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Executives

Martha Hough - VP, Finance and IR

Gerald Proehl - President and CEO

Bill Damby - SVP, Commercial Operations

William Sandborn

Wendell Wierenga - EVP, Research and Development

Mark Totoritis - SVP, Clinical Research

Tom Joyce - VP, Marketing and National Accounts

Analysts

Jason Gerberry - Leerink Swann

Annabel Samimy - Stifel Nicolaus

Scott Henry - Roth Capital

Santarus (SNTS) Analyst Day April 11, 2013 9:00 AM ET

Martha Hough

Good morning and welcome to the Santarus Investor and Analyst Day and I’m Martha Hough, Vice President of Finance and Investor Relations for Santarus. Before we begin, I’d like to remind you that any forward-looking statements made during today’s presentation are subject to risks and uncertainties involved in the company’s business.

I refer you to the safe harbor statement in this presentation and to the cautionary statements contained in the company’s SEC filings. The content of today’s presentation contains time sensitive information that is accurate only as of the date of this presentation and live webcast. Santarus undertakes no obligation to revise or update any forward-looking statements that reflects events or circumstances that may occur after today.

During today’s presentation we will be talking about our company’s performance, financial outlook we will also discuss adjusted EBITDA which is a non-GAAP financial measure. You can find the reconciliation of adjusted EBITDA to GAAP net income at the end of your presentation slide.

With that, I’d now like to introduce the presenters in today’s event. First, Gerald Proehl, President and Chief Executive Officer of Santarus will start with the strategic overview. Next, Bill Denby, Senior Vice President, Commercial Operations will give the commercial update. Dr. William Sandborn will follow with an overview of ulcerative colitis and treatment perspective. Dr. Sandborn is the Chief Physician of Gastroenterology and Director at UCSD IBD Center at the UC San Diego Health Group and a recognized national and international expert in inflammatory bowel disease.

After that Tom Joyce, our Vice President of Marketing and National Accounts will provide an update on UCERIS commercial (inaudible). Dr. Wendell Wierenga, Executive Vice President for Research and Development will give a brief overview of our development pipeline and Dr. Mark Totoritis, Senior Vice President of Clinical Research will provide an overview of (inaudible).

We will then open the presentation to questions. We do ask that you hold your questions until the end of the prepared comments. I’d also like to introduce three additional members of the Santarus management team in attendance today. Debby Crawford, Senior Vice President and Chief Financial Officer (inaudible), Dr. David Ballard, Senior Vice President, Medical Affairs and Pharmacovigilance is also investing in, and Mike Step, Senior Vice President of Corporate Development.

Now I’d like to turn the presentation to Gerry.

Gerald Proehl

Good morning everyone. Santarus is a specialty biopharmaceutical company. I’d like for us to be able to say we are profitable specialty pharmaceutical company. We do have a mix of products, we have five products that are currently on the market I will talk a little more about those and we have three products that are currently in development. As most of you are aware recently on January 14, we did receive approval of UCERIS, about a month later we launched UCERIS and it’s doing quite well. Bill is going to talk a little bit more about the disease and Tom Joyce will talk more about the launch of UCERIS.

Also last year in September, we were glad that the appellate court actually saw the patents our way, they reversed the lower court decision, our litigation with PAR. PAR stopped shipping their product almost immediately and we’re now going through the process of damages, the trial is set for second half of next year and we expect to continue along that process over the next 12 to 18 months.

A new event that just occurred is we did get a notice of allowance on a Cycloset patent that we had filed. We filed that patent under the accelerated review process. It will give us an additional 20 years of patent protection from the time of filing. So the new patent would go until 2032. So, we’re very excited about that. We’ll talk more about that over the next couple of months as we actually get the issuance of the patent.

As far as revenues in 2012, we had revenues of just under $220 million with very significant growth in revenues and I think what you’re going to see is we expect that to continue over the next few years.

On the left is our commercial portfolio, we have two products that we primarily promote to gastroenterologist, UCERIS and ZEGERID and then we have a couple diabetes products GLUMETZA and CYCLOSET and one additional product FENOGLIDE for cholesterol lowering that typically is promoted to endocrinologists and primary care physicians.

Over on the right, we have our development products both RUCONEST and rifamycin are late stage. RUCONEST we expect to file the BLA here shortly and rifamycin SV MMX, we’ve completed one phase III study with positive results and we’re waiting for our partner Dr. Falk to complete their phase III study.

We do have one early stage product, its SAN-300 it’s an anti-VLA-1, antibody we’ve completed the phase I study, we’re currently working on finalizing the design of the phase II study. We’ll file the IND this year about mid year and then move into the phase II later this year.

About four, five years ago, we talked a little bit among ourselves about our strategic directions as a company. While our first product we launched was ZEGERID which is a GI product, it really was predominantly a primary care product and we found ourselves focused in areas where we’re competing against AstraZeneca, PAP, Wyatt, J&J some fairly large companies and they had 3,000 reps and we had 300 reps.

So, we made a strategic decision that what we would try to do is evolve the company into more specialty areas so that we could have a much smaller sales force and be able to compete more effectively against other companies. And we continue to move in that direction. We added a couple products in the GI space, UCERIS and rifamycin. We’ve added additional product in RUCONEST that we think will go to a very small group of allergists and immunologists about a 1,000 physicians and then we added our antibody program SAN-300 which will predominantly go to either rheumatologist and/or gastroenterologist.

So we will continue as we evolve the company to really focus on products that are going to very small target audiences and we’ll tend to move away from primary care over the next few years. By doing that, we think we can really leverage our sales organization. I think what you’ll see over the next few years is the sales per rep will continue to accelerate that will allow us to fund more of our development programs and still increase our overall profitability.

As far as our growth strategies, obviously the first thing is to maximize our current existing portfolio and Wendell will talk a little bit more about what we plan on doing with our current portfolio. We think the products we have in development plus UCERIS have the opportunity to actually broaden in to other indications and continue to drive revenues in the future. We will continue to look for additional products. Predominantly right now we’re focused on later stage products in gastroenterology and endocrinology but we will look at other specialty areas where we think we can have a very small sales force and still be profitable.

In addition, obviously as we continue to grow our revenues to a certain level, it gets more and more difficult to substantially grow revenues by just adding products. So, we are going to bring on a senior executive, that’s going to be in charge of strategic planning and acquisitions and that particular person is really going to be focused on helping us think about how do we grow the company over the next five to 10 years looking at other companies that might have technologies and platforms that would be interesting to us and help us to continue to accelerate both top line growth and also bottom line growth.

As far as our financials, if you look at our product sales you'll see Glumetza is our largest product but Zegerid is continuing to see very nice growth and in the fourth quarter we saw a good bit of that growth and I think you'll see that as we move throughout 2013 without having the par generic on the market, we're seeing very nice revenues and nice profits coming from Zegerid. The other products obviously that's not on there for 2012 is Uceris and I think you'll see nice growth there.

As far as our overall revenues, I mentioned just under 220 million with net income of just under 20 million. What I would say about the company is we're really at the cusp of driving revenue but also of significantly driving profitability. I mentioned before to folks that with Uceris, when you look at the costs of the sales force that we made the investment and the marketing of the product, medical affairs and the cost of goods when we get to about $50 million in Uceris sales, that's when it starts to become very profitable for Santarus and we end up dropping about $0.75 of every dollar to the bottom line, and I think what you're going to see is throughout the year as we start to look at what the trends are, it really allows us to accelerate profitability, I think you're going to see 2013 will be a very good year. But even better would be 2014 and 15 as we move forward.

On the left you can see our revenues and our guidance we gave at the end of the 2012 year was $320 million to $325 million in revenue with an average net income of 52 million and adjusted EBITDA at $76 million. We typically gave an adjusted EBITDA because while it's not exactly cash flow it's pretty close to what we think our cash flow is going to be. So again this is a real pivotal year for us, the launch of Uceris is extremely important to drive us to become a very profitable company and allow us to continue to invest in the future. With that I'll go ahead and bring up Bill Denby to go through some of the commercial products. Bill.

Bill Denby

Good morning everyone and welcome, I'm going to briefly go through the product portfolio with an emphasis ex-Uceris, Tom Joyce will talk about Uceris and the launch of that product in a little bit more detail, but I did want to point out one anecdote. We get them every other day from patients and doctors. One of our reps was calling on an endocrinologist interestingly enough and her husband was a surgeon. He wasn't able to perform any surgery because of the [GEC] [ph]. So she called his gastroenterologist and got him on Uceris, he's back working now. We get those stories every other day; it's very exciting to be able to help patients in this way with an exciting new therapy. Now I need to know where to push.

And I want to talk about the portfolio by way of the sales force. We added 85 sales representatives to the existing 140, when we got Zegerid back and Uceris approved. Interestingly enough these people have 8-10 years’ worth of experience, so we have a very veteran oriented 235 sales people. We also have retained the management team from the early days, so about 10 years ago. Virtually no one has left the company through the trials and tribulations of the growth that we've been able to achieve.

So right now these sales reps, one going to 235 obviously shrinks the geography of the United States, so from a logistics standpoint the sales reps are able to get to the doctors more often and we've also principally mirrored the territory, so that we two reps calling on a physician to make sure that we get the frequency that's associated with rapid uptake specially with regards to Uceris. We're pleased to get Zegerid back and we relaunched that product during the launch meeting in February of Uceris. So just think about it, so on one side we're calling on the gastroenterologist with Uceris and Zegerid but we have high volume diabetes PCPs and endocrinologists we're promoting Glumetza, Cycloset and Fenoglide, in some instances with primary care we have important Zegerid customers as well and then that we're able to call on them and remind them about the availability of Zegerid.

Doctors are very happy to have Zegerid back. They wondered where it went. It didn't really go anywhere we just stopped promoting it. So they're glad to have it supported with samples we have $10 co-pay for the product and I'll talk a little bit more about each one of the products now. So with Zegerid the main message here and the differentiating factor of the product is acid control that holds strong. Zegerid has strong long lasting 24 hour acid control. The icon here is to depict that but that with Atlas holding up the stomach. It also is very affordable with a $10 co-pay.

As Jerry mentioned Par withdrew its product when we won on appeal, we're looking towards damages November 2014. We've been able to achieve $21 million in sales in the fourth quarter of 2012 and look forward to stemming the decline of this product with promotion to gastroenterologists primarily and perhaps even returning it to growth.

And then Glumetza, its key differentiating factor is that its better tolerated than both immediate release metformin and extended release metformin. Currently there are 70 million prescriptions written for metformin, we have 1% of that. Since we took the product over we've been able to achieve sustained growth due to the fact that people can tolerate this drug better than the generic metformins and they're able to get to their A1C goal because of that. They can get to 2000 milligrams of metformin more often than they can with the generic metformin. That's the secret to Glumetza, and as you can see here, we've sustained growth over the years, by way of its once daily extended release the (inaudible) delivery improved GI tolerability. We’ve had substantial growth in the fourth quarter of 24% in prescriptions and substantial growth in sales as well. And I can't get this right. Cycloset, another alternative to treat diabetes, to improve glycemic control by way of its centrally acting dopamine effects.

And you can see here in its unique form of bromocriptin we've been able to sustain growth of this product as well. Its demonstrated cardiovascular safety profile is significant with a 52% relative risk reduction and major GI problems and cardiovascular disease. As you know, diabetes patients often suffer from comorbid conditions in the cardiovascular arena and we achieved 4.5 million sales in the fourth quarter.

Then finally fenoglide, our fenobibrate to control triglycerides, 55% decreases and again, a $10 co-pay, very affordable. When we took the product over, the dash line demonstrates that we've been able to sustain NRXs and TRX growth in a promotionally sensitive market place and we've achieved $1.5 million in sales. So the commercial goals for 2013 are to continue the successful launch of Uceris, it's a key growth driver and a high priority. As I said, we get pretty constant feedback both from physicians and patients. Interestingly managed care is very interested in this product because of its affordability and the legitimate alternative that it provides for mild to moderate you see. Underlying all of that is the base business that we need to continue to grow, Glumetza, Cycloset and Fenoglide.

With that I'll turn it over to Dr. Sandborn to talk more about ulcerative colitis. Thank you.

William Sandborn

Many of you will be familiar with ulcerative colitis and maybe the larger market of inflammatory bowel disease but just to get the little primer. So ulcerative colitis is an autoimmune disease that affects the colon, in the upper left panel you see a normal healthy colon and then across the top and then the bottom the spectrum of mild and moderate or severe disease. If you look at the mild disease, it looks like someone slightly sand papered the colon and you could imagine a little bit of bleeding as stool passes across that. The damage is more significant as you get into moderate disease and then in severe disease you can actually see the whole ulcer. So although we call this ulcerative colitis, it’s really just the most severe patients that have deep ulcers.

In a larger umbrella level, there are two major forms of inflammatory bowel disease, Crohn’s disease and ulcerative colitis. Ulcerative colitis always involves the colon and uniformly involves the rectum, about a quarter of patients who have just rectal involvement, we call that proctitis, or ulcerative proctitis, another quarter or so of patients who have involvement above their rectum but limited to the splenic flexure so the left side of the colon, we call that left sided ulcerative colitis. And the remaining 50% or so patients who have most or all of the colon involved and we call that pancolonic ulcerative colitis or universal colitis.

The small bowel is uninvolved. In contrast and we’re not here to talk about Crohn’s disease today but just so you know the difference between the two. In Crohn’s disease about 25% to 35% of patients will have small bowel or ileum only involvement. Another 40%-45% will have the terminal ileum or the end of the small bowel and the right side of the colon involved and maybe 20%-25% of patients colon only involved. So ulcerative colitis always colon Crohn’s disease colon only in about 20% to 25% of patients.

And even there the rectum is often skipped so it’s not very difficult to distinguish between ulcerative colitis and Crohn’s disease and you can see and I will come back to this but just looking at the anatomy if you wanted to do targeted delivery of a drug for a local therapy you would be targeting the ileum or the small bowel on the right side of the colon if you are going for Crohn’s disease and you’d would want to skip the small bowel and really target the colon and the entire colon including the left colon of the rectum if you are trying to topically target ulcerative colitis. So if you have a smart bomb delivery system, the delivery system will matter in this setting.

What’s the prevalence of ulcerative colitis and Crohn’s disease? In across North America, we generally think of both ulcerative colitis and Crohn’s disease having prevalences in the sort of 200 to 250 per 100,000 range, so multiply it by the U.S. population we would estimate that about 700,000 people or so have ulcerative colitis in the Unites States. About that many again with Crohn’s disease so inflammatory bowel disease overall the prevalence will be 1.4 million, 1.5 million. And you could at least double that if you were thinking of Europe. It’s a serious disease, eventually about a third of patients come to surgical removal of the colon or colectomy if they don’t receive adequate medical therapy. With the range of medical therapies that are available today and I will speak to that in just a minute. The rate of colectomy is going down. So these represent decade or more older data, I think in the last decade the colectomy rate is probably down around 10% or so. So, medical therapy is gradually making a dent in this, but prior to some of the therapy options we have today this is what it would have looked like.

There is also a rising risk of colorectal cancer, so you may be familiar with the concept of a chronic inflammatory disease leading to damage to DNA and a rise in sort of inflammation related cancer as the years go by and that’s true for ulcerative colitis and it looks more and more now that if you really control the disease well over the years that you can drive these rates of dysplasia and cancer downward. So this is kind of what the historic baseline would have been. But again, the cancer rates are declining in ulcerative colitis I think as physicians realize that they need to use a full suite of medical therapy on the maturity of options to get the patient under better medical therapy control.

What does the unmet need look like? The kind of platform therapy if you will has been 5-aminosalicylate or mesalamine. Some of the drugs in this class might be MMX, mesalamine, or lialda Asacol is probably the market leader or pentasa. Some older drugs like balsalazide and sulphasalazine. Once you go from there, you have been into prednisone off label use with (inaudible) 6-Mercaptopurine the so called thiopurine drugs. And then anti TNFs Remicade has been around since 2005, Humira was approved last fall and the PDUFA for SIMPONI, golimumab is in May of this year so there will be three anti-TNFs I think by mid-year. You can appreciate that there is this big inflection point from both the patient perspective, a payer perspective and prescribing physician perspective going from the orally administered mesalamine drugs which are safe and have reasonable efficacy but don’t work for everyone and from there as you get into prednisone, 5-ASA and another immune suppressives and biologics a big tick up in safety concerns.

And so I believe and I think prescribing physicians would agree with me that there is a big unmet need for what you do kind of as alternatives to 5-ASA or mesalamine and anything that lets you tip up and keeps you from tipping up into these drugs that have more serious side effects. So speaking of steroids, historically there has been a couple of ways to do this. You can administer steroids rectally for those patients with proctitis or left sided colitis as a suppository or as an enema. It’s been kind of conventional corticosteroids steroids like hydrocortisone you get a bit less absorption if you give them rectally but there is still enough absorption to have meaningful steroid side effects and off course they can’t treat the right side of the colon.

Outside of the U.S. there is some budesonide formulations available and so budesonide enemas or foams are suppositories are available. There is no such product in the U.S. and then orally administered steroids prednisone or prednisolone would be the most common things. In the Crohn’s space we’ve had a ileum release formulation of budesonide. Remember we talked earlier about the anatomy that if you could target release of a steroid to the right to the ileum in the right colon that would be the right anatomy for Crohn’s disease and that product is Entocort but most of the activity with ulcerative colitis is in the left colon and Entocort is not well designed to release to the left colon. And so, until UCERIS, we didn’t have a topical or safer steroid that we could hit the colon that’s involved with ulcerative colitis with. And then there will be a minority of patients that are hospitalized and get intravenous steroids usually solumedrol.

So, let’s talk just a little bit more about conventional steroids. This is a sort of old grandfathered class of drugs, this was actually one of the first randomized controlled trials in all of medicine done at Oxford University in the 1950s and it should that hydrocortisone was or oral hydrocortisone rather was more effective than placebo for inducing a response and a remission certainly not a sort of validated outcome measure. And you can see here that the placebo rate using the definitions that they had was about 16%.

They also looked at mucosal healing. Back then there wasn’t video endoscopy and they actually assessed this by putting a rigid pipe, a rigid proctoscope into the rectum and assessing the mucosa and they could see to some degree a mucosal healing but note that the rate of mucosal healing is lower than the overall rate of clinical response with these old studies. There is lots of toxicities and for this sophisticated group; we won’t need to go through them in detail. But to say that we usually use by sort of primary care or other disciplines in medicine pretty big doses, we typically start with at least 40 milligrams a day of prednisone up to a milligram per kilogram and we continue a sort of tapering dose of steroids over at least two or three months. So, at least 50% of patients will have substantial steroid side effects and profound adrenal acts of suppression with that kind of wallop steroids. I don't think I made a slide of it, but in addition to this long laundry list of things, there are now several studies that show that the single biggest risk factor for fatal outcomes from serious infection and inflammatory bowel disease is prednisone used for more than two months. So, it’s associated with the two to threefold increased risk in mortality, it's clearly more dangerous than anti-TNF drugs, the azathioprine. It's the most dangerous drug that we use in this patient setting.

So, obviously we’d like to have some way of getting the efficacy of conventional corticosteroids but without that unfavorable toxicity profile. And budesonide is such an example. We have an experience with this in the Crohn’s setting that I think can leverage into our practiced experience now in ulcerative colitis. So, the goal is to identify a so called topical corticosteroid that has good potency, but doesn't have the same systemic bioavailability. And there is a couple of ways to go at that. One is to identify steroids that have a high first pass metabolism and either the gut wall and/or the liver; the second is to go for kind of a poorly absorbed corticosteroid. Now, the problem with the poorly absorbed corticosteroids is that if they don't get into the mucosa they are not going to be highly effective. Budesonide actually has have great absorption, it’s very lipophilic. so wherever you bomb with it from a delivery system, it's going to into the tissue there, but then all the blood supply from the gut goes through the portal vein to the liver and there is a very high first pass liver metabolism, so you can extensively saturate the tissue by targeting and then you detoxify the drug because of the way the blood all drains to the liver.

So, budesonide is quite good. Now if you compare this to mesalamine or 5-aminosalicylate, so we are going to talk a bit more about MMX budesonide. MMX mesalamine the bombing system is actually not as important so mesalamine is only partially absorbed wherever you release it and a good bit of it goes downstream. So as long as you kind of bomb upstream, you are going to get enough collateral flow downstream that the precision of the delivery isn't all that important. By contrast, it's very important where you release budesonide because it’s going go in where you release. So, just kind of a pictorial of that, you could give budesonide either rectally although there are no formulations in the U.S. to do that or you can give it orally with the delayed and/or extended release in MMX kind of does both of those things to release it in the colon and you want extended release through the length of the colon because again if you were to bolus release all this in the right colon, it’s not going to get to the left colon.

So, there are three forms of oral budesonide worldwide, that's controlled ileal release budesonide or Entocort that's available in the United States, it’s widely used for Crohn's disease which involves the ileum in the right colon. It’s been tested in ulcerative colitis and it’s been tested in Crohn’s colitis where the left colon is involved with Crohn’s disease and it’s not been shown more effective than placebo and either of those disease settings. There is a PH modified release form of budesonide which also releases in the small bowel called budenofalk. This is available in Europe and I think Canada and not in the Unites States, it’s a little bit different than controlled ileal release budesonide but it’s pretty similar and not suitable for treating ulcerative colitis and then there is these extended release tablets or MMX delivery system, which is what UCERIS is.

And from a gastroenterologist perspective it’s exactly the same delivery system that we’re used to using with Lialda but now with budesonide in it. So, the multi matrix delivery system is a unique proprietary technology. If there is kind of two levels of protection, the first gets the formulation through the stomach so protects it from acid and then a bunch of these small granules are released with a matrix and the drug slowly leaches out of the matrix. And, so that adds to that time dependency to the release that extends the release throughout the colon.

So, if you look at that, this is one of their early kind of proof of concept studies with this formulation. And if you look out to the right, what you can see is that it’s a little bit of budesonide is going to get into the blood stream, it's not a 100% cleared by the liver. But the liver reduces the clearance enough that you don’t have heavy impact on adrenal access suppression. But looking at blood levels, what you can see is that you get a T-max of the time maximum concentration is pushed out beyond 12 hours. Now, if you were to look at Entocort, it’s going to be something more like six or seven hours. So it’s, the extension is later and then you can see that the late time point; the tail off is relatively flatter so that's telling you that drug is continuing to be released because wherever it’s released, the half-life of this is going to be pretty short. So, the fact that that tail of the area versus concentration curve stays up means that there is continuing to be released throughout the colon.

And then if you look at the centrographic image over on the left, you can see that there is release kind of throughout the colon, so the cluster of contrast in the right lower corner would represent the left colon, in kind of rectum area.

Here is some additional pharmacokinetic data and it’s making the point I was making earlier. So in purple is the Crohn’s formulation of budesonide Entocort and you can see the T-max just back at about six hours and then there is a fairly steep drop off overtime. So it’s a bit of a bolus release of budesonide in the ileum on the right side of the colon. And by contrast if you look at UCERIS in yellow you can see that you kind of come up and stay up over a long period of time with the nine milligram dose and so that's the difference in PK between these pushes, the bulk of the delivery longer and it extends longer providing better colon coverage.

So, coming to the pivotal clinical studies, the core one and core two trials. There were two trials, one run mostly in the United States and one in Europe. Each of them had placebo, each of them had UCERIS nine milligrams, UCERIS three milligrams and then each trial had one reference arm in the U.S. the reference arm was Asacol, in Europe it was Entocort. So, you would be able to see head-on-head if you have the budesonide released in the ileum right colon versus the rest of the colon, how that would do from an efficacy standpoint. These trials were eight weeks in duration and then patients were followed after for safety.

So, here is the scoring system that we used, there is a couple of scoring systems, the male clinic score and the so called ulcerative colitis disease activities index or UCDAI score which we used in this trial, they are fairly similar. There are 12 point score with zero to three points each for stool frequency, rectal bleeding, mucosal appearance and physicians rating of disease activity. In this case, the outcome measure which was a combination of clinical and endoscopic remission was a very, very robust endpoint, probably the most robust endpoint that's been used in clinical trials for any of the approved drugs. So, the patients had to achieve normal stool frequency, resolution of rectal bleeding, a normal endoscopy appearance and the physician's overall rating of how the patient was doing with the physician being blinded to the treatment assignment had to be normal or mild.

So with that robust end point, about 17% to 18% of patients who received Uceris achieved that endpoint compared to a blended average of about 6% on placebo. Asacol which is the market leader for mild to moderate ulcerative colitis in this disease population did not achieve statistical significance versus the control. And we know that Asacol is an effective drug, widely used in clinical practice. So this is not to say that Asacol doesn’t work. But with this tough endpoint in this patient population it didn’t actually beat placebos. That gives you a little bit better feel of what the results for the Uceris 9 milligrams means. And similarly Entocort which you would expect would work in a Crohn’s population setting was not able to separate as well from placebo.

Other clinical endpoints, we looked at measures of clinical improvement, endoscopy improvement as composite to complete endoscopy normalization and resolution of the patient symptoms with rectal bleeding and stool frequency. And here you can see the totality of that. So we’ve talked already about this composite of clinical and endoscopic remission, clinical improvement up in the 40% range; endoscopic improvement a little bit above 40%; symptom resolution significantly different. So across the variety of outcome measures, either significant differences or near significant differences and the totality of this effect, I think shows a nice effect for Uceris versus placebo.

What about safety? I intimated that this drug should be relatively safe and well tolerated and you can kind of see that here if you look at 9 milligrams of Entocort, sorry, Uceris versus placebo, relatively similar overall glucocorticoid effects, moon face, striae, flushing, fluid retention, mood changes, sleep changes, insomnia, acne, bruxism; all the things that you kind of think of if you were taking steroids over a few months; look very similar to placebo and very similar to what you see with a non-steroid mesalamine and in the group where there was an active comparator. And if you were to go and look at the prescribing information with Entocort 9 milligrams in the Crohn’s population, it’s kind of the same thing. Not the side effects over eight weeks are not very different from placebo, and not very different from a mesalamine comparator.

So in conclusion, ulcerative colitis is a chronic inflammatory bowel disease which is limited to the colon. There is approximately 700,000 patients in the United States who have this condition. Current treatment options include mesalamine, conventional corticosteroids like prednisone, immunosuppressives like azathioprine and mercaptopurine, and anti-TNF biologics, Remicade, Humira, and soon simponi. Patients, physicians and payers are all looking for treatment options that can delay or avoid the use of these drugs that have side effects. Uceris is a topical steroid, budesonide that can be used to induce remission, response, mucosal healing. It has a favorable side effect profile. Physicians are very familiar with this molecule because they use Entocort for Crohn’s disease, and I think they are likely to welcome this in their practice for patients with ulcerative colitis as another treatment alternative.

So I will stop there. I think we will continue with the presentations. And I can take questions at the end. Thank you.

Unidentified Company Representative

Good morning. I am pleased to provide you with an update on the progress we have made on the commercial launch of Uceris.

As Dr. Sandborn described, Uceris utilizes MMX technology to deliver budesonide, a locally acting corticosteroid to the entire length of the colon. Uceris has significant commercial potential. And as Gerry described and as I am sure you are well aware, we received approval for Uceris on January 14. Within days of that approval we began promoting the product to physicians, pharmacists and patients, primarily through the internet.

We also expanded our sales force immediately following the approval, adding 85 additional representatives bringing the total representatives that we have to promote all of our products to 235 representatives. Those reps trained on the product in the first part of February and we launched with our representatives, our full promotion in the middle of February to again physicians and pharmacists as well as our patient programs that I will talk a little bit more about later in the presentation.

As Dr. Sandborn mentioned, there are 700,000 patients in the United States suffering from ulcerative colitis. Approximately, 80% to 85% of those patients have a mild to moderate form of the disease. Those patients experienced on average two to four flares or episodes of their disease on an annual basis. Those are the patients and those are the episodes that Uceris has indicated to treat.

Now, Dr. Sandborn shared with you our core 1 and 2 data, that’s a pivotal trial data that we’re using in our promotion that’s included in our package insert. We are continuing to study the product. Dr. Wierenga will share with you additional information on the contribute trial. It’s an ongoing trial that we are conducting. That trial will provide additional data for physicians on how to use Uceris, and it will also be very useful for us into the future as we promote Uceris to give us additional data. Uceris is covered by four U.S. patents providing patent protection to 2020.

Now as Dr. Sandborn described, there are a fairly limited number of options for the treatment of ulcerative colitis particularly mild to moderate disease. The primary choice or the primary therapy is 5-ASAs. And then physicians will next reluctantly often go to systemic corticosteroids. Now what has been very positive is the feedback that we have received from physicians is that physicians do not see Uceris as being competitive to 5-ASAs. In fact they see it to be very complementary. They tell us, that they will use Uceris initially when a patient first comes in and is diagnosed with ulcerative colitis, and use it in combination with 5-ASAs. More often they will use it in addition to a 5-ASA, when a patient has been on a 5-ASA for a period of time, and experiencing flares, they will add Uceris on. From a promotional perspective we see this as very positive because we are less likely to see the type of competitive promotion that you often see in most therapeutic classes.

Now to give you a sense of the market potential, last year there were 3.7 million prescriptions written for the products listed here. 2.2 billion in sales. All of the products listed here with the exception of Entrecote, they are 5-ASAs, So all of the product except Entrecote 5-ASAs, all the 5-ASAs are indicated for ulcerative colitis. Now the 5-ASAs are all essentially very similar products with some subtle differences in dosing or number of tablets, more convenience issues that they address. The reason we share with you Entrecote is to give you a sense of the commercial potential that we have with Uceris. Dr. Sandborn showed you that the prevalence of Chron’s is in United States is very similar to the prevalence of ulcerative colitis and we think that there is a similar market potential. Last year there were about 400,000 prescriptions written for Entrecote. Sales were $412 mil. And you can see that on a prescription basis, prescriptions still rose year-over-year 8% even though there was no promotion for the product. So physicians have a very positive perception of budesonide from their experience that they’ve had with Entrecote in Chron’s. and we leverage that positive perception in our promotion. This is actually very similar to a visual our representatives use with their physicians, and what it shows is the similarities and differences between Uceris and Entocort. The primary similarity that we focus on and the physicians respond very favorably to is that the active ingredient is budesonide; and the positive experience that they have had in the efficacy and safety that they have seen.

The primary difference we emphasize is the MMX technology. And they understand, once they understand the MMX technology, that Uceris delivers budesonide to the entire colon and therefore will be effective in ulcerative colitis. So we developed a promotional campaign, promotional program, we are implementing that program that addresses all of the key stakeholders that have influenced in the prescribing of Uceris. We focus on the prescribing gastroenterologist, the national and regional key opinion leaders, the payers so the commercial insurance companies and government payers. Patient suffering from ulcerative colitis is a primary focus of ours and then the distribution channels, the distribution and pharmacy and retail channels. The prescribing gastroenterologist, they are the primary focus of our sales team. Our sales force focuses on approximately 7,500 of the top gastroenterologists. These gastroenterologists write a vast majority of the prescriptions for ulcerative colitis.

The feedback that we’ve received from physicians today has been extremely positive. For them, Uceris is a fairly simple and logical concept. What we’re doing from their perspective is combining two concepts that they have very positive experience and very familiar with. Budesonide from their experience in Crohn's with Entocort and the MMX technology from their positive experience with Lialda and ulcerative colitis.

Their positive experience with budesonide as well as their understanding of MMX delivering budesonide to the entire colon is what has been driving early use. This will give you a sense of the promotional concept that we’re using to support Uceris. This is actually a screenshot from the iPad that our sales representatives use to talk with their physicians. And you’ll see in the upper left the tagline that we used, Power Your Patient Can Handle, so that speaks to the power of budesonide and the comfort they have in safety of budesonide. And then we used the icon on the right where you see the Power of a tornado captured and controlled in the palm of your hand and we use these taglines in these promotional concepts in all of the materials that we develop.

I mentioned that our sales reps they promote primarily through digital tools so primarily the iPad, they use videos and other web-based tools to promote to their physicians but they also have other materials that they need for audiences such as office staff, pharmacists, and actually materials for patients that they give to the physicians’ office to provide to their patients.

In addition to rep promotion, we do traditional advertising, so general advertising, we advertising in the top six GI journals which have essentially a reach into all gastroenterologists. We advertise in their print version as well as their electronic version.

We spend a great deal of time with national and regional key opinion leaders. These key opinion leaders are the primary focus of our medical science liaison team. And we spend a great deal of time developing relationships and developing a deep understanding for them of Uceris and we leverage those relationships in our promotion in a variety of ways but one of the primary tactics that we use is what we call speaker programs. And if you’re familiar with these, this is essentially where you have national and regional thought leader speaking with community based gastroenterologists about Uceris. And we’ll do these in live form such as a meeting and a physician’s office or in a group practice or in a restaurant. And we’ll also do web-based programs, webinars where a national thought leader will speak with dozens of physicians all across the country.

Today, we’ve trained 110 speakers, we have 50 more scheduled to be trained each month, we’ve held almost 100 programs and we’ve had 550 medical professionals attend these programs.

Payers, when we speak of payers we’re talking about commercial insurance companies, government payers, and we spent a great deal of effort with payers to ensure that Uceris is available and affordable for patients. The feedback that we received so far from managed care in particular has been very positive. They clearly see and do see a need for additional therapies for the treatment of ulcerative colitis particularly mild-to-moderate disease and when they look at Uceris, they actually see it as a potentially and affordable alternative to what they see as very expensive biologic treatments.

So the response has been very positive and so far Uceris is generally available on a third-tier co-pay. We have helped the patients who have commercial insurance by also implementing an e-Voucher program in the way that program works is the patient just brings their prescription to the pharmacy and automatically through the pharmacy system they’ll receive a discount down to $25 co-pay if they have commercial insurance, so makes it more affordable for the patient.

Now, we’ve begun the process with Part D plans. we’ve actually had discussions with all of the top Part D plans across the country and we’re in the process of bidding for 2014 but through those discussions we’ve received positive feedback from many of those plans and they have interest in potentially adding Uceris to their 2013 formulary as well and we hope to wrap up those discussions by the end of the May.

So, overall so far very positive feedback for managed care as far as the coverage of Uceris patient. So I mentioned before there’re approximately 700,000 patients suffering from ulcerative colitis in the United States. Our goal is to create awareness with those patients about Uceris and understanding of Uceris and to motivate those patients to go see their physicians to learn more about Uceris.

The primary tactic that we use, the primary tool that we use is the internet so we advertise and we provide information where patients go in the internet. We advertise on YouTube, Facebook. We provide information to most if not all of the medical information sites, the patients with ulcerative colitis visit. We’re also partnering with two of the largest sites QualityHealth and WebMD to create programs to help motivate the patients to go see their physicians to learn more about Uceris.

And then we link all of those programs, all of those tactics to our patient website and on our website we provide more detailed information about Uceris and we also motivate patients to go see their physicians to learn more about Uceris.

Last customer to talk about is the distribution channel and retail pharmacy, our goal with pharmacy is to ensure that the product is physically available in a convenient manner when patients go to get their prescription and that the prescriptions are filled correctly. And to accomplish that we’re working with our wholesaler and chain drug and independent pharmacy partners to educate pharmacists. We’re also doing general advertising; advertising on the internet and providing medical education or continuing education for pharmacists to help them fully understand what Uceris is and why it’s important for patients to receive the product.

So that’s the plan that we’re implementing at this point. It’s early in the process but we thought we’d share with you some of the results to this point and what we have here is the initial prescription trends on total prescriptions and trends on weekly writers. Keep in mind that full promotion begins the week of February 22nd, so this shows five weeks of data since we’ve had a full promotional launch. The data for this week as you can see here six weeks we have the most recent week 579 prescriptions. What we show is consistent steady growth in both prescriptions and writers and although it’s still very early we’re very pleased with the trends that we see at this point.

Okay, thank you very much, and at this point I’ll bring up Dr. Wendell Wierenga to talk to you more about this the Santarus pipeline.

Wendell Wierenga

Thank you very Tom and I’d like to add my welcome to all of you this morning. To talk about the developmental pipeline for Santarus and evolving Biopharmaceutical Company, I think you can tell from the presentation you’ve seen so far this morning that Santarus has really does an excellent job of commercializing and launching new products but as you know to sustain growth in this industry, in this business, you only do that with new products. So, we have saved the best till last and we are going to talk about the new products coming forward from Santarus’ portfolio over the next decade or so.

This is a snapshot of our current portfolio and I emphasis that this is what we look like today. Uceris as you know has recently been approved, nonetheless we’re continuing to invest in its future and I’ll give you a little bit more information on that as we go into some of the subsequent slides, but I just want you to know that that’s still part of our development portfolio on our ongoing investment.

Ruconest is the second most advanced program in our development portfolio and Mark Totoritis is going to give you a much more in depth presentation of this because this is what we are going to be talking about more and more as we look into the future, in the near term future for Santarus for shareholders and for patients. It is a program that has had the stage of eminent filing and also in parallel we are going to be investigating several additional indications for this particular novel recombinant C1 esterase inhibitor.

Rifamycin MMX represents a treatment for travelers' diarrhea wherein Santarus has completed the phase III clinical trial and we’re awaiting for a second phase III trial to complete together. These two studies will form the basis for our submission for the treatment of travelers’ diarrhea in the U.S. to the FDA.

And lastly our antibody, a novel antibody to the BLA1 integrants SAN-300, is transitioning at this point from phase I into a proof of concept phase II studies. This is another way of looking at our portfolio and it gives you a look into the next decade or so in terms of exclusivity that we have surrounding these particular products and in some more detail, some of the additional opportunities that we envision for the utilization of these agents. I am not going to go on to this detail but suffice it to the say we are investing in these programs because they have this kind of future in terms of time as well as deliverability of value to patients and ultimately to Santarus’ shareholders.

As you can see Uceris out to 2020, Ruconest to 2024, Rifamycin 2025 and SAN-300 to 2022 realizing of course that Ruconest and SAN-300 are both biologics and should enjoy 12 year exclusivity as well, data exclusivity post approval.

A little more granularity then on a couple of these products in our portfolio, to give you a sense of where we are going with them and deliverables over the near term; we have a large clinical trial going on at the present time. We started this trial about a year ago and we expect topline readout at the end of this year. So the trial has gone well in terms of execution, its 500 patients, one to one randomized between patients that are flaring and get placebo and patients that are flaring and get placebo plus Uceris 9 milligram.

The study is a broad in terms of its geographic footprints, it’s in Europe and in U.S. as well and we expect to be able to tell you the results of this as I said about the end of year, we expect enrollment to complete here in the next few months.

We are also going to be initiating discussion with the FDA about the pediatric trial, this is our only post-marketing requirement for the approval of Uceris in the U.S. and we anticipate that trial initiating in 2014. This is important subset of patients for treatment typically getting oral steroids often times and so we believe Uceris will be an important component or contributor to the treatment of the pediatric as well.

In addition, there are other types of colitis, inflammatory bowel disease in the lower GI tract that we believe are amenable to the treatment with the drug like Uceris and we’ll be looking at this in more detail and will be giving you more granularity on what we are exactly going to do with these probably later on this year.

The next most advanced program is Rifamycin. This as you know has a broad spectrum non-systemic antibiotic that is also on the same delivery system as Uceris is, the MMX technology for delivering and releasing in the colon. A phase II trial done several years ago showed comparable efficacy in the treatment of travelers’ diarrhea to Xifaxan. So Santarus initiated a phase III clinical trial, the superiority trial design which ultimately was successful. I’ll give again the top line information on that in just a moment. And this as said earlier, is the part of a two-part package that we intend to submit to the FDA for approval for the treatment of travelers’ diarrhea. The study currently ongoing by Dr. Folk Pharma, has been extended, an upsized to about 1,000 patients. It’s a different trial design. It’s a non-inferiority trial comparing Rifamycin MMX to ciprofloxacin.

Their Data Safety Monitoring Board recommended that they increase the size of the trial when they looked at the data last year. And this particular extension then requires an amendment and approval of the regulatory authorities. This happens to be in the India at the present time and there are some back and forth going with the products under development in India. So this is undergoing some delay and I can’t really give you a specific forecast as to when this is going to be resolved but we are staying very close to the situation because it’s an important asset for the company.

The endpoint of the travelers’ diarrhea trial that we executed on is time to last unformed stool and as you can see from this particular slide, the results of the trial were highly statistically significant with the active Rifamycin MMX showing median TULS of 46 hours compared to placebo of 68 hours. This is using 400 mg b.i.d. for three days and the side effect profile was unremarkable, the frequency of treatment emergent event was similar to placebo.

I am going to spend just a little bit time on SAN-300 as Mark Totoritis is going to come up in a moment and focus exclusively on Ruconest. But SAN-300 is product like Ruconest that we feel has pretty broad potential in terms of a number of potential indications, it like Ruconest is a biologic. This is an antibody that is targeting the alpha-1, beta-1 integrin. As you know several integrins have now been validated in clinical studies and indeed there is a marketed product that target integrins. Most of these are antibodies, there is even a couple of small molecules as well.

The VLA-1 is the major collagen receptor. It’s found on activated T-cells and monocytes. And like other integrins it’s important in both migration and adhesion and ultimately in proliferation of these cells in sites of inflammation. This particular antibody was first generated by Biogen and they had a significant program going on in the 1990s to generate antibodies to integrins. This one was like the other ones made in recombinantly in (inaudible) cells. It binds specifically the alpha-1 subunit of this VLA-1 integrin with high affinity and also inhibits adhesion to matrix molecules at very low concentrations. And so doing it is not non-depleting in terms of the cell type.

This particular antibody has actually been studied very extensively in a large number of animal models representing the diseases that are shown here on this slide, rheumatoid arthritis, IBD, psoriasis, et cetera, in fact in many cases several different models of these diseases were studied and really across the board showing excellent efficacy in these models.

It also represents a drug that has very nice pharmaceutical properties. It’s highly soluble and very stable. So, we’ve been able to generate both an intravenous formulation as well as the subcutaneous formulation and we have evaluated both of these formulations in the phase I clinical study, the typical single rising dose type of trial design where we’ve subjected subjects to the intravenous formulation as well as subcutaneous formulation in a serial faction. 33 subjects have been exposed to the IV version of this drug from 0.3 to 2 milligrams per kilo and subcutaneously we then started to and went up to 6 milligrams per kilo.

In all cases the side effect profile was very similar to what one sees typically with antibodies in this (inaudible) of infusion reactions typically seen with intravenous administration and subcutaneous administration we saw mild injection cite reactions associated with that.

We are very comfortable with the safety profile, we’ve just locked to study and are unbinding the data right now. So, I’m giving this as preliminary information. We do also have data on an important biomarker in the study which measures the degree efficacy (inaudible) which is really receptor saturation. What’s happening at the VLA-1 receptor level in terms of competition with the antibody and we see complete really and durable saturation that will allow us in all probability to be dosing on a once a week basis as we go forward into proof of efficacy studies.

The kind of proof of efficacy that we’re talking about is rheumatoid arthritis followed by something in the inflammatory bowel diseases, either Crohn's or ulcerative colitis and probably in that order. We’ll do a multiple ascending rising dose type trial, here in RA starting later on this year after pre-IND discussions with the FDA. And we anticipate initiating that study then towards the end of the year. And as one gathers data from this particular study in terms of dose and duration and safety then designing a trial as a second trial and goal if we will in the IBD space.

So that’s a quick snapshot of where we are at today and we are going in. And now I’ll like invite Mark Totoritis up for our presentation on Ruconest. Thank you.

Mark Totoritis

Thanks Wendell and good morning everyone. It’s a great pleasure to have the opportunity today to take a little bit deeper dive on our Ruconest program with you. And I’d like to startup by just providing little bit of background on Hereditary Angioedema itself and then tell you little bit about some of the efficacy data in the treatment of acute HAE attack associated with Ruconest. And then tell you something about our plans for moving forward of with exploration of HAE Prophylaxis as well as some other indications for Ruconest that we’ll be thinking about.

So, many of you may be familiar with HAE but it is a rare and potentially life threatening genetic disorder caused by mutations in the gene coding for C1 esterase inhibitor. And 85% of patients approximately this genetic mutation results in low plasma levels of C1 inhibitor called type 1 HAE and in the other 15% there are normal or even elevated plasma levels of a dysfunctional C1 inhibitor. But in either case this leads to acute attacks of angioedema and these are associated with unpredictable and recurrent attacks involving significant swelling of subcutaneous or submucosal tissue at various anatomical locations. The swelling associated with hereditary angioedema should be distinguish from swelling associated with allergic edema.

Hereditary angioedema is not associated with hives or wheels. Virtually any location can be affected by hereditary angioedema and in fact about 15% of patients may have simultaneous involvement of more than one area. Some common areas involve and include the abdomen where many start out with initial pain and vomiting, they progress to very severe symptoms which actually mimic more acute gastro-intestinal disorders and patients often have a history of unnecessary abdominal surgery as a result of this diagnosis.

Involvement of the pharyngeal and laryngeal area can actually be life threatening. And it’s sad to note that about 30% of families who all have a history of a family member who has actually died because of asphyxiation. Peripheral attacks have often been though of as milder but certainly can be associated with very significant pain and disability. We estimate that there are about 6,000 to 8,000 patients in the U.S. with hereditary angioedema.

Now affective management of hereditary angioedema is aimed at either treating acute attacks or preventing attacks from occurring. Unfortunately, there are drugs available for both. Generally patients are put on long term prophylaxis when they have very frequent attacks that are moderate to severe in nature or they have significant associated disability.

Our own market research suggests that about 30% of patients will be candidates for prophylactic therapy but that even with the development of new acute therapies but the major market segment will still be about 70% of the patients who receive acute treatment.

Really, acute treatment should be available for all patients with hereditary angioedema since any attack can develop into a severe and/or life threatening attack. It’s also important to note that affective prophylaxis doesn’t obviate the need for availability of acute therapy as well because these patients will also have breakthrough attacks that require acute treatment.

I want to talk just a little bit about Ruconest. Wendell has already given a brief introduction to this but it’s very unique among C1 inhibitors and being a recommend product produced using a transgenic technology. And as such it is not subject to supply shortages that have often been associated with plasma derived C1 inhibitors and also enables the production of a very highly purified product that is much more pure than the plasma-derived products.

As you’re probably aware, Ruconest is already approved in Europe and currently has orphan drug designation in the U.S. both for the treatment of acute attacks as well as for prophylaxis. Wendell already mentioned that we’re planning to submit a biologic license application for treatment of acute attacks with angioedema within the next several weeks.

Ruconest as a C1 inhibitor, inhibits multiple cascades involved in hereditary angioedema including the coagulation complement and contact system cascade and it does so by inhibiting certain proteases or enzymes in these cascades including factor 12A and 11A, C1r and C1s in the complement cascade and Kallikrein in the contact system cascade.

Under conditions of deficiency of C1 inhibitor there is uncontrolled activation of all of these cascades and this results in the production of many vasoactive substances, but particularly bradykinin which result in increase in vascular permeability or vascular leak associated with the edema and other symptoms of hereditary angioedema.

Now Ecallantide and Icatibant are affected by their effect on the contact system cascade. These are not true replacement therapies and are correcting the deficiencies that exist in the other cascades. I think it’s also important to point out that C1 inhibitor regulation of these multiple cascades will have implications for potential additional indications and we're going to talk about that shortly.

The efficacy of Ruconest for the treatment of acute Angioedema attack has been demonstrated now in three randomized control trials. And in the panel on your left the results from the first few trials are pulled and presented here in graphic form. And they show a clinically and statistically significant reduction in timed onset of relief for either the 50 unit per kilogram or 100 unit per kilogram Ruconest dose, relative to saline or placebo. We can see that there's very little difference in the efficacy between the 50 unit per kilogram or 100 unit per kilogram Ruconest dose, relative to Saline or placebo. You can see that there's very little difference in the efficacy between the 50 unit per kilogram or 100 unit per kilogram dose, but obviously a big difference in timed onset of relief versus placebo. They are also not shown here open label extension data from these trials, showing the consistent and continued efficacy of repeated use of Ruconest for the treatment of acute attacks.

In the right hand panel, I want to point out to you that there are also data to suggest that dose is important to the efficacy of C1 inhibiters. Hack and colleagues evaluated the randomized control data from the plasma-derived clinical trials as well as Ruconest trials and looked at the proportion of patients responding within 4 hours versus placebo and they corrected this for placebo. And what you can see in the graph is what appears to be a dose response with optimal efficacy, 100% response occurring at the 50 unit per kilogram dose.

There's also other information that demonstrates that the 50 unit per kilogram dose restores normal C1inhibitor levels in virtually all patients treated with that dose. I think these data together really give us insight to the fact that with respect to treatment of acute attacks, there are factors related to C1 inhibitor therapy other than the half-life which varies between these agents, which might explain the efficacy of these drugs.

In the current slide, you'll see the results that we in pharming (ph) presented the top line results for the pivotal study of Ruconest and acute attacks of hereditary angioedema, this was presented in the fourth quarter of last year. You can see that the efficacy results are very, very consistent with the prior two randomized control results in demonstrating statistically significant and clinically significant reduction in median time to beginning of symptom relief with Ruconest versus placebo. The fact that there were also a higher proportion of patients in the saline group who experienced a treatment emergent adverse event within 72 hours of completion of the infusion is also indicative that Ruconest was generally well tolerated in the study. Importantly there were no thromboembolic events, no anaphylaxis and no neutralizing antibodies which occurred in this trial. And I think you're also well aware that this trial was conducted under an FDA special protocol assessment.

Next, I'd like to show you a comparison between these Phase III pivotal study 1310 results in the previous two randomized controlled study results and you can see at the bottom of the table, that the results for the 1310 trial looking at the primary endpoint is assessed by a visual analog scale assessment tool were highly statistically significant and very consistent with the results for the prior two randomized control trials.

This is perhaps more strikingly demonstrated in the current figure, where on the left hand side of the figure you can see the median response and 95% confidence intervals for either the 100 in blue or the Ruconest 50 unit per kilogram dose in green, and the consistent efficacy of those results versus a very variable placebo response in red with very broad confidence intervals.

I think there are some very important features of Ruconest which differentiate it from other existing therapies for hereditary angioedema, these are displayed on the table but I'm not going to go through this in detail. Suffice it to say that with respect to efficacy the IV administered C1 inhibiter products including Ruconest seem to clearly demonstrate better efficacy than the sub two products Kalbitor and Firazyr as manifested by the high relapse rate associated with the sub queue products.

And with respect to the C1 inhibitors themselves I've already pointed out to you that Ruconest is the only product which offers a 50 unit per kilogram dose which seems to represent optimal therapy. With respect to safety of the plasma derived products, and again Ruconest is unique in being a recombinant product and therefore should not have some of the potential risk of transmitting blood borne infections that is attendant with the use of plasma derived products.

Now, turning to prophylaxis, I want to point out that twice weekly C1 inhibitor therapy in a 22 patient cross over study was demonstrated to show a reduction in attacks by about 50%. But it's also important to note that the specific mechanism by which this occurs is not entirely clear. There doesn't seem to be an apparent correlation between post dose plasma levels of C1 inhibitor and frequency of attacks, there isn't an apparent threshold that identifies complete protection against attacks and it's also interesting to note that in the open label Cinryze study, some patients who only receive once weekly therapy had significant benefits in terms of reducing frequency of attacks, an efficacy that couldn’t be explained by the half-life of the product alone.

So here as I think within the acute therapy situation you're seeing with prophylaxis there seem to be factors other than half-life of the C1 inhibitor which explain its efficacy. Supporting this is the fact that there is an open label experience with Ruconest where 25 patients receive once weekly treatment for eight weeks, and we saw just over a 50% reduction in attack frequency. So we think these results are very provocative and justify exploration of Ruconest in Prophylaxis and plan to discuss a clinical study design with the FDA in the second half of this year.

Now, I'd like to turn a little bit to a discussion of additional indications, by virtue of its regulation of the complement and contact systems and an effect on inflammation, vascular permeability and pain, there are many other potential indications for Ruconest, it's also important to note that in addition to its mechanism of protease inhibition by other sites on the C1 inhibitor molecule interacting with other types of cells. There are some protease independent anti-inflammatory functions of the molecule which could also contribute it its efficacy. This has led to exploration of C1 inhibitor therapy primary plasma derived products for this point and animal models or small clinical experiences. And these have fallen into roughly two categories either capillary or vascular leak or ischemia and reperfusion. In many of these disorders, I think it’s interesting to note that there may be a relative deficiency of C1 inhibitor.

During an acute inflammatory response, C1 inhibitor acts as an acute phase protein that needs to increase in levels to fight some of the potentially damaging effects of activation of the compliment and contact systems.

In many of these disorders, I think it’s interesting to note that there may be a relative deficiency of C1 inhibitor.

During an acute inflammatory response, C1 inhibitor acts as an acute phase protein that needs to increase in levels to fight some of the potentially damaging effects of activation of the compliment and contact systems.

So even patients with normal levels who have these disorders may as I said have a relative deficiency that requires increasing levels of C1 inhibitor. Of the disorders shown on this slide, we are most intrigued and excited about the potential for pancreatitis and I want to tell you a little bit why.

As the name implies, acute pancreatitis is an acute inflammation of the pancreas. It’s caused in about 75% of the cases by either gallstones or chronic alcohol abuse and there are a host of other causes which are listed on the slide, but I’ll also note that a significant proportion remain of unknown ideology.

The incidents appear to be rising with 274,000 annual hospital admissions, and this represents about a 30% increase over a decade. Mortality rate is still quite significant, averaging about 2% to 10% although it’s much higher than this still in the more severe cases. And there is a very-very high unmet medical need representing a significant opportunity because there is no current specific pharmacologic therapy for treatment of acute pancreatitis.

Treatment is supportive in terms of IV hydration, pain control and nutritional support. And acute pancreatitis is associated with very high direct costs. Pancreatitis is, acute pancreatitis is categorized by acute onset abdominal pain and elevated pancreatic enzymes and as well as characteristic findings on radiologic studies when they are performed.

And the recent revision of the Atlanta criteria have provided a little bit more specific categorization in grading of severity of pancreatitis which helps physicians understand prognosis and predicted severe disease to a greater extent. So the categories are interstitial edematous which tends to be milder and patients will generally resolve after a brief hospitalization and necrotizing which carries a worse prognosis.

And severity ranges from mild to severe, with severe obviously being the area of most concern, and this is associated with persistent organ failure which can lead to significant morbidity and higher mortality. So, it’s really in this group of patients those predicted to have severe acute pancreatitis where there could be the most meaningful intervention we think in terms of the development of specific pharmacologic therapy.

This accounts for about 15% to 25% of pancreatitis presentations and the mortality in the most severe cases is actually quite high as you can see. So physicians are very interested in being able to better predict which group of patients will fall into this category and there are a number of (inaudible) which have been developed for that purpose.

Now regardless of the cause of acute pancreatitis, the path of physiologic process seems to be very similar and follow a sequential process. I have already talked a little bit about potential and citing events. And what

happens under these conditions and for unknown reasons truthfully, instead of the normal condition where the pancreas synthesizes and secretes enzymes which are not activated until they reach the intestine.

There is actually intra-cellular activation of pancreatic enzymes specifically trypsin, which results in damage and injury to the pancreatic acinar cells as well as micro circulatory injury and sets off this process of acute inflammation.

And subsequently results in increased vascular permeability. There is activation of those complement and contact system cascades that I talked about with cytokine release causing a very substantial local inflammatory process involving not only the pancreas but the tissue surrounding the pancreas in a substantial portion of patients.

This can cascade into a more systemic inflammatory response resulting in what’s called SIRS systemic inflammatory response syndrome. Patients who develop SIRS early in the course of disease or who have persistent SIRS beyond 48 hours are at very high risk for organ failure and persistent organ failure which is associated with significant morbidity and mortality.

So it’s very important to focus in this area and physicians are trying to prevent and intervene at a time when they can prevent the development of this systemic inflammatory response and persistent organ failure. Current thinking dictates that there is a window of opportunity if you will during the early phase of pancreatitis to intervene and prevent the complications associated with persistent organ failure. And this may only be a period of several days from the presentation of onset of acute pain and this is going to be something that’s very important to consider in designing clinical trials.

Now there is some very provocative experience with use of C1 inhibitor, either in the setting of pancreatitis or in the vascular leak that can be associated with pancreatitis. I just want to point out in two settings, one in capillary leak syndrome occurring in the setting of bone marrow transplantation, and in another where two young children developed severe acute pancreatitis. And in each of these cases, the patients received early treatment with plasma derived C1 inhibitor over the course of several days. There was a very-very dramatic response in the symptoms and particularly the capillary leakage associated with these abnormalities to the treatment with the plasma derived inhibitor.

So, I think there is some very-very compelling information, there is some very compelling information here that indicates that C1 inhibitor therapy could be effective when used at the appropriate time in pancreatitis and the associated inflammatory cascade that leads us to want to pursue this and explore this further.

So in summary, I talked about for pancreatitis a strong technical rationale, but I’ve also provided some evidence from the clinic that there is reason to consider the use of C1 inhibitor in this condition, and again to stress that there is a very-very significant unmet need here and a very-very large opportunity that we are very excited about. So, on the basis of this, we plan to request a pre-IND meeting with the FDA with a goal of initiating an exploratory proof of concept trial late this year.

So in summary, I think the Ruconest project is progressing very, very nicely and we are very, very excited about the future opportunities with this project. We are going to be eminently submitting along with our partner Pharming, a BLA in the second quarter of this year. And we are going to be exploring other indications not only prophylaxis and HAE but outside of the spectrum of HAE. Pancreatitis looks like a very, very exciting potential opportunity and we’d like to try to initiate a trial before the end of this year. So, thanks very much and with that I'll turn it back over to Gerry to wrap up.

Gerald Proehl

Thanks Mark. I appreciate everybody's attention. As we focus throughout 2013, obviously our number one objective is the successful launch of Uceris. I will say, when we launched Uceris we did a lot of market research prior to the launch, particularly with physicians. We surveyed about 700 physicians, so about 10% of the physician target population and we got very positive responses. Dr. Sandborn said they are very familiar with budesonide. So, for them they were really looking forward to having a budesonide in a colonic delivery.

The things that we weren't sure about was how effective would the product be with an overall response rate of 17% to 18%. The clinical trials you always get concerned, that is this product going to work for patients. What we are hearing from our sales force via the physicians that are treating patients is that patients are getting response within one to two weeks. And the nice thing and I was saying to Dr. Sandborn about this, when you are in diabetes and you put a patient on a diabetic product like GLUMETZA or CYCLOSET, you don't really see anything because it’s an asymptomatic disease. When you are treating a patient with ulcerative colitis that is having 15-20 bowel movements a day and within one or two weeks are down to four or five bowel movements a day, those patients are extremely excited about the effect the product is having. They call their physician up and it’s an instant feedback loop for the physician so we are really excited about that.

The last thing and Tom mentioned this as managed care. We weren't sure what type of response we’d get for managed care. Anytime you bring in a new product in that costs $40, $41 a day, you figure you are going to get some pushback. I think they recognize that if a patient can get success on Uceris it delays the time they go on to a biologic. Once they go on to a biologic, it's likely that they are going to stay on a biologic for the rest of their lives and so they are very open to (inaudible) formulary so that's exciting. We are also focused on continuing to grow our other products. While we want a great launch for Uceris, we want to continue to grow GLUMETZA as Bill said we want to stop the decline of the prescriptions for Zegerid and begin to start to grow that product and continue to grow Cycloset and Fenoglide.

And then lastly, as Wendell and Mark talked about, we are very excited about our pipeline. We think the products that we have in development, while we are going after the initial indication, we think each one of the products have multiple indications. And the nice thing about once you start to develop a product, you learn a lot about the product, about the safety and the efficacy of that product and so the best way to maximize the value of each of those products is to explore the multiple indications. So we plan on continuing to do that.

Obviously, we are focused on driving revenues and profitability and we expect to do that over the coming years. So, with that I will go ahead and open it up to any questions.

Question-and-Answer Session

Jason Gerberry - Leerink Swann

Great, thanks. Jason Gerberry from Leerink Swann. First, thanks Jerry and team for putting this together, this was very helpful. I think I will just start with Uceris, just kind of curious, as you think about 2013, the scripts look pretty good. Talking about Medicare, how big of a limitation that would be in terms of coverage and I noticed that there was no update in terms of maybe a next gen Uceris. Do you guys plan to have any life cycle extension there?

Gerald Proehl

So, as it relates to Medicare, the response we are getting and as Tom mentioned has been very positive. Typically, most of the plans at this point in time are looking at 2014 formularies and you are negotiating to get on 2014 formularies. But with many of the Medicare Part D plans actually, not only are they talking to us about 2014 formulary, but they are actually talking about getting us onto 2013 formulary. So, we expect as we move into the middle of this year that many of the Medicare Part D plans will actually add us on for the second half of 2013 into 2014.

As it relates to your second question, we are continuing to look at how we would extend the lifecycle of Uceris. I don't have anything in particular I can tell you right now but we are very focused on that and I’ll work on some things that could give us a little bit longer time with Uceris.

Jason Gerberry - Leerink Swann

And if I could just ask one follow up to Dr. Sandborn. Could you probably talk about how you plan on using Uceris from treatment algorithm. What impact this has, will you still use oral prednisone and if this contribute study is positive, how that would alter your utilization of the drug? Thanks.

William Sandborn

If you look at Entocort in Crohn’s diseases it's an (inaudible) situation, there were several sort of underpowered equivalent studies that didn’t show a difference but they probably didn’t have enough power so if you put them all together in a meta analysis, conventional steroids are slightly more effective but they come with all of the side effects. So, you get probably 75% or 80% of the efficacy that you are going to get with the topical delivery system without all the side effects. So really ill patients, hospitalized patients, somebody who is approaching hospitalization, the more worried about them you are, and the more they are kind of in the moderate heading towards severe category or definitely in the severe category, probably gets conventional steroids. Anybody in the mild, to light side, to mid moderate, I think you would probably go with the, so that’s sort of how we think about it. Did that answer your question or?

Jason Gerberry - Leerink Swann

An insight on how that might impact your ultimate utilization of the drug, is that?

William Sandborn

Yes, so the two pivotal studies really looked at first line therapy. So patients were, you know, the background was placebo. As I think, we heard from Tom that one of the places that clinicians will want to use this is in patients that are failing mesalamine. You could go back and look at some sub-group analysis and we have them abstracted digestive disease week next month, where we had looked at sub group of patients from the two pivotal studies that had sort of failed mesalamine or relapsed on mesalamine. They had to stop the mesalamine to come into the trial and then they got drug or placebo and we saw a nice benefit in those patients. But the new study actually continues patients on mesalamine and formally looks it add-on therapy. So, I think it's logical that we are working in that setting. Clinicians are already doing it but having robust prospective data and getting that on label eventually would be useful.

Annabel Samimy - Stifel Nicolaus

Hi, just to follow on the Uceris questions, could you tell us right now what type of patients you are seeing on drug? Is it patients who are new patients who need induction or is it patients who are switching from prednisone and I'll just start with that?

Gerald Proehl

Annabel I think we're actually seeing a pretty wide variety of patients and as we have surveyed some of the physicians what they have told us is any patient that's flaring, they can't control the flare, they are going to try Uceris on that patient. So mild patients all the way to probably even more severe patients that are already on biologics, I think they feel like this particular product gives them the option of being able to bring the flare under control without some of the inherent side effects that you see with a systemic steroid. So it’s a wide variety of patients that are seeing effect to this product.

Annabel Samimy - Stifel Nicolaus

And Dr. Sandborn you mentioned that doctors are already putting patients on combination 5-ASA and Uceris so, when you get the, I guess it was a contribute study, when you get the data from that, is there going to be a significant increase in commercial opportunity?

Gerald Proehl

I think I wouldn’t say it is a significant increase in commercial opportunity, mostly because as Dr. Sandborn said, physicians are already doing it. I think what it will do, it will allow our sales reps to go in there and really promote the efficacy of the product in combination with 5-ASAs. So again, the other thing, what’s really important when you are launching a product, I think, and Bill can probably comment on this, you want to be top of mind with physicians particularly the prescribing physicians and the key opinion leaders. The way you do that is to continue to publish more data in medical journals and peer review journals and then present that at medical meetings. We think that, what we will see from the contribute study is continued subset analysis of some of that data that we will be able to continue to publish and present it in some of the major GI medical meetings.

Annabel Samimy - Stifel Nicolaus

And then if I can ask on the commercial side of it, can you help us understand the growth, and now you obviously have a $25 co-pay and there is probably a sampling program, so maybe can you give us a sense of what the gross, net, discounts might be, and then separately the pharmacy switching has been a big issue with a lot of new launches. And do you have an effort to educate pharmacists, but are you seeing any issue with pharmacy switching?

Gerald Proehl

So with regard to the gross and net Annabel, we don’t get into the specifics on that when we actually provide data on sales it's our net sales, we think it will be in the range of what you would expect for a pharmaceutical product certainly not to the same degree that we saw with Zegerid, which was highly discounted. In this particular category, what we are finding is, with the typical discounts you provide the wholesalers and prompt pay etcetera, and you are going to provide some discounting to insurance carriers and Medicare Part D just to get on formulary. But we don’t expect to do any major discounting on this particular product.

And your second question again was on pharmacy switching. We are not expecting to see significant pharmacy switching for a couple of reasons. Number one, it’s very clear that these products are different; Entocort and Uceris. When you are talking about delivery we spent a lot of time calling on retail pharmacist. Our sales reps are trying to get to three or four pharmacies a day to educate. We are actually advertising in the top pharmacy journals and making sure they are aware of the differences in delivery system. In addition, we have $25 co-pay; so for those patients that have [Commerce Insurance] [ph], they will see a rather low co-pay. So we don’t expect to see much switching of pharmacy, will there be some? Sure there is going to be some switching.

And then our guidance of peak sales of $300 million, we have estimated that there will be some switching but we don’t think it will be very substantial.

Unidentified Analyst

Hi Eric (inaudible) here, a few more commercial questions. The clinical trial was done with eight weeks of therapy?

Gerald Proehl

That’s correct.

Unidentified Analyst

Is that what you expect is duration of therapy, that’s number one. And number two, what is the pricing? And number three, how does that compare to the other products Asacol and Pentasa are more chronic therapies, but how does that compare in pricing?

Gerald Proehl

Okay, so with regards to how we expect the product to be used. I think initially it will be used to bring a patient under control. So typically it is going to take about 8 weeks. Some physicians may use it for a shorter period of time, some for a slightly longer. Really I think it’s going to be more dependent on when the patient gets under control. As they get more comfortable with the product, will they use it for a longer period of time, probably would turn that to Dr. Sandborn since he is a prescribing physician and treating patients.

William Sandborn

I think what happens with Entocort, if you treat for eight weeks, the patients are fully controlled in other eight weeks. It actually comes as 3 mg capsules rather than 9 mg capsule and so there is an additional three months of therapy in 6 mg. That can be done sort of short term maintenance with Entocort so that the label on Crohn’s is a bit more flexible. I think the reality is that docs have a pretty good deal of this with 9 mg of Entocort for 16 weeks. The side effect profile still pretty much looks like placebo or mesalamines. I think people would have little to no angst about going beyond eight weeks out to four or five months.

We are not well positioned, at this point because we don’t have a 6 mg sort of dose form for chronic use with the product although and years passed before we had Entocort and patients would get steroid dependent, we used to do every other day steroids. So any of you that have a medical background, you might remember people are still doing, I think sometimes every other day steroids is a way of managing asthma or something.

So I think what a number of us were doing in practice is sort of two days out of three, so you get an average of 6 mg over three days. We will need to generate some more clinical experience and data with that eventually and I don’t want to speak for the company but someone was asking me what’s the lifecycle extension possibility, looking at some sort of 6 mg dose form for a longer term therapy would be a possibility.

Gerald Proehl

The other question on pricing, so the 5-ASAs are going to be priced in the $12 to $15 a day range. As you have mentioned they are typically going to be used chronically, whereas if you compare Uceris’ price switches between $40 to $41 per day. Entocort has actually increased their price. They are in the $60 range. And even the generic budesonide to Entocort is priced at about $38 a day. So we don’t see that has to be an issue we are not getting pushed back from managed care. We actually think that they see us as also a relatively cost-effective therapy when they compare us to a biologic which might cost $20,000 to $25,000 a year.

Scott Henry - Roth Capital

This is Scott Henry, Roth Capital. First of all Gerry, congratulations to you and your whole team on a tremendous year. I know people say that a lot in these type of meetings but you certainly earned it. And then shifting gears to Uceris, talking to some physicians, I hear a lot of feedback, very positive feedback, but that they are using it for induction or acute treatment versus maintenance or chronic treatment. When we look at the 5-ASA market of about 5 million prescriptions a year, how many of them do you think are in an acute fashion? How should we stratify that number?

Gerald Proehl

Well the data that we have seen certainly would indicate that. Again there is probably about 500,000 to 550,000 patients that have mild to moderate disease. And typically a patient is going to flare somewhere between two to four times a year. And from the information that we have gathered we expect that they will probably seek treatment with their physician once to twice a year, and that’s how we have modeled our overall forecast, just assuming that an average patient might actually get treated sometime between once or twice a year with an acute flare, and be treated for an eight week course of therapy.

Scott Henry - Roth Capital

And they would be on, if two of the prescriptions are for acute, how many months of treatment would you expect them to get, would they get?

Gerald Proehl

Well we expect that they will typically be treated for about eight weeks of therapy and that would probably occur in between once or twice. So you might assume in average might be somewhere around 12 to 16 weeks of therapy on Uceris in a year.

Scott Henry - Roth Capital

And then just to clarify, there has been a little discussion of potentially a follow on to Uceris. Do you have all rights to future budesonide products with the MMX technology? You had an agreement with you. And then a question just from the feedback you’re getting in the field. If I recall when the product was progressing through clinicals, one of the issues was that the rate of remission was a little lower than you’re seeing in typical 5-ASA because you had such a strict criteria on how you define it? How is that going over with physicians? Are they seeing through it understanding that you used the stricter criteria or is that a hurdle to overcome?

Gerald Proehl

When we did our initial market research and then subsequent to the launch of Uceris, what we heard from physician is the first thing they would look at is they look at the remission rate of 70% to 80% and it seems kind of low, it’s lower than what I would have expected and then their next response is, but I know budesonide works and so I’m going to use in my patients so we’re getting relatively little pushback on the lower remission rates. Again, remember that this has to do with four different criteria two of criteria are things like physician global assessment and friability of gastric mucosa.

When they’re using Uceris most physicians aren’t doing a colonoscopy afterward to see whether or not the mucosa is friable. What they’re doing is they’re putting the patient on the product and they’re asking the patient how are you feeling and what we’re hearing is that patients very quickly within one or two weeks are seeing the number of bowel movements go down from 15 to 20 down to 3 to 5 bowel movement a day. That’s a significant reduction for these patients. They’re giving their feedback to the doctor and so that’s a positive feedback look that we’re seeing on a pretty regular basis.

Tom Joyce

Gerry, if I could just add to that there is a larger context in the field which you guys are benefiting from, so Humira as you may recall got approved for ulcerative colitis in September I think last year, so the pivotal studies there you could lay the induction data over Uceris, so it was about 20% remission rate over 8 weeks for the higher dose induction regimen and about 10% for placebo. The FDA held an advisory committee and the advisory committee almost unanimously voted that this was a clinically meaningful benefit and the drug should be approved and the launch has been quite good for Humira.

And you know clinicians are used to using it, they thing that it’s effective in Crohn’s disease, they’ve got the mental picture that it’s a powerful drug for Crohn’s, they’re using it and you’ll see they’re having a benefit from it and they’ve got a rising sort of sales right there, so these data are exactly the same and at these needing to be out sort of justifying that difference. Next on deck is SIMPONI with Janssen so (inaudible) and the induction data again look just about like this, so it’s about 10% delta with remission rates with six weeks of about 20% versus about 10% for placebo.

So shortly you’re going to have Janssen out you know marketing that is being clinically meaningful and then Takeda, Millenium their selective anti-alpha 4 beta 7 integrin antibody for induction Vedolizumab I think they’ll file in the summer probably get reviewed probably next year. Again, it’s the same thing so there’re sort of four drugs this is the second of four that I think will ultimately get approved for ulcerative colitis that have exactly the same affect and all the rest of them are powerful biologics, so I think you’re both getting floated biologic companies, you have a similar benefit.

Scott Henry - Roth Capital

Thank Tom.

Unidentified Analyst

(inaudible) from Cowen and Company, thanks for taking my questions, so three quick questions. One, have you given any specific sales guidance with respect to Uceris, two could you briefly describe the full patterns to expire in 2020 for Uceris, and three the Ruconest when was it launched in EU for acute HAE and what to the sales look like?

Tom Joyce

So, the first question has to do with sales forecast for Uceris, we have not given guidance on sales forecast and we’ve given overall revenue forecast for the year but at this point in time it’s really hard to predict sales of part when you just launching it you know we started off to a very nice start as we get a little more attraction as far as number of weeks of prescription certainly we’ll look to, to potency provide more guidance there but at this point in time we haven’t provide the guidance on that.

As relates to the pattern on Uceris that expiring in 2020 the primarily formulation patterns, we have continue to file for additional pattern claims and the pattern claims that we’re pursuing are more functional claims really focus more on some of the PK data that we’ve been able to demonstrate. We’re going to continue to file more claims and give us better protection on this product and we think that by doing that we’ll be able to have the product for the full life of the pattern through 2020 and then you had one more.

Unidentified Analyst

Yeah, it was when was Ruconest launched in EU at acute HAE and what do the sales look like?

Tom Joyce

Ruconest was launched I think about a year and half ago Mark?

Mark Totoritis

It was the fourth quarter of 2010.

Tom Joyce

And I would say it’s starting off about the same as the other products other than Berinert which is it’s a slow steady growth of the product. If you look at all of the product that have launched Berinert has been in the market for about 20 years in Europe. Doctors are very comfortable with the product in the case of Ruconest unfortunately for Sobi which is the company that’s launching the product. There was only one center within the western part of Europe that was involved with any of the clinical study and so they’re really in the process of just developing thought leaders and getting the information out there about the product.

I think if you look at what’s happen to Firazyr or Cinryze in Europe, I think you’re going to find this same thing it’s a much different marketplace more difficult to penetrate, more difficult to get reasonable pricing of products in Europe compared to the U.S. and so it’s been a fairly slow launch for all the products other than Berinert which has been in the market for a while.

Unidentified Analyst

Thank you.

Tom Joyce

You’re welcome.

Unidentified Analyst

Hi. Just want to ask some questions about the pipeline and some of your strategic plans to get you through the 2016 period because obviously it’s a point of concern for some. So, if I understood correctly your primary focus right now is to expand the current product that you have in other indications and you have some opportunity to do so clearly. You’re not cash constrained right now, so the focus is going to be more to spend on R&D for those indications or you still looking for assets and I’ve got some follow-ups to that?

Tom Joyce

Sure. Obviously don’t want to put all your eggs in one basket and so while we’re focused on taking our internal portfolio and continue to explore those products and other indications. Mike Step and his group are actively focused on looking to bring in some additional products. As I mentioned earlier, our primary focus is late stage products so products are ready to move in to Phase III and beyond that are in the GI or endocrine space.

It doesn’t mean that we would look at products in other therapeutic areas if it is a small physicians’ specialty audience. We will look at those products but we’re very focused on bringing an additional product. We hope that we’ve been able to demonstrate that we’ve been able to bring in products at a reasonable price and develop those products and we’ll continue on that path.

And as I mentioned as we looked to bring in our Senior Vice President’s strategic planning and acquisitions we’re going to start to look at some companies that have far access, we think could be attractive to add to our portfolio and we’ll look at those companies also.

Annabel Samimy - Stifel Nicolaus

Okay. So, for your current pipeline right now, what are the things that we can’t count on for 2016 that are going to be there; and then if we can go more specifically on Rifamycin, clearly it’s being developed in travelers’ diarrhea and it’s I guess a little bit delay because some of the approvals that you need, but it seems to be me that you have the financial capacity to be able to develop other things simultaneously to that you know diverticulitis or what we not know the travelers’ diarrhea is not the largest indication, so are there any plans to do simultaneous trials or trials in parallel to travelers’ diarrhea to really maximize the Rifamycin opportunity?

Dr. Mark Totoritis

So as it relates to specifically to Rifamycin, we continue to look at other indications we want to explore and there are number of things that we are considering. I think I have mentioned before, when you have a product like Rifamycin in a colonic delivery, you really want to make sure that whatever indications you go after that is going to be an effective product and as I’ve mentioned before we are looking at hepatic encephalopathy, one of the things that we’ve identified in the literature is that when a patient is on a lactulose, it does change the pH in the gut and we want to make sure that the product is going to be delivering to the right spot if we go after hepatic encephalopathy.

So we still think there is some additional work we need to do in order to make sure that the release profile is appropriate with the current delivery of the product. That doesn’t mean that we couldn’t work with Cosmo to change to release profile to release with the higher up in the small intestine. So we will look at that as it relates to Uceris, as Wendell mentioned in addition to looking at pediatrics which you think is very attractive, one of the areas that we keep getting response back from physicians is the use of Uceris in microscopic colitis.

Microscopic colitis could be similar in size to ulcerative colitis, if not as severe as ulcerative colitis and it typically occurs in little bit older population. So, we are going to look at potentially doing a study on microscopic colitis and probably as we move through the middle of the year, we will talk a little bit more about that.

And certainly with regard to Ruconest, in addition to acute treatment of HAE, the prophylactic treatment of HAE would be very attractive. We need to meet with the FDA to really understand exactly what the requirements are going to be to move through that clinical study. So I can’t tell you that until we meet with the FDA and understand the size of the trial. But having a product potentially that could be used both in acute treatment and prophylactic treatment would be a very attractive I think for both of the physicians that are treating patients with HAE as well for the patients.

And then with the SAN-300, certainly a little bit further behind but we expect as we move into the phase II study and we start to generate data both in RA and in either Crohn’s or ulcerative colitis, it’s going to be very attractive for investors because we are looking at even beyond 2016 and how do we keep accelerating the growth of this company.

And then the last thing I think what you have mentioned is we do expect to continue to generate significant cash and we are going to reinvest the cash in our R&D pipeline but also use some of that cash to look to bring an additional products.

Annabel Samimy - Stifel Nicolaus

If I can just ask one more question, on Cycloset, you have mentioned very briefly, you have got the patent or you have the patent allowance, any plans there to license out the products to develop it more, obviously diabetes as a large market.

Dr. Mark Totoritis

We have just really learned about the patent allowance here just fairly recently and we are beginning to do some more work to really identify you know how do we grow this product more substantially? As I mentioned before, our goal is not to become a primary care sales organizations. We don’t think that how we are going to maximize our profits. That doesn’t mean that we won’t look to partner with some other companies that might want to either get further into primary care with a second product or the other area is into cardiology, and that some of you are aware with regards to Cycloset, it has an excellent cardiovascular safety profile. We saw a very nice reduction in cardiovascular events and when we talk with cardiologists even more so than endocrinologist they are very interested in that data. So we think there could be some opportunity to certainly bring Cycloset to the cardiology community and we will be working on and talking with some companies that are going to cardiologist to see if they have an interest in may be promoting Cycloset to the cardiologist.

Unidentified Analyst

Gerry, this is one of the follow up on acute pancreatitis, can you just talk a little bit about how you plan on initiating patient’s in that type of study what you think of commerce, you know from what we hear from physicians, especially gastroenterologist is that the patients has pretty deteriorated by the time they get to the point of care. So, just was kind of curious how you would go about some of those issues which I guess have been an issue for past drug development?

Gerald Proehl

So maybe I will turn it over to Mark and have Mark comment on it.

Mark Totoritis

Thanks, I think that’s a great question. Actually initially what we planned to do is try to look at a little bit more enriched population as that we are stating where there are highest unmet need seems to be and that would likely be a group of patients with predicted severe acute pancreatitis and also try to intervene at a time point when we haven’t gotten past that so-called tipping point that I have mentioned previously. So those are the kind of things we are taking into consideration as we discussed with thought leaders and evaluate appropriate trial designs.

Unidentified Analyst

As we think about with the patients you can find that are prior to get reaching this tipping point, in what proportion in that 250 some odd thousand severe patients would you say that represents? Thanks.

Dr. Mark Totoritis

Well I think it’s difficult to say for certain at this point, but if one looks at the incidents with severe acute pancreatitis that I talked to you about, you know what, somewhere in the range of 15% to 25% of the overall group of the patients.

Scott Henry - Roth Capital

Thanks, just a quick follow up on Cycloset, when would you expect to be able to get that patent in the Orange Book and just could you remind me currently if there was a generic filer, would they have to have a Paragraph IV filing or could they have a Paragraph III how should we think about that?

Mark Totoritis

Sure. So, with regards to the patent issues and we expect that the patent will issue probably within the next couple of months. We will then move quickly to get into the Orange Book. As it relates to generic filers there has been no Paragraph IV filers at this point; there could be Paragraph III filers. If you file a paragraph III you are basically saying you won’t launch your product, your generic until the last to expire patent. So, if we put this patent in the Orange Book that means they would be not launching until 2032, that’s a fairly long period of time. What could happen is once we file to the Orange Book, somebody could decide that they are going to change and go ahead and file a Paragraph IV, assuming that they are in Paragraph III which we don’t know. So we will wait and see what happens Scott, I think this is certainly going to extend the life of Cycloset. We will go all the way to 2032. I can’t tell you that at this point in time. But we think that the patent is an important patent for us. It’s something that we have learned in the manufacturing of this product and which has not been easy and we think it will be difficult for generics to continue to try to manufacture a product and make it bioequivalent.

Scott Henry - Roth Capital

Okay. And then on Ruconest for acute HAE, how do you think about the peak potential revenues for that indication?

Mark Totoritis

For acute HAE, what’s the reasonable forecast for Ruconest may be somewhere in the $100,000,000 range could it be a little bit better, yes it could be a little better, it could be little worse, yes it could be a little worse. But we are thinking that’s a reasonable range for acute pancreatitis. One of the things that we really do believe is while “the safety of plasma-derived product is not an issue right now, it’s because the patients don’t have a safer option. Once Ruconest is available they’ll have a safer option, it is a recombinant product and as both Mark and Wendell talked about, it’s a very affective product. We’re delivering 50 units per kilogram C1 esterase inhibitor.

And if you look at the other products Berinert delivering 20 units per kilograms and Cinryze is delivering about 13 units per kilograms. The reason we can deliver 50 units per kilogram has to do with the cost of goods and effective recombinant products. So we’re getting lot of product in there that’s why we think we’re getting very good efficacy.

One of the things that’s interesting in this marketplace is because of all the other launches, what we hear from patients are, they are very open to trying other products. Many patients already have tried two or three different products. So, they continue to look for products is given good efficacy and we think we have a nice opportunity here to get the product to use. Thank you.

Scott Henry - Roth Capital

I just clarified a 100 million you stated, were you referring to HAE or acute pancreatitis.

Mark Totoritis

Acute HAE?

Unidentified Analyst

Yes, acute HAE

Unidentified Company Representative

Yes. That’s right any other questions? Great, well thank you very much for coming to the investor presentation and we really appreciate it and happy to follow up with any additional question. Thank you.

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