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Santarus, Inc. (NASDAQ:SNTS)

Q3 2012 Earnings Call

November 07, 2012, 04:30 pm ET

Executives

Martha Hough - VP Finance & Investor Relations

Gerry Proehl - President & CEO

Debbie Crawford - SVP & CFO

Bill Denby - SVP, Commercial Operations

Wendell Wierenga - EVP, Research and Development

Analysts

David Amsellem - Piper Jaffray

Annabel Samimy - Stifel Nicolaus

Scott Henry - Roth Capital

Operator

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

It is now my pleasure to hand the program over to Ms. Martha Hough. Please go ahead.

Martha Hough

Thank you, Christie. Good afternoon, and welcome to today’s call. This is Martha Hough, Vice President of Finance and Investor Relations. Joining me on the call today are Gerry Proehl, President and Chief Executive Officer; Debbie Crawford, Senior Vice President and Chief Financial Officer; Bill Denby, Senior Vice President of Commercial Operations and Dr. Wendell Wierenga, Executive Vice President of Research and Development.

Earlier today, Santarus issued a press release announcing our third quarter 2012 financial results, which is available on our website at www.santarus.com. We will also make a replay of this call available for the next two weeks on the Investor Relations section of our website.

Please keep in mind that risks and uncertainties involved in the company’s business may affect the matters referred to in forward-looking statements made by management during today’s call. As a result, the company’s performance may differ from those expressed in or indicated by such forward-looking statements, which are qualified in their entirety by the cautionary statements contained in the press release and the company’s Securities and Exchange Commission filings.

The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast on November 7, 2012. Santarus undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

In this call, when talking about our company's performance, we will also discuss adjusted EBITDA, a non-GAAP financial measure. You can find the reconciliation of adjusted EBITDA to GAAP net income in our press release issued this afternoon.

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

Gerry Proehl

Thank you, Martha, and welcome to this afternoon’s call. I am happy to share the progress Santarus has made towards improving profitability while building sustainable long-term growth. To that end, today we reported strong financial results for the third quarter with total revenues of approximately $55 million, more than double what we reported in the third quarter of 2011.

We also achieved significant expansion of our bottomline with net income of $9 million compared with approximately $600,000 in the prior year period. The revenue increase which was primarily driven by substantial growth in GLUMETZA net sales allowed us to leverage our commercial organization and deliver impressive bottomline results and cash flow in the quarter.

Our expectations of continued strong commercial performance have led us to raise our financial outlook for 2012. Today, we are increasing our topline guidance for total revenue in 2012 by $10 million, bringing our current estimates to approximately $210 million. We are also raising net income guidance to $12 million to $14 million, up from our prior estimate of $8 million to $11 million. Debbie Crawford will provide additional details about our 2012 financial outlook in her financial review.

In early September, we announced achievement of a major legal milestone with a favorable Appellate Court ruling in the ZEGERID patent litigation. The three judge panel of the Appellate Court overturn the Delaware District Court’s ruling of obviousness for certain claims for two patents covering ZEGERID capsules and powder for oral suspension prescription product. A few days later, Par Pharmaceutical announced that it ceased further shipments of it's generic ZEGERID capsule product. We are very pleased with the outcome of the Appellate Court ruling and we now expect to retain exclusivity for ZEGERID until the patent expire in mid-2016.

As expected, Par recently requested a re-hearing of the ZEGERID case by the three judge panel that overturned the lower court ruling as well as by the entire court in an [on-bonk] review. Although, we can’t be certain of the outcome, historical precedence indicates that a very small percentage of cases are accepted for re-hearing by the Appellate Court. We expect the court to decide on Par's request for re-hearing later this year or early next year. If the request for re-hearing is rejected, the Appellate Court will issue a mandate to send the case back to the Delaware District Court to assess damages which we anticipate, will be decided by a jury trial.

From a commercial perspective, we are continue to offer authorized generic ZEGERID capsule product through our distribution partner, Prasco. We believe it will take several months to work through the inventory of Par’s generic product in the wholesale and retail channel. We also anticipate higher revenues on the authorized generic as the market transitions to a single source authorized generic ZEGERID

capsule. We expect to see a positive impact on our ZEGERID revenues starting in the fourth quarter this year.

Turning to our pipeline, we have recently announced positive topline results for two of our late-stage development products. Earlier today, we announced positive topline Phase III results with RUCONEST in treating acute attacks of angioedema in patients with hereditary angioedema. Wendell Wierenga will provide additional information on the clinical study later in the call.

In September, we announced positive topline results from our Phase III clinical study with Rifamycin SV MMX in travelers’ diarrhea. We expect the second Phase III study being conducted by Dr. Falk Pharma in India will be completed in mid-2013.

In mid August, we announced a new PDUFA target action date of January 16, 2013 for the FDA’s review of UCERIS study induction of remission of active mild-to-moderate ulcerative colitis. The FDA indicated to us that if no major deficiencies are identified during the review of the NDA, the agency plans to communicate proposed labeling for UCERIS to us by mid December. Once we have final labeling, we will require about eight weeks to produce launch quantities of UCERIS. We are currently targeting the startup promotion in the latter half of the first quarter and final labeling and FDA approval.

That completes my review and I will now turn the call over to Debbie to review our financial results. Debbie?

Debbie Crawford

Thank you, Gerry and thank you to everyone for joining our call. I am pleased to be reporting strong financial results today.

Total revenues for the 2012 third quarter grew 104% from the prior year period to $54.7 million. Net income in the 2012 third quarter was $9 million and diluted EPS was $0.13 compared with net income of $563,000 in the third quarter of 2011 and diluted EPS of $0.01.

Adjusted EBITDA for the third quarter of 2012 was $12.3 million, compared with $2.8 million in the third quarter of 2011.

Net product sales in the third quarter of 2012 totaled $53.7 million with individual product breakout as follows: GLUMETZA net sales were $39.3 million. In the prior year period, reported GLUMETZA net sales were $17 million, with net sales of $7.8 million reported by Santarus and net sales of $9.2 million reported by Depomed.

Santarus began recording net sales for GLUMETZA under a new commercialization agreement with Depomed in September of 2011. Santarus also reported $6 million of GLUMETZA promotion revenue in the third quarter of 2011 under our previous promotion agreement.

CYCLOSET net sales were $4.3 million compared with $2.1 million in the prior year period. FENOGLIDE which we began promoting in February of this year achieved net sales of $1.7 million.

Finally, ZEGERID brand and authorized genetic product sales totaled $8.4 million compared with $9.9 million last year. The sales decline reflects lower prescriptions for the ZEGERID brand and authorized generic. Third quarter expenses provide a season royalties of $14.8 million in 2012, an increase of $11.1 million over the prior year period, primarily as a result of royalties payable on net sales of GLUMETZA.

R&D expenses in the third quarter of 2012 increased to $6.2 million from $3.8 million for the prior year period, primarily from costs associated with our UCERIS Phase 3B clinical study and higher compensation costs associated with an increase in R&D headcount. Costs associated with the study for the third quarter of 2012 were lower than anticipated, but we expect R&D costs will be higher in the fourth quarter relative to the third as study enrolment increases.

SG&A expenses were $21.1 million for the third quarter of 2012, an increase of approximately $4.9 million from the prior year period. It also reflects costs associated with the addition of 40 contract sales representatives and sales management personnel in the first quarter of this year, as well as annual increases in salaries and benefits and expenses related to launch preparation activities for UCERIS.

Our operations strengthened our balance sheet during the quarter. As of September 30, 2012 we had cash, cash equivalents and short term investments of $81.9 million, representing an increase of $9.8 million in the quarter and an increase of $23.3 million year-to-date. As Jerry mentioned, our financial outlook for 2012 has been favorably impacted by our continued strong commercial performance, resulting in an upward revision in our revenue and profit estimates.

For 2012, we now expect to report total revenues of approximately $210 million, up from our prior estimates of at least $200 million. On the expense side, total year 2012 license fee expenses will include the $4 million milestone paid to Cosmo for the acceptance of the UCERIS NDA, which we recorded in the first quarter and a $10 million milestone payable in the fourth quarter to Pharming for a successful completion of the Phase 3 clinical study for RUCONEST as well as our royalty payments of GLUMETZA and ZEGERID plus our gross margin split for CYCLOSET.

And we are lowering our full year 2012 R&D expense guidance to $27 million to $29 million compared with prior guidance of $28 million to $30 million based on current projections for enrolment in our UCERIS Phase 3B clinical study.

With regards to our profit estimates, we are raising our net income guidance to approximately $12 million to $14 million, up from our prior estimates of $8 million to $11 million. We are also raising our adjusted EBITDA guidance to approximately $29 million to $32 million, up from our prior estimate of approximately $24 million to $29 million. Bill Denby will now give a brief overview of our commercial operations.

Bill Denby

Thank you Deb. Our promoted products continued to perform well in the third quarter, and we are especially pleased with the trajectory of prescriptions for our lead product GLUMETZA. New prescriptions for GLUMETZA advanced approximately 28%, while total prescriptions grew 30%, both compared with the third quarter 2011.

Sequential quarter was also strong at 6% for new prescriptions, and 5% for total prescriptions. These positive trends reflected in the record level of GLUMETZA net sales for the quarter. We have initiated our recruiting efforts to expand the sales force subject to receiving UCERIS approval. Our current plans are to add a total of approximately 85 contract and Santarus sales representatives early next year. This new timeframe related to the FDA’s revised PDUFA date works to our advantage in recruiting new sales staff, because it allows perspective sales representatives to finish out the year with their curious employer and in many cases retain their sales bonuses for the quarter.

The addition of new reps will bring our total sales force to 235 representatives. We're preparing for the UCERIS launch with a high level of activity in the fourth quarter, focused on developing the promotional plan, including the sales training modules, medical education, advertising, patient outreach and internet based advertising and other demand creation tactics and programs with a favorable outcome at the (inaudible) ZEGERID, we now have the opportunity to promote this attractive GI product for gastroenterologists and selective primary care physicians in the second detail position after UCERIS.

The initial goal will be to stem the erosion of the ZEGERID molecule overall, which has declined about 50% due to act of promotion since the generic launch in 2010. We estimate that half of our current sales force have promoted ZEGERID previously and they are very excited for the opportunity to support it again. When (inaudible) revising and refreshing the promotional campaign for ZEGERID and expect to relaunch the product concurrent with the launch of UCERIS.

To refresh everybody’s memory, the ZEGERID is a proton pump inhibitor that provides strong long lasting asset control. We have promoted ZEGERID from mid 2004 to mid 2010, so we are intimately familiar with the product. With significantly competitive branded promotion in the product proton pump inhibitor category compared with two years ago, we will work to renew interest in ZEGERID by emphasizing its attractive clinical profile and differentiation.

We plan to have all 235 sales representatives promote UCERIS and ZEGERID to gastroenterologist to a select primary care physicians and also to promote GLUMETZA and CYCLOSET to (inaudible) called physicians who are high prescribers for medicines for patients who have type 2 diabetes. Our planned territory alignment will reduce the size of our larger territories to allow for higher frequency of cost. We believe the higher frequency is critical to the success and launching in new pharmaceutical product as well as supporting the growth for in line products.

With the positive decision on the January PDUFA date, we will complete the hiring process for the new reps in early February followed by intensive sales training and a launch meeting. In summary, the commercial team is focused on meeting our sales targets for our in line products in 2012 and preparing for the launch of UCERIS and relaunch of ZEGERID in 2013. Wendell’s up next to discuss our clinical programs.

Wendell Wierenga

Thanks Bill. As Gerry mentioned we had good forward momentum in our pipeline with two Phase 3 studies reported on the positive top line results in the past two months. Earlier this morning we announced that RUCONEST 50 unites per kilogram met the primary end point of time to beginning of symptom and treating acute attacks of angioedema patients with HAE and the pivotal phase III clinical study. The phase III study was conduced under a special protocol assessment agreement with FDA, it was an international multi center, double blind, randomized placebo controlled study.

A total of 75 patients were enrolled and central randomized in the 3:2 ratio, 44 to active and 31 to placebo, to receive an intervenes injection look at our store placebo during and acute attack of angioedema. Approximately half of patients work from US sites. In the study RUCONEST achieved a statistically significant improvement and time to beginning of symptom relief versus placebo with a pvalue of 0.031.

The medium time to beginning of symptom relief was 90 minutes for RUCONEST patients and a 152 minutes for placebo patients. The time to beginning of symptom relief was to find as the time from the beginning of the infusion study medication until the beginning of the persistent beneficial effect based on a patients responses to achievement effect questioner for the primary attack location.

RUCONEST was generally well tolerated in the study and the frequency of the patients experiencing at least a one treatment emergent adverse events in the RUCONEST treating group was less than in the placebo group. Within 72 hours of the completion of infusion of study medication, 7% of the RUCONEST patient experienced six adverse events which included sneezing, procedural headache, back pain, skin burning sensation, increase in D-dimer and lipoma.

Within the same 72 hours 22% of the placebo patients experienced four adverse events which included the sinus conjunction, (inaudible) Diarrhea and [dislepsia]. In a prior randomized control study conducted in North America and the medium time to beginning of relief for RUCONEST at 50 units per kilogram was 122 minutes and was statistically significantly different from placebo.

Patients at an earlier study used a different instrument to report their symptoms called the visual analog scale. The treatment effect questionnaire used in the current study was the required measurement tool under the spa by the FDA. We and our development partner Pharming are now working to prepare the biological license application, the BLA for RUCONEST. We expect to submit to the FDA in the first half of 2013.

In September, we announced that our Phase 3 clinical study with Rifamycin SV MMX in patients with travelers’ diarrhea met the primary end point of reducing time to last unformed stool with highly statistically significant results. We intend to treat population of 264 patients; the median time to last unformed stool was 46 hours for Rifamycin SV MMX compared to 68 hours for placebo. Statistically significant were the p value of 0.008.

In order to submit NDA for Rifamycin SV MMX we will need to wait for a completion of a second Phase 3 clinical study, being conducted by Cosmo Pharmaceuticals European development partner Dr. Falk Pharma. This is a non-inferiority study were Rifamycin SV MMX is being compared to ciprofloxacin. We and Dr. Falk Pharma have an agreement to share data and we plan to have the data from Dr. Falk study as part of the NDA submission.

Dr. Falk expects to complete the study in mid 2013. Our Phase 3B clinical study to evaluate UCERIS as an add-on therapy to current [5 ASH] treatments for the induction of remission of active mild to moderate ulcerative colitis has enrolled a 136 patients as of November 2 other than expected total of enrolment targeted at 500.

We have added clinical sites which we expect to accelerate our recruitment starting in the fourth quarter and we expect a complete patient enrolment in 2013. A manuscript for our US pivotal study with the UCERIS was recently published on line in Gastroenterology and will appear in the November 2012 print issue on the journal.

Finally, we are on track to complete patient enrolment in our SAN-300, antibody against VLA-1. It’s a Phase 1 clinical study with both IV and subcutaneous forms of administration by the end of this year.

With that summary of our clinical programs, I will turn the call back over to Jerry.

Gerry Proehl

Thanks Wendell. In closing, we've made excellent progress towards our major goals for 2012. We've grown prescriptions and revenues for our marketed products and in this quarter have achieved the highest net sales in the history of the company. We've received a favorable Appellate Court decision on our patent case and now expect to have ZEGERID back as an important revenue contributor through mid 2016.

Our commercial team is making great progress in preparing for the commercial launch of UCERIS in 2013 subject to FDA approval. The clinical group has added more study sites to increase our patient enrolment for the Phase 3B clinical study for the use of UCERIS as an add-on therapy in ulcerative colitis. We've reported positive top line Phase 3 results to advance the clinical programs through RUCONEST and Rifamycin SV MMX. We expect our SAN-300 Phase 1 program will complete enrolment this year with both IV and subcutaneous dosage forms.

And finally, we expect to exceed our original revenue and profit objectives for the year and as a result have increased our guidance. In addition, we're focusing our business development efforts on the assessment of marketed or late stage development opportunities that could leverage our commercial organization.

With that overview, I now like to open the call for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions)

Martha Hough

This is Martha Hough again. While we're waiting for those questions, I would like to mention that we will be presenting two upcoming investment conferences. We will be at the Lazard Capital Markets 9th Annual Healthcare Conference in New York City on November 14 and we will also be presenting at the 24th Annual Piper Jaffray Healthcare Conference in New York on November 27. Okay, Christie, we're ready for the first question.

Operator

Your first question comes from the line of David Amsellem with Piper Jaffray.

David Amsellem - Piper Jaffray

Just a few quick questions. Starting with ZEGERID and the pricing of the AG, when should we expect to see the full impact in the improvement in pricing for the AG and maybe anyway to quantify what you do you think the improvement in that selling price is could be overtime?

Gerry Proehl

Yeah, Dave, this is Gerry. I think as we said on the call, we will start to see some of the impact in the fourth quarter as the wholesalers and retailers work through their prior inventory and begin ordering the Prasco product. As it relates to the full impact, I think by the time we get to the first quarter we should see the full impact of both the price increase at Prasco is taking and also the inventory draw downs of the power generic product.

David Amsellem - Piper Jaffray

Okay, that’s helpful. And then switching gears a couple of quick questions on GLUMETZA®, you think have room for significant additional pricing actions on the product and then give us a little bit of color on the latest reimbursement landscape may be percentage of probably commercializing (inaudible) that right now have on restricted access?

Gerry Proehl

I think Dave I can give you some of that, first of all in terms of price increases I think we will take them when we think the timing is right. I don’t think we get too much visibility to that. The [GRX] has continue to grow very well and I think the main answer to the managed curve portion of the question is that we have instituted a voucher so that most patients are able to get a $10 co-pay and that’s really our main sort of tactic in being able to make sure that GLUMETZA is accessible and affordable.

David Amsellem - Piper Jaffray

Okay and just to be clear that most patients do have unrestricted access you are not seeing a step at or a prior ops in most cases?

Gerry Proehl

That’s correct. I would say David what we do see is as it relates to GLUMETZA and generic metformin is that there are some plans certainly that require a patient to stay on a generic metformin before they can go to GLUMETZA and in some cases it may be just one generic metformin, some plans may require patients to fail an immediate release and then fail extended release product before they can go to GLUMETZA. So it really depends on the plan. I think what we are finding though is that for many patients as the doctors look at the $10 co-pay with GLUMETZA and they identify patients that may be at a previous history of having GI upset or previously haven’t been able to tolerate GI products. They are attending to go to GLUMETZA first line and we are seeing many more patients go on GLUMETZA before they every gone a generic metformin product which would indicate that there are the patients that don't have to step through generic metformin to go to GLUMETZA.

Operator

Your next question comes from the line of Scott Henry with Roth Capital. I think his line is open.

Martha Hough

I don't think he is there, and let's move to the next person maybe, he can reconnect.

Operator

Okay. Your next question comes from the line of Annabel Samimy with Stifel Nicolaus.

Annabel Samimy - Stifel Nicolaus

Thank you. just a few questions here. And first on the RUCONEST, I know you have got other 50 unit just in trail out of the way, you can obviously file. How does this compared to right now what’s out there, and how exactly do envision 15 is being used, was it just check the box type of thing or is there someway strategically they could be used in the marketplace?

Wendell Wierenga

The comparison is of course to other products out of the marketplace is a hard thing I must say they have to have studied but certainly looking at our four products out there two of which are intravenous plasma drives C1 esterase inhibitors into our subcutaneous administration. There are clearly differences between them in terms of onset symptoms versus treatment relief, obviously a lot of demonstration and even mechanism of action but looking at the differentiation of RUCONEST versus the plasma drives we think that the factors of being recombinant is a substantial supply advantage, its high efficacy rate which we continue to see and was seen in this particular study as well. Together, with the absence of Thromboembolic events represent a significant opportunity for RUCONEST going forward and we intend to exploit all of those and more as we finish the data analysis in the study and of course this is just topline information that we have at the present time.

Annabel Samimy - Stifel Nicolaus

I guess maybe I wanted to clarify the point, in terms of maybe the 50 and relative to the 100 unit that you are going to have, do you envision that the 50 unit would be used initially more often than the 100 unit or is it something that you just had to have to answer a question that the FDA had?

Wendell Wierenga

This was really at the request of the FDA to do additional patients at the 50 unit per kilogram dose, because the data prior to that time had suggested a pretty similar efficacy profile and no difference in safety between a 100 units and 50 units and so we have fulfilled that request in this far Phase 3 clinical study and anticipate that 50 unit per kilogram will be the prescribed dose.

Annabel Samimy - Stifel Nicolaus

Then in terms of the GLUMETZA, I guess the revenues that came in for GLUMETZA were a little bit higher than expected. We thought we had captured all the price increases in the volumes from IMS is there something that we are missing or maybe as many people are using the e-voucher program and its helping your net price, can you just give us a little bit more color there?

Gerry Proehl

I think Annabel, if you track the prescriptions, you are going to generally track pretty closer to the sales, but if you happen to get a big order coming in at the end of a quarter, it could increase the quarter, that quarter. So there's going to be some variability, so when shipments go out and typically we see larger shipments on Monday, Tuesdays of a week than at the end of the week, so some of it just has to do with when the quarter ends.

Annabel Samimy - Stifel Nicolaus

Okay, and then finally on ZEGERID you mentioned that you are going to be promoting, can you just give us a little bit of color on what kind of promotion you expect to have on ZEGERID; what kind of cost that might entail and how it will all play out with the AG and feed the substitution directly to the AG, if you are going to end up the same substitution to generic net results, can you just help us understand what the dynamics going to be there?

Bill Denby

Yeah, from a general viewpoint Annabel this is Bill, what we will start out with is first of all refreshing all of the sales material that we, promotional sales material that we had prior to the generic entry. As once we get that done and then we do all the training material, as I said 50% of the sales reps have sold ZEGERID before but they need some refreshing as well as the other 50% that have never sold ZEGERID.

So we will get them into some intensive training on the product and really promote the fact that we have an affordable long lasting proton pump inhibitor and so the affordable part comes on the AG. Having that remain available increases the access to both the branded product and the AG product i.e., through managed care and so we will probably be promoting both of those in a sense and making doctors sort of reorienting doctors to the strong long lasting nature of the product and we will sample it and we’ll do some other non end Par promotion as well. If we are able to stem the tide in terms of the decline, we may actually put more investment in it if it makes sense if it makes sense economically out in 2013.

Gerry Proehl

Yeah, to your other question Annabel, with regard to whether or not patients will move, and switch with the pharmacy to ZEGERID brand to either ZEGERID AG or omeprazole generic, we think that there are couple of reasons why most of the patients will be moved from the brand to the ZEGERID AG. Number one, the omeprazole product is not AB rated to our AG, so would require a pharmacist to have to call the physician to ask them to switch. But I think even more important is the economics to the pharmacists, because omeprazole has been out there for a long-time as a generic with many generic competitors, there is a fairly low overall price that they get for every prescription they fill for generic omeprazole. First is the value that they get on filling a prescription of an AG for ZEGERID is significantly higher and therefore financially, they would be better off to move a patient over to ZEGERID AG than to move them over to omeprazole generic.

Operator

Your next question comes from the line of Scott Henry with Roth Capital.

Scott Henry - Roth Capital

Just a couple of questions; I guess starting with UCERIS, in the ongoing dialog with FDA, have you noted anything different than would be expected and I guess, if you can’t comment, there was that issue of the FDA wanting to review, I believe, it was the international side. Has that taken place and have you heard any commentary on that process, if you can share it?

Wendell Wierenga

Well Scott this is Wendell. The review is on track and going as one would expect at this stage. The pre-approval inspections have been completed and we anticipate discussion with reviewing division on the label then in mid-December as they had originally indicated to us back in September.

Scott Henry - Roth Capital

I just wanted to dig in a little more on the RUCONEST, I understand how you are going to position the product versus others given the three components the supply advantages. I was curious could you comment on how saw the Phase III clinical data compared to others, particularly when you are thinking about time to symptom and perhaps a comparison of the pvalue among the trials. Just trying to get an idea of how in your words you would compare the products.

Wendell Wierenga

Again Scott this is Wendell. I think the comparison with the earlier data is bottom line very much in line with what we saw before in terms of time to symptom relief with the 50 unit per kilograms and a 100 unit per kilogram and the two Phase III trials that had been previously reported out. The difference in terms of pvalue was really due to the difference in placebo response where in the current study that we just recorded this morning, the placebo came in at a 152 whereas with previous RUCONEST studies it was 250 to 500 depending on the study.

We believe the main reason for that difference, as oppose to any sort of difference in medium time till we are ready for RUCONEST is really the different question there that was used here in this particular study as required by the FDA, and a questionnaire that had additional question in it with several sub parts to it, it was asked numerous times right after the initial infusion and really gives us a different base line in terms of the measurements that we were using both in the study versus the previous study we are using analog scale.

And comparing as well to the other plasma drive products, it’s a challenge in the sense that they too had differences in endpoints compared to what we have done with RUCONEST thus far. They also have a difference in proportion of patient at the several primary attack location, so the balance between peripheral versus abdominal will make a difference as you know in terms medium time to symptom relief.

Lastly of course the very variability between studies based on the entry criteria and how the patients are treated with the drug at the first initial science symptoms they were all different. So, I think in bottom when you look at across all these with all those caveats, you will conclude that RUCONEST compares as very favorably in terms of data that we just disclosed as well together with previously recorded data.

Gerry Proehl

Just another comment, and I think we mentioned in our press release and again its not only the fact that our product is recumbent products versus the couple of other products that have plasma derived products, but in all of our studies and all the patients that had been exposed to this product we've seen no tremble and [black] events in any of the patients. That's not the case with the other two plasma derived C1 inhibitors, and we think those types of things not only been recombinant and not having to worry about potential transmissions of viruses, (inaudible) etcetera, but there are other aspects of this product that we think are going to come out and people are going to see that both physicians and patients are going to see it when they start using this product.

Scott Henry - Roth Capital

Shifting gears if I could to CYCLOSET, you know there's a couple of things we are waiting for, I just wanted to check if there are any updates on them, one being when we could have word on potential patent, and second I believe there were thoughts about getting that in the clinical guidelines, are there any updates on either of those.

Gerry Proehl

Yeah, let me address patent and I will let Wendell will address the clinical guidelines. As you know we filed the patent under the accelerated review process with the PTO. We would expect to hear from the PTO probably in the May-June timeframe of next year. You know we may hear sometime early then that, but as far as an allowance of a patent it would happen in about that timeframe.

Wendell Wierenga

And relative to guidelines specifically with [AACE], we believe that the guidelines will now be published very early in 2013. They submitted to endocrine practice and we anticipate that together with a consensus paper being published and distributed in January-February timeframe.

Scott Henry - Roth Capital

Great, and then just the final question with regards to guidance, one, have you given any SG&A guidance and I am just taking a quick look at the release but it appears that if you back it out the EPS for the fourth quarter should be relatively breakeven, is that a fair analysis of it?

Debbie Crawford

Hi, there Scott its Debbie. Yes, that’s a fair analysis and I think the point to remember is that in the fourth quarter we would have the $10 million milestone payment to Pharming in our license fees. So without that it would have been a much higher guidance for us relative to the fourth quarter.

Operator

(Operator Instructions) Your next question comes from the line of (inaudible) with SunTrust.

Unidentified Analyst

Just a question on the RUCONEST trial, the 90 day follow-up period is currently ongoing, is it correct?

Wendell Wierenga

Well, actually the 90 day follow-up period was for those patients that were enrolled and treated in the protocol and to be followed for 90 days specifically. We now have that [mess] completed. We now have patients on open-label extension for a period of time and that length of time will be dictated based on our next dialogue with the FDA. We anticipate determining that in a pre-BLA conference with them in the not too distant future.

Unidentified Analyst

And then I think you may have answered this in the last series of questions Wendell, but there was an integrated analysis presented late last year that showed 60 minutes median time to symptom relief and I am guessing that the reason for the 60 minute versus 90 minutes reported today was just using different applications of the visual analog scale?

Wendell Wierenga

Yes, indeed. That was the difference between then and now.

Unidentified Analyst

Okay, and on the Dr. Falk study, can you remind me what the non-inferiority margin is?

Wendell Wierenga

I don't believe they have disclosed that at this point but the non-inferiority was set up relative to ciprofloxacin to meet the European guidelines for non-inferiority and they have added an additional 250 patients to their original target population to now, they are always secure of that degree of margin that they are looking for. At this point, we're anticipating they will complete that in the middle of next year.

Unidentified Analyst

Okay, thanks and then just a question on CYCLOSET and what you are seeing among the candidate patients. What are these patients look like? Are they failing something common therapy or intolerance of something? What's the typical profile of the CYCLOSET patient looking like?

Bill Denby

I think, Brian, the typical CYCLOSET patient is normally a couple other anti-diabetic products. So it's being used most likely from what we can see, third line, in some cases, fourth line of foreign injectable product. So they are most likely going to be on metformin product and then probably one other product, more likely in today’s market a DPP-4 inhibitor and then if they are still not getting the type of control they are looking for on HbA1c, they are adding CYCLOSET on to that drug regimen. Occasionally if you use second line but I would say majority time was third or fourth line.

Operator

This time I would like to hand the mic over to management for further comments or closing remarks.

Gerry Proehl

Great, well I would like to thank you for interest in Santarus and for joining us for today’s call. If you do have any further questions please feel free to contact me, Debbie or Martha. Thanks and have a great evening.

Operator

That concludes today’s conference call. You may now disconnect.

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