Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Santarus, Inc. (NASDAQ:SNTS)

Q4 2012 Earnings Conference Call

March 04, 2013, 16:30 PM ET

Executives

Martha L. Hough - VP, Finance & Investor Relations

Gerald T. Proehl - President & CEO

Debra P. Crawford - SVP & CFO

William C. Denby III - SVP, Commercial Operations

Wendell Wierenga - EVP, Research and Development

Analysts

David Amsellem - Piper Jaffray & Co.

Jason Gerberry - Leerink Swann

Scott Henry - Roth Capital

Annabel Samimy - Stifel Nicolaus

Operator

Good afternoon. My name is Candice and I will be your conference operator today. At this time, I would like to welcome everyone to the Santarus Fourth Quarter and Full Year 2012 Financial Results Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

Ms. Martha Hough, you may begin your conference.

Martha L. Hough

Thank you, Candice. 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; and Bill Denby, Senior Vice President of Commercial Operations. Dr. Wendell Wierenga, Executive Vice President of Research and Development will also be available during the question-and-answer session.

Earlier today, Santarus issued a press release announcing our fourth quarter and full year 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, March 4, 2013. 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 and financial outlook, we will also discuss adjusted EBITDA, adjusted earnings and adjusted earnings per share, all non-GAAP financial measures. You can find the reconciliation of adjusted EBITDA or non-GAAP adjusted earnings to GAAP net income in our press release issued this afternoon.

I'll now turn the call over to Gerry Proehl.

Gerald T. Proehl

Thank you, Martha, and welcome to this afternoon's call. 2012 was an inflection year for Santarus. The strong performance of our in line products along with the positive legal decisions relating to ZEGERID IP and regaining market exclusivity for ZEGERID early September when Par Pharmaceutical ceased shipping their product, resulted in a high double-digit revenue growth and significantly improved profitability.

At the same time, we took steps towards delivering sustainable growth with the advancement of our product development pipeline. Last year brought positive top line results in two Phase III clinical programs, RUCONEST and rifamycin SV MMX. Initiation of Phase IIIb clinical study with UCERIS and the completion of a Phase I clinical study with SAN-300, our early stage antibody.

Today we reported continued strong financial results for the 2012 fourth quarter for total revenues of approximately $70 million, up 65% compared with our revenue in the fourth quarter of 2011. Net income was $5.5 million in the fourth quarter compared with approximately $1.9 million in the prior-year period.

Our full year results were equally strong with revenues of $218 million, up approximately 83% over 2011 and 2012 net income almost quadruple to $18.6 million. This positive momentum has carried over into early 2013 with the FDA approval in January of UCERIS for the induction of remission in patients with active, mild to moderate ulcerative colitis.

With the UCERIS approval, we've added 85 sales representatives to our sales organization bringing the total to 235 individuals. In February, we began promoting UCERIS to gastroenterologists and also relaunched ZEGERID into the GI market for the treatment of certain upper GI disorder.

Our in line products GLUMETZA, CYCLOSET and FENOGLIDE performed well in the fourth quarter, growing just over 50% on a combined basis in net sales versus the prior-year period. Turning to our pipeline, we're finalizing the Biologics License Application or BLA for RUCONEST for the treatment of acute attacks of angioedema in patients with hereditary angioedema or HAE and expect to submit the BLA in the second quarter of this year.

In the second half of the year, assuming RUCONEST BLA have been accepted for review, we plan to request separate meetings with the FDA to discuss the pathway for other potential indications for RUCONEST such as the treatment of acute pancreatitis and the prophylactic treatment of HAE.

Last September, we announced positive top line results for our Phase III clinical study with rifamycin SV MMX in travelers' diarrhea and we are waiting for the completion of a second Phase III study being conducted by Dr. Falk Pharma in India. We have also completed a Phase I clinical study with SAN-300, our anti-VLA-1 antibody that we are moving forward a plan to initiate a Phase IIa clinical study later this year with a subcutaneous dosage form of SAN-300 in patients with rheumatoid arthritis.

That completes my overview. I'll now turn it over to Deb for a review of our financial results. Deb.

Debra P. Crawford

Thank you, Gerry, and thank you to everyone for joining our call. I'm pleased to report strong financial results for the fourth quarter of 2012. As Gerry indicated, total revenues for the 2012 fourth quarter grew approximately 65% from the prior-year period to $70.2 million led by substantial increases in net sales of GLUMETZA and ZEGERID.

Net income in the 2012 fourth quarter was $5.5 million and diluted EPS was $0.08 compared with net income of $1.9 million in the fourth quarter of 2011 and diluted EPS of $0.03. As a reminder, our results include the impact of a $10 million success-based milestone fully expensed in the 2012 fourth quarter for a successful completion of the RUCONEST Phase III clinical study.

Adjusted EBITDA for the fourth quarter of 2012 was $9.6 million compared with $4.5 million in the fourth quarter of 2011. Net product sales in the fourth quarter of 2012 totaled 69.4 million with individual product breakout as follows. GLUMETZA net sales were $42.6 million. In the prior-year period, we reported GLUMETZA net sales of $28.5 million reflecting a 49% increase.

ZEGERID brand and authorized generic product sales were up 121% totaling $20.8 million compared with $9.4 million last year. The increase in sales reflects higher prescription volume and pricing for the ZEGERID authorized generic which is now a single source generic product.

CYCLOSET net sales were $4.5 million compared with $3.8 million in the prior-year period. And FENOGLIDE, which we began promoting in February 2012, achieved net sales of $1.5 million.

Fourth quarter expenses for license fees and royalties were $26.2 million in 2012, an increase of $15.9 million over the prior-year period. The increase was primarily as a result of the $10 million milestone for successful completion of the RUCONEST Phase III clinical study and royalties payable on net sales of GLUMETZA.

Fourth quarter 2012 R&D expenses were $7.7 million compared with $7.4 million for the prior-year period. Our Phase IIIb clinical study with UCERIS was nearing 50% enrollment at December 31, 2012.

SG&A expenses were approximately $25 million in the fourth quarter of 2012, an increase of approximately $5.5 million from the prior-year period. The higher spending reflects costs associated with the addition of 40 contract sales representatives and sales management personnel in the first quarter of 2012, as well as annual increases in salary and benefits and expenses related to launch preparation activities for UCERIS.

As of December 2012, we had cash, cash equivalents and short-term investments of $94.7 million which represents an increase of $12.8 million during the fourth quarter and an increase of $36.1 million compared with the balance as of December 31, 2011.

For the full year in 2012, we reported record revenues of $218 million, up 83% over 2011. Net income of $18.6 million and diluted EPS of $0.27 for 2012 compared with net income of $4.7 million and diluted EPS of $0.07 for 2011 and adjusted EBITDA of $36.9 million for 2012 compared with $13.9 million for 2011.

Today, we are affirming our full year 2013 financial outlook as discussed in our business update conference call on January 15 and introducing guidance for diluted EPS and non-GAAP adjusted diluted EPS. Our estimates are; total revenues of approximately $320 million to $325 million, net income of approximately $50 million to $54 million, GAAP diluted EPS of approximately $0.63 to $0.68, adjusted EBITDA or non-GAAP adjusted earnings of approximately $73 million to $79 million and non-GAAP adjusted diluted EPS of approximately $0.92 to $1.

We are using an estimate of 79 million shares for the fully diluted EPS calculation. Additional details on selected estimated expenses for 2013 are as follows. License fees will include a $5 million expense for a success-based milestone assuming FDA acceptance for review of the RUCONEST Biologics License Application. R&D expenses of approximately $34 million to $38 million. And SG&A expenses of approximately $131 million to $134 million, which include an incremental estimated $38 million to $40 million from the sales force expansion of 85 sales reps and promotional and other costs related to the UCERIS launch and ZEGERID relaunch.

Bill Denby will now give a brief overview of commercial operations and our UCERIS launch activities.

William C. Denby III

Thanks, Deb. The launch of the UCERIS is underway and thanks to excellent coordination between our commercial and manufacturing groups, product was shipped to wholesalers and made available to retail pharmacies during our UCERIS launch meeting in mid-February.

Importantly, starting with the mid-January approval, we began communicating through various media about the pending availability of UCERIS and these promotions are continuing. The media sources included dedicated webpage, advertising in top GI journals, email and direct mail. We also began advertising the features of UCERIS on key websites. These steps helped to build awareness of UCERIS as our sales rep prepared for the full launch of the product and will continue to build awareness during the launch period.

On February 18, our sales organization began calling gastroenterologists to detail the benefits of UCERIS for patients with ulcerative colitis, as well as ZEGERID for upper GI disorders with the high level of enthusiasm generated for the launch meeting still fresh in their minds. So far, the reception has been excellent and we expect to get all of our -- to all of our GI doctors within the first month of launch.

As you may know, ulcerative colitis is a very serious chronic disease with few therapeutic options, as we believe UCERIS represents a significant new option for patients suffering from active mild to moderate disease. Awareness programs and patient outreach focused on the two core strengths of UCERIS that were demonstrated in our clinical pivotal studies. The efficacy of a steroid combined with favorable tolerability and safety profile. This translates into power patients can handle.

As a result of this favorable safety and efficacy profile, managed care has been receptive and supportive of endorsing the product and we believe the product will generally be covered on Tier 3. In addition, we have added the $25 eVoucher to increase affordability and access to UCERIS. Many payors use UCERIS as a reasonably priced option that may defer a patient on progressing the treatment with biologic drugs, which typically is prescribed for moderate to severe disease and are significantly higher priced.

We've learned through marketing research that patient awareness will be a key driver to the success of UCERIS. Therefore, we have embarked on efforts to educate and motivate patients to ask their doctor about UCERIS. The outreach campaign is directed to the sites where patients go most frequently for information, including social media outlets and key medical information websites, in particular WebMD and the Mayo Clinic website.

Upon the January FDA approval of UCERIS, we added 85 new sales representatives to our existing core of 150 sales reps. All 235 sales reps are promoting both UCERIS and ZEGERID primarily to gastroenterologists and they're also promoting GLUMETZA, CYCLOSE and FENOGLIDE to endocrinologists and high prescribing physicians who treat patients with type 2 diabetes and high cholesterol. They are now trained on all products and actively promoting as of February 18.

The use of our entire sales organization to promote all of our products allows us to reduce the size of larger territories and mirror more of our existing territories to allow for higher frequency and better access to our physicians. Our past experience with product launches tells us that higher call frequency is essential for rapid uptick. At the end of the day, we want our physician audience to keep our product portfolio top of mind.

I'm also pleased to report that our in line products performed well in the fourth quarter. GLUMETZA total prescriptions increased 24% in the fourth quarter versus the prior-year quarter and we're up 30% year-over-year. Total prescriptions for CYCLOSET increased approximately 49% and total prescriptions for FENOGLIDE grew approximately 35% which compared to the fourth quarter of 2011.

The ZEGERID prescription volume has declined as generic competition entered the market in mid-2010. Our goal in 2013 is to [stem] the decline of prescriptions with our promotional support. The competitive landscape for proton pump inhibitors has changed significantly since we ceased promotion in 2010. We believe that in a less competitive environment, our renewed promotional efforts will have positive effect on ZEGERID among our called-on physicians who treat patients with GERD.

Interestingly, even with no promotion over the last few years, awareness of ZEGERID remains high. We will be underscoring the strong, long-lasting, 24-hour acid control and affordability given the continued availability of an authorized generic by way of our distribution arrangement with Prasco. So far gastroenterologists are glad to see ZEGERID supportive of samples and to be reminded of this option once again. It's clear that our expanded and effective promotional activities resulted in excellent results in 2012. We have now turned our focus to implementing and executing our commercial plans for 2013 and making the UCERIS launch a great success while maintaining sustainable growth of our main business.

I'll now turn the call back over to Gerry for his concluding comments.

Gerald T. Proehl

Thanks, Bill. In closing we achieved all our major goals for 2012. We exceeded our 2012 financial guidance for revenue and profit objectives through strong commercial performance and careful management of our business. We've received a favorable Appellate Court decision on our patent case and now have ZEGERID back as an important revenue contributor.

In addition, we will continue to pursue our claim against Par Pharmaceutical for lost profit damages. We made good progress with patient enrollment for the Phase IIIb clinical study for the use of UCERIS as an add-on therapy in ulcerative colitis. And we expect to complete enrollment in mid-2013.

We've reported positive top line Phase III results to advance the clinical programs through RUCONEST and rifamycin SV MMX. We plan to file the BLA for RUCONEST in second quarter this year. And we completed the SAN-300 Phase I clinical study in healthy subjects with both I.V. and subcutaneous dosage forms.

In addition, we are continuing to focus significant efforts on the assessment of marketed and late-stage development opportunities to licenses or acquire that could further leverage our commercial operations.

In closing, I would like to extend a personal invitation to attend our Investor and Analyst Day on Thursday, April 11 in New York at the Millennium Broadway Hotel. We plan to give an update on the UCERIS launch and an overview of our development programs. A hold-the-date email and invitations to the event will be going out soon.

I'd now like to turn the call over to the operator for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions).

Martha L. Hough

This is Martha Hough. While we're waiting for those questions, I'd like to mention that we will be presenting at two upcoming March investment conferences. We'll be at the Cowen and Company Health Care Conference in Boston presenting at 9.20 a.m. Eastern Time on March 6. We'll also be at the 25th Annual Roth Conference in Dana Point presenting at 1 p.m. Pacific Time, 4 p.m. Eastern Time on March 19. Okay, Candice, we're ready for the first question.

Operator

Your first question comes from David Amsellem of Piper Jaffray. Your line is now open.

David Amsellem - Piper Jaffray & Co.

Thanks. Just a couple. First on ZEGERID, any expectation that pricing could continue to improve into 2013 compared to the fourth quarter or what we saw in the fourth quarter kind of the maximum benefit we're likely to see there? I just want to get a sense as how we should think of the trajectory on the pricing side in 2013?

Gerald T. Proehl

David, this is Gerry. I think from a pricing perspective, I think 2012 fourth quarter was probably pretty good representation. At the same time, as I'm sure you're aware of the actual amount of product that Par was selling was still in the pipeline. So, we had to kind of drain down the Par product throughout the fourth quarter so one might expect as we move into the first quarter, most of that product's gone and still a little bit out there we still see when we look at prescriptions, we get about 97.5% of prescriptions. But most of that was kind of whittled down in the fourth quarter.

David Amsellem - Piper Jaffray & Co.

Okay, that's helpful. And then a couple of quick questions on RUCONEST. Can you just talk about preliminary positioning versus the other acute HAE treatments Firazyr and Kalbitor, maybe talk about convenience in terms of dosing, handling and administration? And then give us a sense of what you're earliest thoughts are on pricing of the product versus the competition out there? Thank you.

Gerald T. Proehl

This is Gerry again. With regards to the competition, obviously there are a couple of plasma-derived products on the market already. The barrener product is one for acute treatment of HAE. So that's most likely where we'll be competing along with Kalbitor and Firazyr. We think that when you're treating patients that have an acute attack, the fastest way to treat the attack is using an I.V. push to get into the blood stream quickly and can stop the swelling that takes place when a patient has hereditary angioedema. Clearly have a recombinant product, there's some safety that we think is important to patients versus plasma-derived products as is in the package insert for the plasma-derived product, there are some stated potential issues with thromboembolic events. I can't say at this point because we're not yet filing the BLA. Whether or not we will have a class effect in our label I can't say in all of our clinical work, we've not seen any thromboembolic events. In addition obviously just having a recombinant product, there's some safety that goes along with it. The other thing that we've mentioned before is when you look at our product and how much of C1 esterase inhibitor were delivering, we have 50 units per kilogram is how we're delivering. For a comparison, barrener is delivering 20 units per kilogram. And part of that is the fact that because we're using the recombinant process, we think that ultimately the cost of goods are very attractive and we don't have any supply issues and we can scale up very rapidly, so there's some advantages there. So there are a number of advantages we have with regards to treating patients for acute attack of angioedema.

David Amsellem - Piper Jaffray & Co.

Okay. Just a quick follow-up in terms of Firazyr and Kalbitor, you think there's any way that you can position RUCONEST competitively or is mainly the focus going to be the barrener?

Gerald T. Proehl

Yeah. I think if you look at the patients and what's happening, somewhere between 70%, 80% of these patients are treating themselves at home either they're treating themselves or a relative or a family member is administering the product. I think if you look at Kalbitor obviously has a black box warning that doesn't allow that product to be administered either by the patient or by the family member. It has to be administered by a health care professional. So I think that's always going to be an issue for a disease where you're getting acute attack and you're beginning to swell. As far as Firazyr, it's done very well in the market. We think that ultimately what people are going to see is that the efficacy they get from RUCONEST is going to be outstanding efficacy with no rebound effect. We haven't seen any rebound in our clinical studies. I don't think if you ask some clinical experts and folks that are using Firazyr, I don't think you'll hear that they don't see any rebound effects. So there are some advantages. We think once we get on the marketplace, the prescribers will see the advantages versus the competitive products.

David Amsellem - Piper Jaffray & Co.

All right, thanks.

Operator

Your next question comes from Jason Gerberry with Leerink Swann. Your line is now open.

Jason Gerberry - Leerink Swann

Thanks for taking the question. Maybe first off, on UCERIS and the launch, could you just give us a little bit of a sense of how aggressively you guys are sampling the product and how long you'd expect that sampling effort to continue? And then secondly on the post marketing study, could you talk about how you expect that to impact UCERIS prescribing patterns? Would you expect that to be a major catalyst for driving market share in the category? Thanks.

William C. Denby III

Hi, Jason. It's Bill Denby. First of all, we're very happy with the initial response to UCERIS by our targeted gastroenterologists. We'll continue to sample and support the products. The samples are designed to give a few days worth of therapy, so people can get started immediately while they're waiting for their prescription to be different wholesalers to pharmacy and they go ahead and get them. So we'll continue to support the launch of UCERIS with samples and other promotion to make sure that one, the physicians are aware of the product and its benefits as well as the patients so that they intersect to the benefit of both the doctor and the patient and to Santarus with the optimal uptake of the product. The second question I think, Jason, had to do with the Phase IIIb study and the fact that it's an add-on to 5ASA. We think that certainly there are going to be some physicians that even without completing that study will likely use UCERIS in combination with 5ASA. At the same time, there are going to be some physicians that want to see additional clinical data. And so completing that study and getting that information out there, I think, will help all gastroenterologists understand that UCERIS is not only effective as initial therapy but it's also effective as an add-on therapy to 5ASA.

Jason Gerberry - Leerink Swann

Got it, thanks. And if I can just squeeze in a follow-up. I thought I heard you say that you'll have a pre proof of concept meeting with the FDA regarding the acute pancreatitis indication for RUCONEST? Is that correct and can you just give us a sense of what -- when you might expect that study to begin in timelines around that program? Thanks.

Wendell Wierenga

Jason, this is Wendell. The scenario for acute pancreatitis with RUCONEST is still evolving, so I can't be too specific about the timeline, but we're hopeful of having a dialogue with the FDA here (inaudible) with plans then for just getting a study by the end of the year that we need to address relative to patient population and of course treatment paradigm are coming together very nicely but [fortunately] we have a dialogue with the agency on this before really settling on it.

Jason Gerberry - Leerink Swann

Thanks for taking my questions.

Operator

Your next question comes from Scott Henry with Roth Capital. Your line is now open.

Scott Henry - Roth Capital

Hello. Thank you. Just a couple of quick questions. For starters and I guess these are directed at Debra, when we think about 2013, are there any notable quarterly trends that we should be looking for with regards to SG&A and R&D and any kind of spikes or should we just expect a gradual trend with the revenue line on the EPS?

Debra P. Crawford

With regards to the spending, Scott, I think given the investment we're making in UCERIS, we anticipate that increased SG&A number will be fairly substantial throughout the year rather than a build, because we've already hired the additional 85 sales reps and we're doing the launch activities as Bill mentioned with regards to promotion and so forth. So I think perhaps with SG&A considering that more step up in the spend versus a gradual increase as we move through the year. With regards to R&D, that can fluctuate. We have the most substantial contributor to the R&D spend being the Phase IIIb study with UCERIS and we anticipate completing enrollment in that study by mid-year. But whereas those costs might be declining in the second half of the year, we anticipate starting some additional studies both for SAN-300 Phase II study and potentially the RUCONEST study of acute pancreatitis and so forth. So really don't have anything specific to tell you about R&D but I think similarly that could be a substantial increase throughout the year rather than a build as we move through the year.

Scott Henry - Roth Capital

Thank you. That's helpful. As well, I believe I read that you were targeting 79 million diluted shares on the bottom line for 2013. It seems like somewhat of a big jump given where you were in fourth quarter. Can you talk about -- did I read that correctly and if so, what's driving that kind of mini spike?

Debra P. Crawford

Yeah. So you're correct, Scott, the estimate we provided is 79 million for purposes of the fully diluted EPS calculation. And as you know, that calculation is dependent upon a number of factors one of which is how the stock price has actually performing and that is relative to the options that we have outstanding. So we've had a number of options outstanding for a number of years which were not in the money but our estimate assumes given the current trading of the stock price that those shares would be in fact included in the diluted EPS calculations.

Scott Henry - Roth Capital

Okay, that is helpful. As well, in the quarter, was there any notable stocking or any price increases? GLUMETZA came in a little stronger on a revenue prescript basis than I would have expected. Just wondering if there is anything there?

Debra P. Crawford

Scott, I don't characterize it as anything unusual but we typically see in the December month in the fourth quarter a little bit of backing on the part of pharmacies just to ensure they have product for the holidays. So that was pretty similar to what we've seen in the prior years.

Scott Henry - Roth Capital

Okay. Final question is a little longer term oriented when we look out to 2016 the patents are pretty much fully expired for ZEGERID and GLUMETZA. I guess, Gerry, is there any lifecycle management you can do for those two products or should we just kind of truncate their revenue streams at that point in time?

Gerald T. Proehl

So I would say at this point, Scott, we don't expect there'll be much lifecycle management. Obviously with ZEGERID, assuming that a generic does come out in the market July of 2016, we'll already have our authorized generic on the marketplace. And so that certainly could be helpful as a new generic comes on and looks to take market share. But at this point in time, we don't have other plans. I would say with regard to our current development pipeline and even UCERIS, we continue to look at other opportunities with UCERIS for other indications and the clinical group is doing a lot of work there. We think there are other things we can do with rifamycin and we're doing some work right now with that. Certainly with RUCONEST the potential for either acute pancreatitis or prophylactic treatment of HAE we think could provide with nice upside potential. And then the last thing is we're actively looking at other products, mostly products that would be either ready to move into Phase III or probably onto products that were on the market that we could bring in and actually take care of that 2016 revenue gap. So, I'm pretty confident we're going to be able to execute on some of those things. We certainly, I think, demonstrated in the past. We've been able to bring in product opportunities and do a good job. And I think in the future what people are going to see is we'll continue to do that.

Scott Henry - Roth Capital

Okay, great. Thank you for the color and thank you for taking the questions.

Gerald T. Proehl

Thanks, Scott.

Operator

(Operator Instructions). You next question comes from Annabel Samimy with Stifel. Your line is now open.

Annabel Samimy - Stifel Nicolaus

Thank you for taking my questions. So just a few on UCERIS, I guess we haven't really talked about that one as much, but in terms of the marketing is there any specific GI physicians your targeting more acutely such as doctors still prescribing more prednisone rather than budesonide (inaudible) like just seems like you have a little bit more of an angle to differentiate from prednisone. So if you can just give us a little bit of color there in terms of the GI doctor you're targeting for?

William C. Denby III

Well, I think Annabel -- this is Bill, we're targeting approximately 7,000 important gastroenterologists. We do it more based on their prescribing volume and not really segmenting them by how they prescribe or what they're current situation is with their patient population really. It's more important to make sure that we get the right frequencies, so that we keep awareness half of mind on all the important physicians. So I hope that's helpful. That's around 95% of margins.

Gerald T. Proehl

Annabel, this is Gerry. It's interesting talking with our sales reps and our managers because when they're calling on the gastroenterologists, the first thing they hear from them is we're happy that someone finally put budesonide in a colonic delivery. We've been waiting for a product like this for years. We've used Entocort for Crohn's disease for many years. It's very effective, it's very safe and we get very little pushback from the physicians to use UCERIS for ulcerative colitis. The interesting thing is where we thought we might get more pushback was actually from managed care, but we have the real advantage of the fact that there are biologics out there obviously Humira being approved about three months before us that are significantly more expensive with more safety and side effect issues. So when we walk into managed care with UCERIS and talked to them about the efficacy of the product, the safety of the product and the price, we're getting very warm reception from most managed care plans.

Annabel Samimy - Stifel Nicolaus

And is the price generally at par with where Entocort was?

Gerald T. Proehl

Where Entocort was, yes. It is receiving -- if you look at the generic Entocort price, it's almost as high as our prices for UCERIS. But obviously Entocort is delivering most of the product of the small intestine, it's not getting to the colon whereas UCERIS is clearly getting to the colon. So the doctors understand that, the reps have a detail that demonstrates the blood levels of Entocort and where it peaks compared to UCERIS. And it's very clear to the doctors that UCERIS is in a colonic delivery whereas Entocort is in a delivery system predominately delivering to the small intestine.

William C. Denby III

I would just say -- Annabel I'd add to your original question. If a doctor writing for mild to moderate disease, our goal is for them to have awareness of UCERIS within the first month of the launch.

Annabel Samimy - Stifel Nicolaus

Okay. That was helpful. Thank you. If we can just move over to RUCONEST really quickly, I know that you mentioned that you're going to conduct some studies in prophylaxis and just want to understand where the benefit would be for the product given it's half life relative to some of the others, mainly borrow from [Synrise]?

Wendell Wierenga

Annabel, it's Wendell. I think the concern of our half life has been out here before and it's understandable to two of them. You have the data would argue that half life is really not that consequential if at all important again prophylactic setting of HAE as (inaudible) and the 25-patient trial that was done in our group (inaudible) once a week at 50 units showed a 50% reduction in a [tag] group as relative to baseline history and relative to their patients. The correlation of C1 esterase levels is really not there at all in patients that are being treated with an agent like Synrise on a twice a week basis. So the combination then [fresh hold] absence of data showing correlation at a certain level of C1 (inaudible) that's about to happen and the fact that the open label (inaudible) Synrise showing once a week seems to be effective as well, all argue that C1 has or half life is not important. In fact there's probably more data to suggest that C1 is more important and in fact therein RUCONEST shows an obvious advantage because it shows that two and a half times what the plasma-derived are being dosed at and it has the very obvious mass effect. So we think there's a very good rationale for prophylaxis with an agent like RUCONEST but also appreciate the fact that we'll have to show that of the trial.

Gerald T. Proehl

Just another comment, Annabel, I'll make to follow-up on Wendell's comments. I think one of the things that we think is very important if we're able to show that RUCONEST works for prophylaxis is these patients are being dosed twice a week and certainly any type of product that was bringing true safety to the patient is going to be important to the patient. As I mentioned, when you look at Synrise, they have about 5% thromboembolic events. We don't know whether that has to do with the fact that about 20% of their product is not C1 esterase inhibitors, it's something else coming from the blood plasma, whether that has to do with how -- like constellation pattern is done or whether it has to do with the fact that Synrise does have a longer half life, so it's hanging around in the blood stream longer than RUCONEST. All we know is that we have not seen any thromboembolic events. So not only do we think we could have an effective product, but we think we could have a safer product for patients that have to dose themselves twice a week probably throughout their life.

Annabel Samimy - Stifel Nicolaus

Great. Thanks a lot.

Gerald T. Proehl

Sure.

Operator

There are no further questions at this time. I turn the call back to our presenter.

Gerald T. Proehl

Great. Well, I'd like to thank you for your interest in Santarus and for joining us on today's call. If you do have any further questions, please feel free to contact me, Debbie Crawford or Martha. Have a great evening.

Operator

This concludes today's conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Santarus' CEO Discusses Q4 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts