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Santarus, Inc. (SNTS)

Lazard Capital Markets 8th Annual Healthcare Conference Call

November 15, 2011 1:00 PM ET

Executives

Gerald Proehl – President and CEO

Debra Crawford – Senior Vice President and CFO

Analysts

Karen Koski - Lazard Capital Markets

Presentation

Karen Koski

Okay. I think we already get started. My name is Karen Koski from Lazard Capital Markets and we are pleased to have Santarus here with us today. Presenting on behalf of the company is the President and CEO, Mr. Gerald Proehl; and Senior VP and CFO, Ms. Debra Crawford, and we invite you to ask questions at the end of the presentation. Mr. Proehl?

Gerald Proehl

Thanks Karen. I will be making some forward-looking statements, so please refer to our SEC filings. Santarus is a specialty biopharmaceutical company, we currently have two marketed products both in the type 2 diabetes space, GLUMETZA, which is the extended release metformin product and CYCLOSET, which is a dopamine antagonist. We estimate peak sales of those two products between $300 to $400 million.

We also have three products in late-stage development, UCERIS which is our new brand name for budesonide. We currently have completed two pivotal studies and an extension study, and we are in our final phases of working on the NDA, which we expect to file before the end of this year.

RHUCIN which is recombinant C1 inhibitor currently completed two pivotal studies and we are in the process of enrolling patients in one additional Phase III pivotal study.

And Rifamycin, which we are currently enrolling patients, we're about 70% enrolled in the first Phase III study for travelers’ diarrhea. There is an additional study ongoing with Dr. Falk, which is the European partner. They are currently enrolling patients in a Phase III study in Africa. We estimate peak sales of around $500 million for that those products and then we have an early-stage program in some anti-VLA-1 antibody program that’s currently enrolling patients in the Phase I program.

This gives you a very brief look at the overall portfolio, the only thing I’ll point out here is the third product now ZEGERID, some of you might be aware of. We did release a lower court decision last year on our patent to Par Pharmaceutical, they launched in generic product in July of last year. We appeal decision and oral arguments were heard in May of this year and we currently await the decision from the appellate court. Our analyses tell us the average is two to six months, we spent just a little over six months, so we’re outside the average now, but we look everyday at 8 o’clock in the morning.

As far as our focus, the way to think about us is we are really in the process of moving from what was predominantly a primary care/GI focus to much more of a specialty focus. We currently call on about 3000 endocrinologist and about another 8 to 10,000 primary care physicians for type 2 diabetes franchise. We have 110 reps currently. We are in the process of adding additional 40 reps or hire those reps beginning in the first month of 2012.

With budesonide we really focus on gastroenterologists and what we have down here is 80-rep equivalents. I think as we move throughout 2012, we will make an assessment of how well we are performing with the 150 reps for GLUMETZA and CYCLOSET in making determination whether or not we would add a fall additional 80 reps, 40 reps or something out of that. But we believe we need 80-rep equivalents to successfully launch budesonide.

For RHUCIN it’s about 20 to 25 reps calling on particularly allergists and some immunologists. And then alternatively with SAN-300, if we decide to go forward in rheumatology be about additional 30 reps. We think the antibody program could be effective not only in RA but also in inflammatory bowel disease and highly likely that we would look as we move through Phase II to look for a partner either an ex-U.S. partner or potential worldwide partner for that particular program, potentially we have no partner and we move forward with the RE indication, and thus focusing on GI indication.

As far as how we are trying to move the business forward and in moving from more of a primary care to a specialty focus is really trying to moving to those markets where we can increase sales per sales rep and we want the sales rep to be more efficient currently, we had about a $1 million for sales reps, we think we want to get into the $2, $3, $4 million per sales rep range where we can be much more efficient.

In doing that we will be able to decrease our overall SG&A as percentage of revenue and maintain our R&D as a percent of revenue. We then better allow us to continue to develop our portfolio fully but also increase overall profit and cash flow in the future.

Let’s me talk little bit about GLUMETZA, I mentioned it’s an extended release metformin product, very simple, metformin is a standard of care for treating type 2 diabetes almost every type 2 diabetic patient is going to be studied on metformin.

The biggest issues with metformin are GI side effects, particularly as doctors tolerate the dose, they fed at 500 milligrams and they tolerate up by 500 milligrams increments. When they get up to about 1000 milligrams is when they start to see the side effects from metformin.

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