Santarus, Inc. (NASDAQ: SNTS), a specialty biopharmaceutical company, today reported financial and operating results for the quarter ended March 31, 2012.
Key financial results for the 2012 first quarter include:
“We began 2012 on a strong note as total revenues doubled from the prior year period on a significant contribution from net sales of GLUMETZA®, higher sales of CYCLOSET® and an encouraging start to our promotion of FENOGLIDE®. Even with the approximately $4 million success-based regulatory milestone expense for FDA acceptance for filing of the UCERIS™ NDA, we are reporting profitability versus a loss in the first quarter of 2011,” said Gerald T. Proehl, president and chief executive officer of Santarus. “We continue to advance our clinical programs and we anticipate reporting top-line results from Phase III studies for RHUCIN® and rifamycin SV MMX® during the second half of the year.”
First quarter and recent business highlights include the following:
First Quarter 2012 Financial Results
Total revenues increased to $45.9 million for the first quarter of 2012, compared with $22.8 million for the first quarter of 2011 as indicated below ($ in millions):
|Three Months Ended||Increase|
|Product sales, net|
|Total product sales, net||45.1||12.0||33.1|
1Includes ZEGERID brand and authorized generic
2Other revenue included $10.3 million of GLUMETZA promotion revenue in the first quarter of 2011
Net income for the first quarter of 2012 was $0.6 million, diluted EPS was $0.01 and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $7.8 million. In the first quarter of 2011 the company had a net loss of $0.5 million, a net loss per share of $0.01, and adjusted EBITDA of $1.5 million.
The cost of product sales was $3.5 million, or approximately 8% of net product sales, for the first quarter of 2012, compared with $1.5 million, or approximately 13% of net product sales, for the first quarter of 2011. The decrease in the cost of product sales as a percentage of net product sales was primarily attributable to higher gross margins associated with the GLUMETZA products and certain fixed costs being applied over increased sales volumes.
License fees and royalties of $16.3 million for the first quarter of 2012 included royalties on GLUMETZA net sales under the restructured commercialization agreement signed in August 2011, the gross margin split on CYCLOSET net sales, amortization of upfront payments and a regulatory milestone paid for FDA acceptance of the UCERIS NDA for review. License fees and royalties of $1.9 million for the first quarter of 2011 included the gross margin split on CYCLOSET net sales, royalties on ZEGERID net sales and amortization of upfront payments.
Research and development (R&D) expenses were $5.2 million for the first quarter of 2012, compared with $3.3 million for the first quarter of 2011. The $1.9 million increase in R&D expenses was primarily attributable to costs associated with the UCERIS Phase IIIb clinical study and costs associated with increased R&D headcount.
Selling, general and administrative (SG&A) expenses were $19.8 million for the first quarter of 2012 and $16.5 million for the first quarter of 2011. The $3.3 million increase in SG&A expenses was primarily attributable to the addition of 40 contract sales representatives in January 2012.
As of March 31, 2012, Santarus reported cash, cash equivalents and short-term investments of $65.5 million, compared with $58.6 million as of December 31, 2011. The $6.9 million net increase resulted primarily from the company’s net income for the three months ended March 31, 2012, adjusted for non-cash charges, including $3.7 million related to issuance of common stock for achievement of a regulatory milestone.
Financial Outlook for 2012
The company affirmed that it expects to report for the full year, 2012:
Non-GAAP Financial Measures
In this press release, Santarus used adjusted EBITDA as a key operating metric. Adjusted EBITDA is a non-GAAP financial measure. The company believes that the presentation of this non-GAAP financial measure provides useful supplementary information to and facilitates additional analysis by investors. The company uses this non-GAAP financial measure in connection with its own budgeting and planning. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.
Set forth below are tables reconciling the company’s adjusted EBITDA to GAAP net income for the periods ending March 31, 2012 and 2011 and reconciling the company’s adjusted EBITDA guidance to GAAP net income guidance for the year ending December 31, 2012.
|Reconciliation of GAAP Net Income to Adjusted EBITDA|
|($ in millions)|
|Three Months Ended||Increase|
|GAAP net income (loss)||$||0.6||$||(0.5||)||$||1.1|
|Interest (income) expense||0.1||0.1||-|
|Income tax expense||0.3||-||0.3|
|Depreciation and amortization||1.5||0.8||0.7|
|Stock issuance for regulatory milestone||3.7||-||3.7|
|Loss on contingent consideration||0.2||0.1||0.1|
|Reconciliation of GAAP Net Income to Adjusted EBITDA|
|Guidance for the Year Ending December 31, 2012|
|($ in millions)|
|GAAP net income||$8 - $11|
|Interest (income) expense||0 - 1|
|Income tax expense||1|
|Depreciation and amortization||6|
|Stock-based compensation||5 - 6|
|Stock issuance for regulatory milestone||4|
|Adjusted EBITDA||$24 - $29|
Santarus has scheduled an investor conference call regarding this announcement at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) today, May 8, 2012. Individuals interested in participating in the call may do so by dialing 888-803-8275 for domestic callers, or 706-643-7736 for international callers. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 855-859-2056 for domestic callers, or 404-537-3406 for international callers, and entering reservation code 70617723. The live conference call also will be available by visiting the Investor Relations section of the company’s website at www.santarus.com and a recording of the call will be available on the company’s website for 14 days following the completion of the call.
Santarus, Inc. is a specialty biopharmaceutical company focused on acquiring, developing and commercializing proprietary products that address the needs of patients treated by physician specialists. The company’s current commercial efforts are focused on GLUMETZA® (metformin hydrochloride extended release tablets) and CYCLOSET® (bromocriptine mesylate) tablets, which are indicated as adjuncts to diet and exercise to improve glycemic control in adults with type 2 diabetes, and on FENOGLIDE® (fenofibrate) tablets, which is indicated as an adjunct to diet to reduce high cholesterol.
Santarus has a diverse product development pipeline. A New Drug Application for UCERIS™ (budesonide) tablets for induction of remission of mild to moderate active ulcerative colitis is under review by the U.S. Food and Drug Administration with a response expected in October 2012. The pipeline also includes two late-stage investigational drugs in Phase III clinical studies: RHUCIN® (recombinant human C1 inhibitor) for treatment of acute attacks of hereditary angioedema and rifamycin SV MMX® for treatment of travelers’ diarrhea. In addition, the company’s investigational monoclonal antibody, SAN-300, is being evaluated in a Phase I clinical program. More information about Santarus is available at www.santarus.com.
Statements included in this press release that are not a description of historical facts are forward-looking statements. These forward-looking statements include statements regarding anticipated financial results, the timing for FDA review of the UCERIS NDA, the timing for completion of the Phase III clinical studies for RHUCIN and rifamycin SV MMX and the timing for completion of the Phase IIIb clinical study for UCERIS.
The inclusion of forward-looking statements should not be regarded as a representation by Santarus that its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in Santarus’ business, including, without limitation: Santarus’ ability to generate sales of its brand products; Santarus’ ability to successfully advance the development of, obtain regulatory approval for and ultimately commercialize, its development product candidates; whether Santarus obtains regulatory approval for UCERIS in a timely manner or at all; Santarus’ ability to maintain patent protection for its products and risks associated with ongoing patent litigation; Santarus’ ability to continue to generate revenues from its branded and authorized generic ZEGERID prescription products and the impact on Santarus’ business and financial condition of the ongoing generic competition for ZEGERID; Santarus’ ability to achieve continued progress under its strategic alliances, and the potential for early termination of, or reduced payments under, these agreements; adverse side effects, inadequate therapeutic efficacy or other issues related to Santarus’ products or products Santarus promotes that could result in product recalls, market withdrawals or product liability claims; competition from other pharmaceutical or biotechnology companies and evolving market dynamics; other difficulties or delays relating to the development, testing, manufacturing and marketing of, and obtaining and maintaining regulatory approvals for, Santarus’ and its strategic partners’ products; fluctuations in quarterly and annual results; and other risks detailed in Santarus’ prior press releases and public periodic filings with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement and Santarus undertakes no obligation to revise or update this news release to reflect events or circumstances after the date hereof. This caution is made under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.
Santarus®, FENOGLIDE®, UCERIS™, and ZEGERID® are trademarks of Santarus, Inc. GLUMETZA® is a trademark of Biovail Laboratories International S.r.l. licensed exclusively in the United States to Depomed, Inc. CYCLOSET® is a trademark of VeroScience LLC. MMX® is a trademark of Cosmo Technologies Limited. RHUCIN® is a trademark of Pharming Group NV.
|Condensed Consolidated Balance Sheets|
|March 31,||December 31,|
|Cash and cash equivalents and short-term investments||$||65,512||$||58,608|
|Accounts receivable, net||20,751||20,274|
|Prepaid expenses and other current assets||4,679||3,714|
|Total current assets||95,692||87,725|
|Long-term restricted cash||950||1,050|
|Property and equipment, net||500||578|
|Intangible assets, net||20,414||21,787|
|Liabilities and stockholders' equity|
|Accounts payable and accrued liabilities||$||34,762||$||35,413|
|Allowance for product returns||14,210||13,895|
|Total current liabilities||48,972||49,308|
|Deferred revenue, less current portion||2,053||2,163|
|Other long-term liabilities||2,648||2,494|
|Total stockholders' equity||56,964||50,088|
|Total liabilities and stockholders' equity||$||120,469||$||114,053|
|Condensed Consolidated Statements of Operations|
|(in thousands, except share and per share amounts)|
|Three Months Ended|
|Product sales, net||$||45,129||$||11,981|
|Costs and expenses:|
|Cost of product sales||3,484||1,520|
|License fees and royalties||16,319||1,883|
|Research and development||5,174||3,326|
|Selling, general and administrative||19,847||16,478|
|Total costs and expenses||44,824||23,207|
|Income (loss) from operations||1,056||(393||)|
|Other income (expense):|
|Total other income (expense)||(101||)||(103||)|
|Income (loss) before income taxes||955||(496||)|
|Income tax expense||328||20|
|Net income (loss)||$||627||$||(516||)|
|Net income (loss) per share:|
|Weighted average shares outstanding used to calculate net income (loss) per share:|