Santarus Reports Second Quarter 2012 Financial Results
Santarus, Inc.Martha L. HoughVP Finance & Investor Relations858-314-5824orDebra P. CrawfordChief Financial Officer858-314-5708orWestwicke Partners, LLCStefan Loren, Ph.D., 858-356-5930orRobert Uhl, 858-356-5932
(NASDAQ: SNTS), a specialty biopharmaceutical company, today reported financial and operating results for the quarter ended June 30, 2012. Key financial results include:
“Our year-over-year revenue growth was strong in the first half of 2012, and we expect further growth for our promoted products, GLUMETZA, CYCLOSET and FENOGLIDE, as a result of the sales force expansion we carried out at the beginning of this year,” said Gerald T. Proehl, president and chief executive officer of Santarus.
He added, “We are looking forward to several key regulatory and development milestones in the second half of the year, the most important of which is the October 16 U.S. Food and Drug Administration (FDA) target action date for UCERIS for the induction of remission of mild to moderate active ulcerative colitis. We are working on a number of activities to prepare for the commercial launch of UCERIS in early 2013, subject to the receipt of FDA approval. We also expect top-line data from two Phase III studies in the second half of the year, including data from our development partner for RUCONEST in treating acute attacks of hereditary angioedema and data evaluating rifamycin SV MMX for the treatment of travelers’ diarrhea.”
Key second quarter and recent business activities include the following:
Total revenues increased to $47.2 million for the second quarter of 2012, compared with $26.6 million for the second quarter of 2011 as indicated below ($ in millions):
Includes ZEGERID brand and authorized genericThe current period reflects an increase of $1.7 million in the estimated allowance for product returns associated with product sales in prior yearsOther revenue included $11.1 million of GLUMETZA promotion revenue in the second quarter of 2011
Net income for the second quarter of 2012 was $3.4 million, diluted EPS was $0.05 and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $7.1 million. In the second quarter of 2011 the company reported net income of $2.7 million, diluted EPS of $0.04, and adjusted EBITDA of $5.1 million.
The cost of product sales was $3.7 million, or approximately 8% of net product sales, for the second quarter of 2012, compared with $1.8 million, or approximately 13% of net product sales, for the second quarter of 2011. The decrease in the cost of product sales as a percentage of net product sales was primarily attributable to higher gross margins associated with the GLUMETZA products and certain fixed costs being applied over increased sales volumes.
License fees and royalties of $12.4 million for the second quarter of 2012 included royalties on GLUMETZA net sales under the restructured commercialization agreement signed in August 2011, the gross margin split on CYCLOSET net sales, royalties on ZEGERID net sales and amortization of upfront payments. License fees and royalties of $2.0 million for the second quarter of 2011 included the gross margin split on CYCLOSET net sales, royalties on ZEGERID net sales and amortization of upfront payments.
Research and development (R&D) expenses totaled $6.7 million for the second quarter of 2012, compared with $3.8 million for the second quarter of 2011. The $2.9 million increase in R&D expenses was primarily attributable to costs associated with the UCERIS Phase IIIb clinical study and costs associated with a higher R&D headcount.
Selling, general and administrative (SG&A) expenses were $20.6 million for the second quarter of 2012 and $16.1 million for the second quarter of 2011. The $4.5 million increase in SG&A expenses was primarily attributable to increases in compensation and benefits, and costs associated with the addition of 40 contract sales representatives hired in January 2012.
For the six months ended June 30, 2012, total revenues were $93.1 million compared with $49.4 million for the six months ended June 30, 2011 as indicated below ($ in millions).
Includes ZEGERID brand and authorized genericThe current period reflects an increase of $1.8 million in the estimated allowance for product returns associated with product sales in prior yearsOther revenue included $21.3 million of GLUMETZA promotion revenue for first six months of 2011
Santarus reported net income of $4.1 million, or $0.06 diluted EPS, for the first six months of 2012, compared with net income of $2.2 million, or $0.04 diluted EPS, for the first six months of 2011. Adjusted EBITDA for the six months ended June 30, 2012 was $14.9 million compared with adjusted EBITDA of $6.6 million for the six months ended June 30, 2011.
As of June 30, 2012, Santarus had cash, cash equivalents and short-term investments of $72.1 million, an increase of approximately $6.6 million in the second quarter. Cash, cash equivalents and short-term investments were $58.6 million as of December 31, 2011.
Santarus affirmed that it expects to report total revenues of at least $200 million for the full year in 2012.
The company’s expense estimates are as follows:
The company affirmed net income guidance of approximately $8 million to $11 million, which includes the impact of the approximately $4 million success-based regulatory milestone expense in the first quarter related to UCERIS and the anticipated $10 million expense for the success-based milestone for RUCONEST mentioned above. In addition the company affirmed adjusted EBITDA of approximately $24 million to $29 million.
In this press release, Santarus used adjusted EBITDA as a key operating metric. Adjusted EBITDA is a non-GAAP financial measure. The company believes that the presentation of this non-GAAP financial measure provides useful supplementary information to and facilitates additional analysis by investors. The company uses this non-GAAP financial measure in connection with its own budgeting and planning. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.
Set forth below are tables reconciling the company’s adjusted EBITDA to GAAP net income for the three months and six months ending June 30, 2012 and 2011 and reconciling the company’s adjusted EBITDA guidance to GAAP net income guidance for the year ending December 31, 2012.
Santarus has scheduled an investor conference call regarding this announcement at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) today, August 7, 2012. Individuals interested in participating in the call may do so by dialing 866-819-7280 for domestic callers, or 678-374-2322 for international callers. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 855-859-2056 for domestic callers, or 404-537-3406 for international callers, and entering reservation code 14120595. The live conference call also will be available by visiting the Investor Relations section of the company’s website at and a recording of the call will be available on the company’s website for 14 days following the completion of the call.
Santarus, Inc. is a specialty biopharmaceutical company focused on acquiring, developing and commercializing proprietary products that address the needs of patients treated by physician specialists. The company’s current commercial efforts are focused on (metformin hydrochloride extended release tablets) and (bromocriptine mesylate) tablets, which are indicated as adjuncts to diet and exercise to improve glycemic control in adults with type 2 diabetes, and on (fenofibrate) tablets, which is indicated as an adjunct to diet to reduce high cholesterol.
Santarus has a diverse product development pipeline. A New Drug Application for UCERIS (budesonide) tablets for induction of remission of mild to moderate active ulcerative colitis is under review by the U.S. Food and Drug Administration with a response expected in October 2012. The pipeline also includes two late-stage investigational drugs in Phase III clinical studies: RUCONEST (recombinant human C1 inhibitor) for treatment of acute attacks of hereditary angioedema and rifamycin SV MMX for treatment of travelers’ diarrhea. In addition, the company’s investigational monoclonal antibody, SAN-300, is being evaluated in a Phase I clinical program. More information about Santarus is available at .