EXHIBIT 99.1
| | | |
COMPANY CONTACT: | | INVESTOR CONTACT: |
| Martha L. Hough | | Lippert/Heilshorn & Associates, Inc. |
| VP Finance & Investor Relations | | Jody Cain (jcain@lhai.com) |
| (858) 314-5824 | | Kevin Mc Cabe (kmccabe@lhai.com) |
| Debra P. Crawford | | (310) 691-7100 |
| Chief Financial Officer | | |
| (858) 314-5708 | | |
For Immediate Release
SANTARUS REPORTS SECOND QUARTER 2008 FINANCIAL RESULTS
Second quarter revenues up 74% with increase in Zegerid product sales of 27% from prior year period
Reports first profitable quarter
Provides outlook for 2008 net loss
Conference call to begin at 5:00 p.m. Eastern time today
SAN DIEGO (August 4, 2008)— Santarus, Inc. (NASDAQ: SNTS), a specialty pharmaceutical company, today reported financial and operating results for the quarter ended June 30, 2008. Key financial results for the 2008 second quarter include:
| • | | Total revenues of $36.0 million, including a $2.5 million milestone and $5.0 million of amortization of deferred revenue upon termination of a co-promotion agreement, compared with $20.7 million in total revenues in the prior year period |
| • | | Net product sales of $24.0 million, compared with $18.8 million in the prior year period |
| • | | Net income of $3.2 million, or $0.06 per share, versus a net loss of $12.9 million, or $0.25 per share, in the prior year period |
“We are pleased with our progress toward our corporate objectives, including the growth of ZEGERID® product sales and our recent agreement to promote GLUMETZA®,” said Gerald T. Proehl, president and chief executive officer of Santarus. “We are focused on expanding our sales reach to continue to drive ZEGERID sales and look forward to launching GLUMETZAearly in the 2008 fourth quarter.”
Business Highlights
Key second quarter accomplishments and recent highlights include the following:
| • | | Grew ZEGERID (omeprazole/sodium bicarbonate) brand total prescriptions to approximately 262,000 in the second quarter of 2008, an increase of 28% versus total prescriptions in the second quarter of 2007. |
| • | | Signed an agreement with Depomed, Inc. in July to promote GLUMETZA (metformin hydrochloride extended release tablets) in the U.S. GLUMETZA is a once-daily, extended-release formulation of metformin that incorporates patented drug delivery technology and is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus. Santarus expects to begin sales promotion early in the fourth quarter of 2008. |
| • | | Earned a $2.5 million regulatory milestone in May under Santarus’ over-the-counter (OTC) license agreement with Schering-Plough HealthCare Products, Inc. Schering-Plough is seeking FDA approval to sell a ZEGERID branded omeprazole/sodium bicarbonate OTC product. |
| • | | Received notice that U.S. patent number 7,399,772 was issued by the U.S. Patent and Trademark Office on July 15, 2008. The patent covers methods for treating acid-caused gastrointestinal disorders by administering a solid pharmaceutical composition comprising non-enteric coated omeprazole and certain antacids and provides additional coverage for the ZEGERID Capsule and Powder for Oral Suspension products. |
| • | | Announced clinical results from an abstract and poster presented at the Digestive Disease Week meeting in May summarizing positive data from a pharmacokinetic study. The study results indicated that after seven days of pre-breakfast dosing, ZEGERID Capsules produced significantly greater and significantly faster control of gastric acidity in patients with gastroesophageal reflux disease (GERD) than two branded delayed-release proton pump inhibitors (PPIs). |
| • | | Increased to $25 million the company’s revolving line of credit with Comerica Bank on favorable terms and extended the maturity date to July 2011. Santarus has not drawn on the line of credit to date. |
| • | | Effective with the termination of the co-promotion agreement for ZEGERID prescription products with Otsuka America Pharmaceutical, Inc. on June 30, 2008, Santarus will no longer be obligated to pay a royalty to Otsuka America on ZEGERID net sales. |
| • | | Announced the termination effective October 1, 2008 of the co-promotion agreement with Victory Pharma, Inc. for NAPRELAN® (naproxen sodium) Controlled Release Tablets. Santarus will continue to promote NAPRELAN through September 30, 2008. |
Second Quarter 2008 Financial Results
Total revenues for the second quarter of 2008 were $36.0 million, consisting of $24.0 million in net product sales and $12.0 million in contract revenue, which included a $2.5 million regulatory milestone that Santarus earned in May 2008 under its license agreement with Schering-Plough. In addition, with the termination of the co-promotion agreement with Otsuka America, the company recognized $5.0 million in amortization of deferred revenue representing the remaining balance of the upfront payment received from Otsuka America in October 2004. Santarus reported $20.7 million in total revenues in the second quarter of 2007, consisting of net product sales of $18.8 million and $1.9 million in contract revenue.
Net product sales were $24.0 million in the second quarter of 2008, a 27% increase over net product sales of $18.8 million in the second quarter of 2007. The 2008 and 2007 second quarter results consisted of sales of ZEGERID Capsules and Powder for Oral Suspension.
Santarus reported net income of $3.2 million, or $0.06 per share, for the second quarter of 2008, compared with a net loss of $12.9 million, or $0.25 per share, for the second quarter of 2007.
The cost of product sales was $1.7 million in the second quarter of 2008 and $1.7 million in the second quarter of 2007, or 7% and 9% of net product sales, respectively. The decrease in cost of product sales as a percent of net product sales was primarily attributable to lower manufacturing costs associated with ZEGERID Capsules and certain fixed costs being applied to increased sales volumes.
Santarus reported license fees and royalties of $3.4 million in the second quarter of 2008, which consisted of royalties payable to the University of Missouri and to Otsuka America Pharmaceutical, Inc. based on net product sales. License fees and royalties were $2.6 million in the second quarter of 2007.
Selling, general and administrative (SG&A) expenses were $25.8 million for the second quarter of 2008, and $28.5 million for the second quarter of 2007. The decrease in SG&A expenses was primarily attributable to a decrease in selling costs and costs associated with advertising and promotional activities, as well as a decrease in stock-based compensation, offset in part by legal fees associated with patent litigation.
For the six months ended June 30, 2008, the company reported total revenues of $60.5 million, which increased approximately 52% over the prior year period. The current period total revenues consisted of $43.4 million in net product sales and $17.1 million in contract revenue. The contract revenue for the six months ended June 30, 2008 included a $2.5 million milestone and $5.7 million in amortization of deferred revenue representing the remaining balance of an upfront fee received in 2004. This compares with total revenues of $39.7 million for the first six months of 2007, which consisted of $35.8 million in net product sales and $3.9 million in contract revenue.
Santarus reported a net loss of $4.4 million, or $0.09 per share, for the first six months of 2008, which decreased 85% compared with a net loss of $29.4 million, or $0.58 per share, for the first six months of 2007.
As of June 30, 2008, Santarus had cash, cash equivalents and short-term investments of $51.1 million, compared with $64.7 million as of December 31, 2007. The decrease of $13.6 million resulted primarily from the company’s net loss for the six months ended June 30, 2008, adjusted for non-cash stock-based compensation and changes in operating assets and liabilities. In addition, due to the illiquid state of the company’s auction rate securities, Santarus reclassified the fair value of these securities from short-term to long-term investments in the six months ended June 30, 2008. The fair value of Santarus’ auction rate securities was approximately $4.0 million in the company’s condensed balance sheet as of June 30, 2008.
Financial Outlook for 2008
The company affirmed that it expects to report total revenues of $115 million to $125 million, including estimated year-over-year growth of ZEGERID net product sales of 15% to 25%. The company today announced that it expects to report a significantly reduced net loss of less than $12.5 million for fiscal 2008 compared with the net loss of $44.3 million in the prior year. Santarus expects to report a net loss in the third quarter of 2008, and affirmed expectations to achieve breakeven in the fourth quarter of 2008, including contributions from existing contract revenue sources, the components of which may include milestone or other payments.
Conference Call
Santarus has scheduled an investor conference call regarding this announcement at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) today, August 4, 2008. 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 conclusion of the call by dialing 800-642-1687 for domestic callers, or 706-645-9291 for international callers, and entering reservation code 56065158. The live conference call also will be available via the Internet by visiting the Investor Relations section of the company’s Web site atwww.santarus.com, and a recording of the call will be available on the company’s Web site for 14 days following the completion of the call.
About Santarus
Santarus, Inc. is a specialty pharmaceutical company focused on acquiring, developing and commercializing proprietary products that address the needs of patients treated by gastroenterologists or primary care physicians. The company’s current marketing efforts are primarily focused on ZEGERID Capsules and Powder for Oral Suspension. These products are immediate-release formulations of omeprazole, a widely prescribed PPI. More information about Santarus is available on the company’s Web site atwww.santarus.com.
Santarus cautions you that 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 projected total revenues and net loss, the potential for and timing of breakeven, liquidity and other financial performance, the potential to grow ZEGERID and GLUMETZA brand net product sales, and the potential for and timing of contract revenues. The inclusion of forward-looking statements should not be regarded as a representation by Santarus that any of 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 increase market demand for, and sales of, its ZEGERID products and any other products that it or its strategic partners market, including Santarus’ ability to successfully launch and increase sales of GLUMETZA; the scope and validity of patent protection for Santarus’ products, including the outcome and duration of its patent infringement lawsuits against Par Pharmaceutical, Inc., and Santarus’ and its strategic partners’ ability to commercialize products without infringing the patent rights of others; Santarus’ dependence on a number of third parties, such as GlaxoSmithKline under license and distribution agreements and Schering-Plough under an OTC license agreement, and whether these arrangements will be successful; competition from other pharmaceutical or biotechnology companies and evolving market dynamics, including the impact of currently available generic PPI products and the introduction of additional generic PPI products; Santarus’ ability to further diversify its sources of revenue and product portfolio; other difficulties or delays relating to the development, testing, manufacturing and marketing of, and maintaining regulatory approvals for, Santarus’ and its strategic partners’ products; fluctuations in quarterly and annual results; Santarus’ ability to obtain additional financing as needed to support its operations or future product acquisitions, including its ability to access funds that may be available under the revolving line of credit with Comerica Bank; and other risks detailed in Santarus’ prior press releases, as well as in 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®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. NAPRELAN® is a registered trademark of Elan Corporation, plc.
[Tables to follow]
Santarus, Inc.
Condensed Balance Sheets
(in thousands)
(unaudited)
| | | | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2008 | | | 2007 | |
Assets | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents and short-term investments | | $ | 51,053 | | | $ | 64,678 | |
| Accounts receivable, net | | | 11,861 | | | | 9,681 | |
| Inventories, net | | | 6,838 | | | | 6,157 | |
| Other current assets | | | 2,552 | | | | 2,340 | |
| | | | | | | |
| Total current assets | | | 72,304 | | | | 82,856 | |
| Long-term restricted cash | | | 1,400 | | | | 1,400 | |
| Long-term investments | | | 4,012 | | | | — | |
| Property and equipment, net | | | 1,167 | | | | 667 | |
| Other assets | | | 249 | | | | 421 | |
| | | | | | | |
| Total assets | | $ | 79,132 | | | $ | 85,344 | |
| | | | | | | |
| | | | | | | | | |
Liabilities and stockholders’ equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 42,322 | | | $ | 37,355 | |
| Allowance for product returns | | | 8,323 | | | | 5,947 | |
| Current portion of deferred revenue | | | 10,365 | | | | 13,972 | |
| | | | | | | |
| Total current liabilities | | | 61,010 | | | | 57,274 | |
| Deferred revenue, less current portion | | | 4,858 | | | | 12,722 | |
| Total stockholders’ equity | | | 13,264 | | | | 15,348 | |
| | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 79,132 | | | $ | 85,344 | |
| | | | | | | |
Santarus, Inc.
Condensed Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Revenues: | | | | | | | | | | | | | | | | |
| Product sales, net | | $ | 23,954 | | | $ | 18,800 | | | $ | 43,369 | | | $ | 35,827 | |
| Contract revenue | | | 12,051 | | | | 1,930 | | | | 17,102 | | | | 3,861 | |
| | | | | | | | | | | | | |
| Total revenues | | | 36,005 | | | | 20,730 | | | | 60,471 | | | | 39,688 | |
| Costs and expenses: | | | | | | | | | | | | | | | | |
| Cost of product sales | | | 1,701 | | | | 1,663 | | | | 3,396 | | | | 3,310 | |
| License fees and royalties | | | 3,369 | | | | 2,632 | | | | 6,098 | | | | 5,016 | |
| Research and development | | | 2,241 | | | | 1,597 | | | | 3,947 | | | | 3,231 | |
| Selling, general and administrative | | | 25,751 | | | | 28,535 | | | | 52,267 | | | | 59,182 | |
| | | | | | | | | | | | | |
| Total costs and expenses | | | 33,062 | | | | 34,427 | | | | 65,708 | | | | 70,739 | |
| | | | | | | | | | | | | |
| Income (loss) from operations | | | 2,943 | | | | (13,697 | ) | | | (5,237 | ) | | | (31,051 | ) |
| Interest and other income, net | | | 262 | | | | 761 | | | | 823 | | | | 1,679 | |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | 3,205 | | | $ | (12,936 | ) | | $ | (4,414 | ) | | $ | (29,372 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.06 | | | $ | (0.25 | ) | | $ | (0.09 | ) | | $ | (0.58 | ) |
| | | | | | | | | | | | | |
| Diluted | | $ | 0.06 | | | $ | (0.25 | ) | | $ | (0.09 | ) | | $ | (0.58 | ) |
| | | | | | | | | | | | | |
| Weighted average shares outstanding used to calculate net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | | 51,389,988 | | | | 50,914,289 | | | | 51,353,401 | | | | 50,810,371 | |
| Diluted | | | 52,111,524 | | | | 50,914,289 | | | | 51,353,401 | | | | 50,810,371 | |
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