Santarus Beats on Earnings and Revs


Santarus, Inc. (SNTS) reported first quarter 2013 earnings of 26 cents per share, well above the year-ago earnings of 7 cents and the Zacks Consensus Estimate of 12 cents per share.

Quarterly revenues increased 73.1% year over year to $79.4 million, well above the Zacks Consensus Estimate of $74 million, with performance being driven by Glumetza and Zegerid.

Quarter in Detail

During the quarter, Glumetza revenues increased 33% to $41.5 million. Total prescription volume shot up 18% from the year-ago quarter.

Zegerid revenues (branded and authorized generic) came in at $24.6 million, recording significant growth from year-ago revenues of $8.5 million. We note that Santarus re-launched Zegerid in Feb 2013 and is working on stopping the decline of Zegerid prescriptions. However, Zegerid total prescriptions were down 20% year over year.

Cycloset revenues increased 8.3% to $3.9 million. Fenoglide revenues were $1.9 million.

Uceris revenues were $6.6 million in the reported quarter. We remind investors that in Jan 2013, Uceris received approval from US Food and Drug Administration (:FDA) for the induction of remission in patients suffering from mild-to-moderate ulcerative colitis. The product was launched in the US in Feb 2013.  

Research and development expenses increased 26.7% to $6.6 million primarily driven by costs related to the Uceris study. Selling, general and administrative (SG&A) expenses increased 55% to $30.8 million. Sales force expansion and higher costs associated with the Uceris launch led to the increase in SG&A spend.

Santarus is currently seeking FDA approval for Ruconest for the treatment of acute attacks of angioedema in hereditary angioedema (HAE) patients. A response is expected in Apr 2014. Santarus is looking to study Ruconest in HAE prophylaxis and acute pancreatitis.

2013 Guidance Up

Santarus raised its 2013 guidance with Glumetza, Zegerid and Uceris expected to continue performing well. Santarus raised its total revenue guidance to $330 million - $340 million from the earlier range of $320 million − $325 million.

The company now expects earnings per share (excluding the impact of stock-based compensation expense) in the range of $1.03 to $1.15, above the earlier guidance of $0.92 to $1.00. Stock based compensation expense is expected in the range of $13 - $14 million.

Santarus maintained its expense guidance. While research and development expenses are expected in the range of $34−$38 million, SG&A expenses are estimated at $131−$134 million. Santarus earmarked $38−$40 million for the expansion of its sales force and other promotional costs related to the launch of Uceris and the re-launch of Zegerid.

Our Take

We are encouraged by the company’s first quarter results and raised outlook. Uceris is off to a strong start and should continue performing well. We expect investor focus to remain on the Uceris launch and Zegerid re-launch.

Santarus carries a Zacks Rank #3 (Hold). Currently, companies like Lannett Company, Inc. (LCI) and Catalyst Pharmaceutical Partners Inc. (CPRX) look more attractive with a Zacks Rank #1 (Strong Buy). Elan Corporation, plc (ELN) is also attractive with a Zacks Rank #2 (Buy).

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