Santarus, Inc. (SNTS)
UBS Global Life Sciences Conference Call
September 20, 2011 15:00 ET
Gerry Proehl – President and Chief Executive Officer
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Gerry Proehl – President and Chief Executive Officer
Thanks and good afternoon. Before I proceed, I will be making some forward-looking statements. I refer you to our SEC filings.
Santarus is a specialty pharmaceutical company focused in a number of areas. If you look at our portfolio, I kind of think about it in three separate buckets, we have marketed products, Glumetza and Cycloset, which are both products for type 2 diabetes approved on the market. We think peak sales of these two products combined in the range of $300 million to $400 million.
We have two very late-stage products, budesonide MMX, which we have two completed Phase III studies and plan on submitting the NDA in December of this year for ulcerative colitis and Rhucin, which is a recombinant C1 inhibitor, which has completed two pivotal studies with positive results, and we are currently enrolling patients in the third pivotal study, expect to complete that above third quarter of next year, and then submit the BLA right after that.
A little bit behind Rhucin and budesonide are rifamycin SV MMX, which is a broad spectrum non-systemic antibiotic currently enrolling patients in a Phase III study for Travelers’ Diarrhea, about 60% enrolled and SAN-300, which is antibiotic program which is in Phase I currently.
This will give you overview of kind of where the overall portfolio stands. And the only product I’ll point out here that I won’t talk at more detail is Zegerid. So, Zegerid is immediate-release proton pump inhibitor. It was our dominant product until we lost the lower court patent decision in April of last year and a generic was launched against the product in July of 2010. We’re currently appealing the Zegerid’s lower court decision. The oral arguments took place in the first week in May of this year and we would expect to hear from the appeal court probably sometime in the next two to three months.
If you think about our commercial organization, currently, we are calling on endocrinologists and primary care physicians. The endocrinologists and primary care physicians are the primary prescribers for Glumetza and Cycloset. It’s about 3,000 endocrinologists and about 9,000 or 10,000 primary care physicians.
As we think about moving the program and moving the company forward, we plan on adding additional 80 reps to call on the gastroenterologists for budesonide. We’ll add about 20 to 25 reps that will sell Rhucin to the allergists and immunologists. And then finally, when we launch SAN-300 with what we expect to be the first indication for rheumatoid arthritis will call on rheumatologists with about a 30 sales rep sales force.
What we are trying to do with the company is really begin to evolve the company out of being what really was more of a primary care focused company to more of a specialty based company. As we moved towards calling on endocrinologists, gastroenterologists, allergists, and then rheumatologists, we think what we can do is increase their overall revenues per sales representative. We can overall maintain R&D as a percentage of revenue and thus drive down SG&A as a percentage of revenue and increase our profit and cash flow. And that’s what we are focused on doing over the next three to five years.
Let me talk a little bit about Glumetza. Glumetza is an extended release metformin product. It’s been on the market for some period of time. We see nice growth in metformin. It’s typically used after a physician would put a patient on generic metformin, many of those patients, up to 50% went up with GI side effects, significant enough, where either doctor can’t titrate the dose higher or the patient has to go off of the product.
Glumetza, because of its unique delivery system, delivers metformin over a six to eight hour period. It reduces the peak blood levels and reduces the GI side effects. So, it’s a first line therapy for patients with type 2 diabetes. We did announce here recently a new commercialization agreement with Glumetza. We’ve restructured agreement that would basically give Santarus more control over Glumetza. So, we have taken over overall responsibilities for shipping the product, booking the sales. We have pricing and contracting. We’ll oversee the manufacturing of the 500 milligram via Patheon their contract manufacturer.
We are going to be assuming the NDA. We’ll be assuming all the safety in drug pharmacovigilance and the interactions with the FDA. The way we have restructured the agreement basically takes the economics and splits it among Santarus and Depomed in a way that we think makes good sense for both companies. We have taken a fairly significant price increase recently, about a 60% price increase that takes us up to similar price to (indiscernible).
And here as of Monday, we have implemented what’s called an eVoucher program, where we actually lowered the co-pay to the patient, we think will allow us to get many more prescriptions. Some of which are already written for Glumetza, but never filled at pharmacy either the patient doesn’t fill the prescription, because of the higher co-pay or in some cases the pharmacist actually will convert a patient from a Glumetza prescription to a generic metformin.