Executives
Martha Hough – Vice President Finance, Investor Relations
Gerald Proehl – President, Chief Executive Officer
Debra Crawford – Senior Vice President, Chief Financial Officer, Treasurer, Secretary
William Danby – Senior Vice President, Commercial Operations
Dr. David Ballard – Senior Vice President, Clinical Research and Medical Affairs
Analysts
Annabel Samimy – Thomas Weisel Partners
[Scott Henry – Roth Capital]
David Amsellum – Piper Jaffray
Santarus, Inc. (SNTS) Q2 2009 Earnings Call August 3, 2009 5:00 PM ET
Operator
Welcome to the Santarus second quarter financial results conference call. (Operator Instructions) I would now like to turn the conference over to Martha Hough.
Martha Hough
Good afternoon and welcome to today's call. This is Martha Hoff, Vice President of Finance and Investor Relations. Joining me on the call today are Jerry Proehl, President and Chief Executive Officer, Debbie Crawford, Senior Vice President, Chief Financial Officer and Bill Danby, Senior Vice President, Commercial Operations, Dr. David Ballard, our Senior Vice President and Medical Affairs who will also join us for the question and answer session.
Earlier today, Santarus issued a press release announcing our second quarter 2009 financial results which is available on our website. This call is also being broadcast live over the internet at www.santarus.com and a replay of the call will be available for the next two weeks under the investor relations section of our website.
For today's call, please keep in mind that risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements made during today's call. As a result, the company's performance may differ from those expressed in or indicated by such forward-looking statements which are qualified in their entirety by the cautionary statements contained in the press release and the company's Securities and Exchange Commission filings.
The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 3, 2009. Santarus undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstance after the date of this conference call.
I'd now like to turn the call over to Jerry Proehl.
Gerald Proehl
I'd like to add my welcome to everyone on this call this afternoon. I'm pleased to announce our second consecutive quarter of profitability. Today, we are reporting net income of $1.1 million on $35.8 million in total revenues. Product related revenues were $33.6 million, a 31% increase over the prior year.
ZEGERID revenues in the second quarter grew 17% over the prior year period and we are benefiting from our Glemetza promotion which contributed $5.6 million to second quarter revenues, a 25% sequential increase.
We now anticipate reaching break even or being slightly profitable in 2009 on our previously announced expectation for total revenues of approximately $145 million. This improved bottom line guidance is based on a revised expectation for lower overall expenses due primarily to reduced research and development costs in 2009.
Although we now anticipate spending less this year on R&D, we continue to expect to remain on track with the clinical time lines for our late stage lower GI product candidates; Budesonide MMX and Rifamycin SV MMX. We are developing Budesonide MMX in the U.S. for the induction of remission in patients with mild or moderate active ulcerative colitis.
As an update, we expect completion of patient enrollment in our U.S. Phase Three registration trial in the first half of 2010. During the past several months, we've taken action to increase trial enrollment including holding investigator meetings, making site visits, engaging a centralized recruiting organization to run television ads in certain markets and we will be adding clinical sites in India. Our goal is to recruit approximately 492 patients to yield 450 patients for evaluation and to date this trial is approximately 35% enrolled.
We anticipate higher R&D costs in the second half of this year compared to the first as patient enrollment increases. These higher costs are reflected in our 2009 financial guidance.
Enrollment in the Budesonide MMX European trial, which began in mid 2008 is approximately 75% complete, again with the goal of recruiting approximately 492 patients to yield 450 evaluable patients.
Given that the European clinical trial began before the U.S. trial, we expect top line data from the European trial to be available possibly late this year, or more likely the first half of next year and to report top line data from the U.S. trial in the second half of 2010.
As previously reported, the FDA has requested a 12 month extended use trial in up to 150 patients. We expect the extension trial to be completed in the first half of 2011. Given these time lines and assuming positive clinical trial results, we plan to submit a new drug application for Budesonide MMX to the FDA in the second half of 2011.
Turning to Rifamycin SV MMX, our partner, Cosmo Technologies is reporting progress with a number of non clinical and pre clinical development activities is preparation for the filing of an investigational new drug application with the FDA.
We are on track to file the IND application and initiate our Phase Three clinical program in traveler's diarrhea in the first half of 2010. Our goal is to complete the Phase Three program in the first half of 2011 and assuming positive clinical trial results, to submit an NDA later that year.
We believe that these MMX product candidates fit strategically with our GI focus, both Budesonide MMX, and Rifamycin SV MMX adjust serious lower GI conditions treated by gastroenterologists. We estimate Budesonide MMX annual's peak sales potential at $150 million to $250 million and Rifamycin SV MMX at $50 million to $150 million.
We anticipate that these products will overlay well with our sales force call patterns on gastroenterologists and we do not anticipate the need to increase our sales organization to promote these drugs, offering the potential for substantial operating leverage.
Turning to significant recent developments, in late June, Schering-Plough received notification from the FDA of December 2009 action date for the review of the new drug application for OTC ZEGERID. Schering filed a response with the FDA in early June to complete response letter received early in 2009.
Under the terms of our license agreement with Schering-Plough we are entitled to receive a $20 million milestone upon FDA approval of OTC ZEGERID. In addition, we are entitled to receive low double digit royalties on net sales of any of OTC ZEGERID product, and we may also receive up to $37.5 million in sales milestones.
The bench trial in our patent litigation with Par Pharmaceuticals was held July 13 through 17 in the U.S. Court of the District of Delaware. The case was heard by Chief Judge Sleet who also served as the presiding judge for our Markman hearing last November. We are pleased with the partial ruling from the bench on July 16 in favor of Santarus and the University of Missouri on the issue of infringement.
Judge Sleet ruled that Par's proposed generic version of ZEGERID capsules and powder for oral suspension infringed the claims of five patents, licensors from the University of Missouri. The court has not yet ruled on Par's defense of invalidity and inequitable conduct. The next step will be the submission of post trial briefs by August 14.
The court may issue its ruling on the remaining issues at any time after post trial brief submission which may be before or after the expiration of the 30 month stay on our capsule product in early February. Although we cannot be certain about the ultimate outcome in the case, we believe the trial went well.
Finally, regarding our X U.S. license agreement, GlaxoSmithKline has informed us of regulatory submissions in Brazil and Mexico and plans for additional submissions this year in South Africa and several other Latin American countries. We anticipate that GSK will continue to make additional regulatory submissions in 2010.
Now, I'll turn the call over to Debbie Crawford to discuss our second quarter financial performance.
Debra Crawford
I will be providing an overview of our second quarter financial results and reviewing our improved outlook for 2009. For additional information on the second quarter, investors can refer to our Form 10-Q which we expect to file with the SEC later this week.
Total revenues in the second quarter of 2009 were $35.8 million compared to $36 million in the second quarter of 2008. Although the total revenues in each period were similar, the components of revenue tracked quite differently. In particular, total revenue in the prior period included a $2.5 million regulatory milestone that we earned in May 2008 under our license agreement with Schering-Plough and $5 million in amortization of deferred revenue resulting from our termination of a co-promotion agreement for ZEGERID with Otsuka America Pharmaceutical in June of last year.
Product related revenue was $33.6 million in the second quarter of 2009 and as Jerry mentioned, increased 31% compared to $25.8 million in the second quarter of 2008. The increase in product related revenue in the current period reflects the continued growth in ZEGERID net product sales which were $28 million in the second quarter of 2009 and the positive contribution of $5.6 million earned under our Glumetza promotion agreement.
This marks our third quarter of promoting Glumetza and over that nine month period, we have reported a total of $14.9 million in promotion revenue which exceeds the $12 million we paid in an upfront fee to acquire the right to Glumetza. From a financial reporting point of view, this agreement has been accretive from our first quarter of promotion.
The components of product related revenue in the second quarter of 2008 were $24 million in ZEGERID net product sales and $1.8 million of promotion revenue.
License and royalty revenue was $2.2 million in the second quarter of 2009 compared with $10.2 million in the prior year period which included the $7.5 million in milestone and amortized deferred revenue that I mentioned earlier.
As Jerry stated, we reported net income of $1.1 million, or $0.02 per share in the second quarter of 2009 compared with net income for the second quarter of 2008 of $3.2 million or $0.06 per share. Net income in the second quarter of 2008 benefited from the $7.5 million in milestone and amortized deferred revenue which had no offsetting expenses.
Our cost of product sales was $2.1 million in the second quarter of 2009 or approximately 7.5% of net product sales compared with $1.7 million in the second quarter of 2008 which was approximately 7.1% of net product sales.
We reported license fees and royalties of $1.9 million in the second quarter of 2009 which consisted of $1.4 million in royalties payable to the University of Missouri based on ZEGERID net product sales and amortization expense associated with our acquisition of exclusive U.S. promotion right to Glumetza.
License fees and royalties in the second quarter of 2008 were $3.4 million which consisted of royalty's payable to the University of Missouri and to Otsuka America. We stopped paying a high single digit royalty to Otsuka America under our co-promotion agreement as of June 30, 2008.
Research and Development expenses were $3.3 million in the second quarter of 2009 compared with $2.2 million in the second quarter of 2008. The increase in R&D spending was due primarily to our 50% share of the out-of-pocket costs for the Phase Three clinical program for Budesonide MMX.
Selling, general and administrative expenses were $27.3 million for the second quarter of 2009 compared with $25.8 million for the second quarter of 2008. SG&A expenses increased due to higher legal fees associated with our patent litigation as well as advertising and promotional costs for Glumetza. These expenses were offset in part in a decrease in costs associated with advertising and promotional activities related to ZEGERID.
Included in the expenses discussed previously, non cash stock based compensation expense in the second quarter of 2009 was $1.4 million compared with $1.1 million in the second quarter of 2008. In the second quarter of 2009 we recorded compensation expense of approximately $355,000 related to stock option awards with performance based vesting that vested based on the attainment of specific financial performance targets previously established in 2008.
Turning to our year to date results, for the six months ended June 30, 2009 we reported total revenues of $70.7 million which increased approximately 17% over the prior year period. Total revenues consisted of $65.8 million in product related revenue which increased approximately 41% over the prior year period and $4.9 million in license and royalty revenue.
In the six months ended June 30, 2008 total revenues were $60.5 million which consisted of $46.8 million in product related revenue and $13.7 million in license and royalty revenue.
We reported net income of $2.3 million or $0.04 per share for the first six months of 2009 compared with a net loss of $4.4 million or $0.09 per share for the first six months of 2008.
We are pleased to report positive cash flow from operations of $5.2 million in the second quarter of 2009. For the six months ended June 30, 2009, we reported $982,000 of positive cash flow from operations.
As of June 30, 2009 Santarus had cash, cash equivalents and short term investments of $57.5 million compared with $52 million as of December 31, 2008. The net increase of $5.5 million resulted from our net income adjusted for non cash charges and changes in operating assets and liabilities, and the reclassification from long term investments to short term investments of $4.2 million which represents the aggregate fair value of auction rate securities and auction rate securities rights.
Moving on to our financial outlook for 2009, we are affirming our expectation to report product related revenue of approximately $138 million representing an increase of approximately 24% over 2008 and total revenues of approximately $145 million. Product related revenue consists of net product sales and promotion revenue.
We currently expect to manage Research and Development expenses for 2009 to a lower amount of approximately $19 million to $20 million compared with our prior estimate of $20 million to $23 million. Our R&D expenses include costs associated with Budesonide MMX and Rifamycin SV MMX as well as costs associated with the new ZEGERID tablet formulation.
As Jerry indicated, although we have reduced our estimated 2009 R&D expense, we expect to maintain the clinical time lines for our late stage lower GI product candidates.
With the anticipated reduction in expenses, we currently estimate that our 2009 full year bottom line results will improve to a range of break even to $1 million in net income. Our prior guidance was for bottom line results ranging from break even to a net loss of $3 million for 2009.
In addition, if Schering-Plough receives FDA approval of its new drug application for an OTC ZEGERID product, we will earn a $20 million regulatory milestone. Therefore if the FDA approval occurs in 2009 it will positively impact our financial outlook in the current year.
I'd now like to turn the call over to Bill Danby.
William Danby
We continued during the second quarter to outperform the established delayed release branded Proton pump inhibitors. ZEGERID total prescriptions were approximately 298,000 in the second quarter, up approximately 13% over the prior year period.
In reviewing PPI prescription trends for the overall market for the 12 months ending in June 2009 compared with the prior 12 months, total prescriptions grew at approximately 4%. Total PPI prescriptions were approximately 122 million for the 12 months ending in June 2009, increasing by almost 6 million in the 12 month period.
Total prescription volume for Prevacid decreased about 12%, Aciphex decreased by approximately 14% on a moving annual total basis in June. Nexium's total prescriptions grew during the same period by approximately 1%.
In contrast, ZEGERID's total prescriptions grew at approximately 17% on a moving annual total basis, the strongest growth of any branded PPI on the market for the last 12 months.
Rapider the new PPI launched by Takeda Pharmaceuticals earlier this year captured approximately four tenths of one percent of the PPI market for the quarter. Kapidex launched last February and has been heavily promoted. Based on prescription trends, we believe the entry of Kapidex in the market is having some effect on all branded PPI's and is a component of the slowing of new prescription growth for ZEGERID in the second quarter.
Turning to Glumetza, we're very pleased to report our progress. Total prescriptions in the 2009 second quarter were approximately 68,000 and new prescriptions were approximately 27,000, both up more than 9% compared with the 2009 first quarter. Since we began promoting Glumetza last October, we've increased our share of branded weekly new prescriptions by 9 percentage points to approximately34% and our share of branded weekly total prescriptions by 7 percentage points to 30%.
And, we are gaining momentum. Total Glumetza prescriptions in June were at an all time high dating back to the launch of the product in late 2006, and we believe we can continue to increase demand for this product.
This is particularly noteworthy given that Glumetza was launched by King Pharmaceuticals with a much larger sales force in late 2006. Total prescriptions peaked at approximately 22,000 in January 2008, the month after King ended its promotional activity.
Prescriptions then declined over the intervening months to approximately 20,000 in September 2008 during the period that [Depemed] supported the product with a 30 person part time sales force. We began our promotion in October 2008 and in June of this year, total prescriptions were approximately 24,000.
When we began promoting Glumetza, we added a group of high prescribing endocrinologists and primary care physicians [inaudible] called on doctors. We have now assessed our progress with this physician group and with our most recent sales allowances, revised our list of called on physicians for both ZEGERID and Glumetza. For ZEGERID we have increased this group from 16,000 to 18,000. We have also doubled out coverage of prescribers who have recently written Glumetza.
For ZEGERID, we have reassessed our physician population and refocusing our sales calls on physicians we believe will be high prescribers. At the same time, we've increased the number of physicians that will receive details on both ZEGERID and Glumetza from 14,000 to 17,000. Overall, we're currently calling on 26,000 physicians. We believe that these changes will increase our sales call productivity and the potential to increase our sales for both products.
Pricing actions were taken for both ZEGERID and Glumetza in early July. The wholesale acquisition costs or price for ZEGERID caps increased to $4.90. This compared to a range of $5.16 to $5.25 for the other branded PPI's excluding Kapidex which was launched at a significantly discounted price compared with the rest of the branded PPI's.
After the July pricing action Glumetza price was $1.40 for the 500 mg and $3.40 for the 1,000 mg. This is 26% to 30% below the price for Fodemet, the brand promoted by [Cyal Schonogi] depending on dosage strength.
[Cyal] has limited promotion of [Fodemet] resulting in second quarter 2009 prescription volume declines of 5% compared to the first quarter of this year and at 20% compared to the second quarter of 2008.
Although formula coverage for ZEGERID continues to be important, we've been working over time to balance prescription growth with the value of a prescription. We have been increasing our average selling price by carefully managing certain price sensitive segments of the business. In that regard, our Medicaid business has become less profitable and we have decided to terminate our participation in the Medicaid program effective October 2009 and forego that portion of the market.
We believe this decision will result in a decrease in ZEGERID prescriptions of up to 8% to 10% on at least a short term basis starting in the fourth quarter of this year. However, this change is not expected to impact unfavorably our overall financial results.
Before I turn the call back over to Jerry, I'd like to emphasize how motivated our commercial organization is by the success of our ZEGERID and Glumetza promotional activities and how enthusiastic we are about the lower GI product candidates we have in clinical development.
Gerald Proehl
This is an exciting time at Santarus. We are executing on our strategy to build Santarus into a premier specialty bio pharmaceutical company by leveraging our expertise in drug development and commercialization of prescription pharmaceutical products.
We took a strong step forward in enhancing our operating leverage by adding Glumetza to our product portfolio and we are continuing to evaluate other marketed products to complement our current sales call patterns with ZEGERID and Glumetza.
Further we believe that our late stage GI product candidates, Budesonide MMX and Rifamycin SV MMX hold great promise for us to further leverage our commercial organization and focus on gastroenterologists and the future revenues we expect to receive from Schering-Plough and GSK require no additional investment and will provide us with added cash that can potentially be used to expand our pipeline and drive our future growth.
With our business moving strongly in the right direction at Santarus, the future is certainly exciting.
I'll now open the call to questions.
Question-and-Answer Session
Operator
(Operator Instructions)
Debra Crawford
While we're waiting for questions, I'd like to mention we have some conference we'll be presenting at in the next several weeks, the BMO Capital Markets 9th Annual Focus on Health Care Conference this Wednesday, August 5th at the Millennium Broadway Hotel in New York City, the Thomas Weisel Partners Annual Health Care Conference on Wednesday, September 9th at the Four Seasons Hotel in Boston, and at the UBS Global Life Sciences Conference at the Grand Hyatt Hotel in New York which is taking place September 21st to the 23rd. If you're attending any of these conferences we invite you to meet with us in person. A webcast of our corporate presentation will also be available on the Santarus website.
We're now ready for the first questions.
Operator
Your first question comes from Annabel Samimy – Thomas Weisel Partners.
Annabel Samimy – Thomas Weisel Partners
On ZEGERID, it seems pretty clear that ZEGERID is slashed sequentially because the prescriptions had gone up a certain amount, so can you give us an idea of what may be driving that? You had mentioned the Medicaid portion of the business is not as profitable. Is that potentially putting pressure on it and what component of the business is Medicaid?
Debra Crawford
Just to clarify your question, I thought you indicated that you thought sales were down sequentially.
Annabel Samimy – Thomas Weisel Partners
Slightly up sequentially.
Debra Crawford
They're up slightly.
Annabel Samimy – Thomas Weisel Partners
Essentially flat if you're rounding, so can you give us a better idea of what may be driving that?
Debra Crawford
I think you mentioned it and Bill can add to this, but we are seeing a little more business coming from the Medicaid component of the market and that has had an impact on the overall value of a prescription. That really is an element of why we've decided to look at moving outside of that business, just the net pricing of Medicaid has become quite reduced. And that is one factor, although I think generally speaking, our overall ASP is pretty similar quarter to quarter.
Annabel Samimy – Thomas Weisel Partners
How much of your business is Medicaid?
William Danby
It's about 8% to 10%. And that will kick in more significantly in terms of withdrawing from that business in October.
Debra Crawford
There's always a slight difference between shipments and prescriptions and so you have modest changes that can be occurring in the channel inventory so there might have been a slight decrease in the second quarter channel inventory but generally we feel the prescriptions were tracking the shipments in both quarters.
Annabel Samimy – Thomas Weisel Partners
And the price for the private side of the business has been pretty steady?
Debra Crawford
In July we increased our price, that's correct.
Annabel Samimy – Thomas Weisel Partners
No, but for the second quarter.
Debra Crawford
The price hadn't changed.
Annabel Samimy – Thomas Weisel Partners
Can you give us a little bit more color around the litigation regarding the validity claim? Is there anything in particular that gives you confidence going forward and the outcome of the trials?
Gerald Proehl
Obviously Judge Sleet hasn't ruled yet on the enforceability or validity of the claims. As we've said before, we feel confident in our patent portfolio and our patent position. It's been vetted by many companies including Schering-Plough, GSK in addition to venture firms that put money in the company. So they've all looked at our IP and felt comfortable with our intellectual property to invest in the company.
We haven't changed our position. We feel that we have good enforceable patents and we look forward to Judge Sleet ruling on the enforceability and validity of the claims.
Operator
Your next question comes from [Scott Henry – Roth Capital]
[Scott Henry – Roth Capital]
Starting on ZEGERID, first on the cogs line it looked a little higher relative to sequentially the 7.5% versus typically around 7%. Any thoughts on that? Do you expect it to revert back or is it going to stay at this higher level going forward?
Debra Crawford
I would say that generally you can see variations quarter to quarter as a percent of net product sales. We don't see it as a new trend in and of itself. I think generally and on a year to date basis, we're in that 7% range.
[Scott Henry – Roth Capital]
If I understand you correctly, if I think about ZEGERID from a modeling standpoint, it tracks about a revenue prescript about $94.00 for the past quarter depending what data you look at. It sounds like you would expect that number to perhaps jump up to $100 to $105 in Q4 if you're going to in theory take away 8% to 10% of your business and still maintain the same revenues. Is that a reasonable logic to expect to see about a 10% per script jump in the Q4 time frame?
Debra Crawford
There's a lot of dynamics that go into the average value of a prescription, but certainly from a trend point of view, we would expect to see an increase in that average value when we eliminate our participation in Medicaid.
[Scott Henry – Roth Capital]
Is that just like turning the switch off? Do you lose 8% to 10% on day one or is there kind of gradual, perhaps do you maintain some of that group? I haven't seen this dynamic play out before.
Gerald Proehl
I don't think it will all go away immediately, but it will move pretty quickly because obviously these Medicaid patients are fairly well subsidized, so they're getting the product at a fairly low price. I expect it will happen pretty quickly. It won't happen overnight but it will be pretty quick.
[Scott Henry – Roth Capital]
One question on the trial with ZEGERID, and I recognize that you may choose to answer parts of this or not answer parts of this, and I did see some of the trial and I thought it would agree with you, it went pretty positive for you. But the stake's obviously quite high here. Do you have any thoughts, are you still open to looking at a settlement or at some point it's okay to say we're going to wait and let the judge decide. And the other question is upon a verdict, if it should go against you, would that make settling beyond that impossibility?
William Danby
A couple of things; there's always the possibility of a settlement at any point in time before the judge rules. After the judge rules, if either company appeals the ruling, until there is a final ruling, I think there's always an opportunity for settlement.
If it were to go in favor of Par, they first have to get approval of their products and to now, at least as we check the FDA website, they have not received tentative approval of any of their [andis]. So the first thing is they would have to see approval then they would have to manufacture the product and launch the product.
We're certainly prepared for both outcomes, certainly very hopeful on a favorable outcome, but prepared for an unfavorable outcome if it did occur.
[Scott Henry – Roth Capital]
If I recall, you are pursuing other patents. Any updates perhaps on the time line for other patents that perhaps would not be subject to this trial?
William Danby
No update right now. We're pursuing other patents, but nothing to update.
Operator
Your next question comes from David Amsellum – Piper Jaffray.
David Amsellum – Piper Jaffray
Let's say you win the case. Do you envision looking to add another or other products for the primary care sales force and ZEGERID would presumably have a lengthy future ahead of it and overall, how committed are you to continuing to focus on the GP setting?
Gerald Proehl
We're pretty active right now in looking for another marketed product. As we said publicly before, we believe that we have further capacity. Certainly we have capacity within the gastroenterologist's offices and the endocrinologists, but we also have some capacity within primary care so we're actively looking for products that we can either co-promote, license or acquire.
As it relates to the primary care segment, were we to prevail in this particular trial on ZEGERID, as you are aware, we have patent protection until July 2016. The first patent for Glumetza expires also in 2016, so we think that there's still room to grow for those two products and since both products go to primary care targeted audience, at least through 2016, we would certainly continue to be focused on that particular audience in addition to gastro's and endro's.
David Amsellum – Piper Jaffray
In terms of the launch, this is a competitive question, but the eventual launch of generic Prevacid, how do you envision that impacting scripts for the ZEGERID capsules and do you expect that generic Prevacid launch will have a similar kind of impact that we saw when Protonics went generic?
Gerald Proehl
We certainly tried to model that and certainly think that generic brand will have some impact on ZEGERID. When we looked at it with regards to generic [Entoprisol] we saw an impact for about a six month time frame. What we're not sure of and remains to be seen is that Takeda is putting significant resources behind Kapidex.
We estimate they're spending well in excess of what they're receiving as far as revenues on the product. Certainly it's easier to fund that type of promotion when you have a product like Prevacid that's continued to drop lots of money to the bottom line. Once that product goes generic, it makes continued support for a product like Kapidex more difficult decision for Takeda and how much resources they're willing to put behind the product.
So there are lots of dynamics. We expect that generic will have some impact, but there's obviously OTC. Prevacid, there will be future OTC. Hopefully ZEGERID, and we're prepared for that and trying to make sure we take the appropriate steps on a commercial perspective to get to the right target audience.
David Amsellum – Piper Jaffray
On final question on Rifamycin, can you give us a sense of you plans for label expansions or market expansion trials for Rifamycin? Are you planning to take a development pathway similar to that of Cialix with [Cyfaxin]?
Gerald Proehl
Yes, we certainly think that there's opportunities for Rifamycin beyond traveler's diarrhea. We're currently assessing different potential claims that we might pursue that might be unique to Rifamycin, but we haven't made final decisions or communicated anything publicly yet.
Operator
There are no further questions at this time. Please proceed with your presentation or any closing remarks.
Gerald Proehl
I'd like to thank you all for your interest in Santarus and for joining us for this call. These are exciting times at Santarus and we continue to increase our product revenue and report progress with our pipeline. If you have any further questions, please feel free to contact me, Debbie Crawford or Martha Hough. Have a great evening.
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