Crawford - SVP & CFO
Bill Denby - SVP, Commercial Operations
Wendell Wierenga - EVP, Research and Development
David Amsellem - Piper Jaffray
Annabel Samimy - Stifel Nicolaus
Scott Henry - Roth Capital
Previous Statements by SNTS
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It is now my pleasure to hand the program over to Ms. Martha Hough. Please go ahead.
Thank you, Christie. Good afternoon, and welcome to today’s call. This is Martha Hough, Vice President of Finance and Investor Relations. Joining me on the call today are Gerry Proehl, President and Chief Executive Officer; Debbie Crawford, Senior Vice President and Chief Financial Officer; Bill Denby, Senior Vice President of Commercial Operations and Dr. Wendell Wierenga, Executive Vice President of Research and Development.
Earlier today, Santarus issued a press release announcing our third quarter 2012 financial results, which is available on our website at www.santarus.com. We will also make a replay of this call available for the next two weeks on the Investor Relations section of our website.
Please keep in mind that risks and uncertainties involved in the company’s business may affect the matters referred to in forward-looking statements made by management during today’s call. As a result, the company’s performance may differ from those expressed in or indicated by such forward-looking statements, which are qualified in their entirety by the cautionary statements contained in the press release and the company’s Securities and Exchange Commission filings.
The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast on November 7, 2012. Santarus undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.
In this call, when talking about our company's performance, we will also discuss adjusted EBITDA, a non-GAAP financial measure. You can find the reconciliation of adjusted EBITDA to GAAP net income in our press release issued this afternoon.
I’ll now turn the call over to Gerry Proehl.
Thank you, Martha, and welcome to this afternoon’s call. I am happy to share the progress Santarus has made towards improving profitability while building sustainable long-term growth. To that end, today we reported strong financial results for the third quarter with total revenues of approximately $55 million, more than double what we reported in the third quarter of 2011.
We also achieved significant expansion of our bottomline with net income of $9 million compared with approximately $600,000 in the prior year period. The revenue increase which was primarily driven by substantial growth in GLUMETZA net sales allowed us to leverage our commercial organization and deliver impressive bottomline results and cash flow in the quarter.
Our expectations of continued strong commercial performance have led us to raise our financial outlook for 2012. Today, we are increasing our topline guidance for total revenue in 2012 by $10 million, bringing our current estimates to approximately $210 million. We are also raising net income guidance to $12 million to $14 million, up from our prior estimate of $8 million to $11 million. Debbie Crawford will provide additional details about our 2012 financial outlook in her financial review.
In early September, we announced achievement of a major legal milestone with a favorable Appellate Court ruling in the ZEGERID patent litigation. The three judge panel of the Appellate Court overturn the Delaware District Court’s ruling of obviousness for certain claims for two patents covering ZEGERID capsules and powder for oral suspension prescription product. A few days later, Par Pharmaceutical announced that it ceased further shipments of it's generic ZEGERID capsule product. We are very pleased with the outcome of the Appellate Court ruling and we now expect to retain exclusivity for ZEGERID until the patent expire in mid-2016.
As expected, Par recently requested a re-hearing of the ZEGERID case by the three judge panel that overturned the lower court ruling as well as by the entire court in an [on-bonk] review. Although, we can’t be certain of the outcome, historical precedence indicates that a very small percentage of cases are accepted for re-hearing by the Appellate Court. We expect the court to decide on Par's request for re-hearing later this year or early next year. If the request for re-hearing is rejected, the Appellate Court will issue a mandate to send the case back to the Delaware District Court to assess damages which we anticipate, will be decided by a jury trial.
From a commercial perspective, we are continue to offer authorized generic ZEGERID capsule product through our distribution partner, Prasco. We believe it will take several months to work through the inventory of Par’s generic product in the wholesale and retail channel. We also anticipate higher revenues on the authorized generic as the market transitions to a single source authorized generic ZEGERID
capsule. We expect to see a positive impact on our ZEGERID revenues starting in the fourth quarter this year.
Turning to our pipeline, we have recently announced positive topline results for two of our late-stage development products. Earlier today, we announced positive topline Phase III results with RUCONEST in treating acute attacks of angioedema in patients with hereditary angioedema. Wendell Wierenga will provide additional information on the clinical study later in the call.