Santarus Reports Fourth Quarter and Full Year 2006 Financial Results.Fourth Quarter ZEGERID Prescriptions up 248% versus 2005 Fourth Quarter Conference Call to Begin at 5:00 p.m. Eastern Time Today SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- Santarus, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SNTS SNTS Society for New Testament Studies SNTS Standalone NMD Training System ), a specialty pharmaceutical company, today reported financial and operating results for the quarter and year ended December 31, 2006. Key financial results for the 2006 fourth quarter included: * Total revenues of $20.5 million * Net product sales of $19.3 million, compared with $5.0 million in the prior year period, and $12.2 million in the third quarter of 2006 * Net loss of $7.5 million, or $0.15 per share, versus a net loss of $15.8 million in the fourth quarter of 2005, and $12.4 million in the third quarter of 2006 Santarus reported total revenues of $49.2 million for the year ended December 31, 2006 versus total revenues of $26.5 million for the year ended December 31, 2005. Included in the 2006 full year results were net product sales of $46.0 million, compared with net product sales of $13.7 million in the prior year. The net loss for the year ended December 31, 2006 was $56.5 million, or $1.19 per share, compared with a net loss of $65.0 million, or $1.66 per share, for the year ended December 31, 2005. "Since the approval and launch of our ZEGERID([R])Capsules in the first quarter of 2006, we have achieved solid sequential quarterly growth in ZEGERID product prescriptions while managing our expenses," said Gerald T. Proehl, president and chief executive officer of Santarus. "Late last year we announced plans to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this positive sales momentum and to further optimize physician calling patterns by adding 150 new sales representatives to our commercial presence. We are pleased to report that these sales representatives have been trained and are currently promoting the distinct features of our ZEGERID products to gastroenterologists and primary care physicians in their territories." Fourth Quarter and Full Year 2006 Financial Results Net product sales were $19.3 million in the fourth quarter of 2006, increasing 289% over net product sales of $5.0 million in the fourth quarter of 2005. The 2006 fourth quarter results consisted of sales of ZEGERID Capsules and ZEGERID Powder for Oral Suspension and the prior period results consisted only of sales of ZEGERID Powder for Oral Suspension. The fourth quarter 2006 net product sales include $3.4 million in connection with a reduction in the allowance for product returns. Prior to the fourth quarter of 2006, the allowance for product returns was based on an analysis of ZEGERID product shipped to wholesalers in excess of prescription demand. After analyzing product returns history gathered over the past two years and through the end of 2006, the company determined that it had the information needed to reasonably estimate future product returns. As a result, the company recognized net product sales of $3.4 million representing revenue previously deferred, net of contractual allowances and other discounts. Going forward, the company will continue to provide for an estimate of future product returns based upon historical product returns trends and analysis of product expiration dating and inventory levels in the distribution channel. Excluding the $3.4 million, net product sales for the fourth quarter of 2006 increased 221% over the same period in 2005. Total revenues for the fourth quarter of 2006 were $20.5 million, consisting of $19.3 million in net product sales and $1.2 million in contract revenue. Santarus reported $5.7 million in total revenues in the fourth quarter of 2005, including $5.0 million in net product sales and $714,000 in contract revenue. Santarus reported a net loss of $7.5 million, or $0.15 per share, for the fourth quarter of 2006, compared with a net loss of $15.8 million, or $0.36 per share, for the fourth quarter of 2005. In connection with the reduction in the allowance for product returns, the net loss for the fourth quarter of 2006 was reduced by $2.7 million, representing net product sales partially offset by the related cost of sales and royalties. The net loss for the fourth quarter of 2006 included approximately $2.2 million, or $0.04 per share, in stock-based compensation expense. The cost of sales was $1.5 million, or approximately 8% of net product sales, in the fourth quarter of 2006, compared with $753,000 in the fourth quarter of 2005, which was approximately 15% of net product sales. The reduction in cost of sales as a percentage of net product sales was primarily attributable to lower manufacturing costs associated with the capsule product and certain fixed overhead costs overhead costs see fixed costs. being applied to increased sales volumes. Santarus reported license fees and royalties of $2.7 million in the fourth quarter of 2006, 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 $696,000 in the fourth quarter of 2005. Research and development expenses for the fourth quarter of 2006 decreased to $1.6 million, compared with $3.1 million for the fourth quarter of 2005. The lower expenses in the fourth quarter of 2006 reflect a decrease in clinical and manufacturing development activities and a decrease in compensation costs. Selling, general and administrative expenses were $23.1 million for the fourth quarter of 2006, and $17.6 million for the fourth quarter of 2005. The increase in selling, general and administrative expenses was primarily attributable to costs associated with the company's sales force expansion, increased promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade and approximately $1.4 million of additional stock-based compensation expense. The company reported total revenues of $49.2 million for the year ended December 31, 2006, consisting of $46.0 million in net product sales, including $3.4 million in connection with the reduction in the allowance for product returns in the fourth quarter, and $3.2 million in contract revenue. For the year ended December 31, 2005, Santarus reported $26.5 million in total revenues, consisting of $13.7 million in net product sales and $12.8 million in contract revenue, including a $10.0 million milestone payment received from TAP Pharmaceutical Products Inc. under a sublicense sub·li·cense n. A license giving rights of production or marketing of products or services to a person or company that is not the primary holder of such rights. tr.v. agreement that was subsequently terminated in March 2006. Santarus reported a net loss of $56.5 million, or $1.19 per share, for the year ended December 31, 2006, compared with a net loss of $65.0 million, or $1.66 per share, for the year ended December 31, 2005. The net loss for the year ended December 31, 2006 was reduced by $2.7 million in connection with the reduction in the allowance for product returns in the fourth quarter. The results for the year ended December 31, 2006 included approximately $9.3 million, or $0.20 per share, in stock-based compensation expense. As of December 31, 2006, Santarus had cash, cash equivalents and short-term investments of $75.5 million, compared with $69.4 million as of December 31, 2005, an increase of $6.1 million. This increase resulted primarily from net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $36.3 million resulting from draw downs under the committed equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. facility with Kingsbridge Capital Limited, a private investment group, and a $15.0 million upfront payment received from Schering-Plough HealthCare Products, Inc., offset in part by the company's net loss for 2006. Financial Outlook for 2007 and 2008 The company anticipates that the addition of approximately 150 sales representatives will have a positive impact on revenue, primarily beginning in the second half of 2007 and to a greater extent in 2008. Santarus expects to report total revenues of more than $200 million in 2008 and to achieve breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations in the second half of that year. The company expects that the financial impact of adding 150 sales representatives will be to increase selling, general and administrative expenses by approximately $30 million to $35 million annually. This estimate includes a projection of the fully-burdened cost of a sales representative, as well as the related marketing expenditures, including samples, promotional literature and speaker programs associated with the expansion. Additional Business Highlights Key fourth quarter accomplishments and recent highlights include the following: * Grew ZEGERID brand total prescriptions to approximately 153,000 in the fourth quarter of 2006, an increase of 248% versus total prescriptions in the fourth quarter of 2005, and an increase of 28% over the third quarter of 2006. * Sequentially increased total ZEGERID Capsule prescriptions by 44%, to approximately 118,000 in the fourth quarter, over the 82,000 prescriptions reported in the third quarter of 2006. For the fourth quarter, ZEGERID Capsule prescriptions represented approximately 77% of total ZEGERID brand prescriptions and 80% of new prescriptions. * Received a $15.0 million upfront payment in late November 2006 under an agreement signed earlier in the fourth quarter that grants Schering-Plough certain exclusive rights to develop, manufacture and commercialize 20 mg omeprazole omeprazole /omep·ra·zole/ (o-mep´ra-zol) an inhibitor of gastric acid secretion used in the treatment of dyspepsia , gastroesophageal reflux disease, disorders of gastric hypersecretion, and peptic ulcer, including that associated with products using the company's patented PPI (1) (Pixels Per Inch) The measurement of the resolution of a monitor or scanner. For example, a monitor that is 16 inches wide and displays 1600 pixels across its width would have a resolution of 100 ppi (1600 divided by 16). technology for the over-the-counter (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). ) market in the U.S. and Canada. * Recruited and trained approximately 150 new sales representatives in December 2006 and January 2007 to promote ZEGERID brand prescription products in the U.S., with 140 sales representatives added through a contract sales agreement with inVentiv Health, Inc. and the remaining sales representatives hired by Santarus. * Publication of a manuscript in the January 2007 issue of Alimentary alimentary /al·i·men·ta·ry/ (al?i-men´tah-re) pertaining to food or nutritive material, or to the organs of digestion. al·i·men·ta·ry adj. 1. Pharmacology pharmacology, study of the changes produced in living animals by chemical substances, especially the actions of drugs, substances used to treat disease. Systematic investigation of the effects of drugs based on animal experimentation and the use of isolated and & Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. summarizing positive study data evaluating the effects on nocturnal nocturnal /noc·tur·nal/ (nok-tur´n'l) pertaining to, occurring at, or active at night. noc·tur·nal adj. 1. Of, relating to, or occurring in the night. 2. gastric acidity acidity /acid·i·ty/ (-i-te) the quality of being acid; the power to unite with positively charged ions or with basic substances. a·cid·i·ty n. The state, quality, or degree of being acid. in patients with nighttime symptoms of gastroesophageal reflux disease gastroesophageal reflux disease (GERD) Disorder characterized by frequent passage of gastric contents from the stomach back into the esophagus. Symptoms of GERD may include heartburn, coughing, frequent clearing of the throat, and difficulty in swallowing. (GERD GERD gastroesophageal reflux disease. GERD abbr. gastroesophageal reflux disease GERD ) after bedtime bedtime Sleep disorders The time when one attempts to fall asleep–as distinguished from the time when one gets into bed dosing with ZEGERID Powder for Oral Suspension and two leading delayed-release PPIs. 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, March 5, 2007. 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 7806262. The live conference call also will be available via the Internet by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the company's Web site at www.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 currently markets ZEGERID Capsules and ZEGERID Powder for Oral Suspension. These products are immediate-release formulations of omeprazole, a widely prescribed proton pump inhibitor proton pump inhibitor n. A class of drugs that inhibit gastric acid secretion by interfering with the movement of hydrogen ions across cell membranes and are used mainly to treat peptic ulcers, gastroesophageal reflux disease, and esophagitis. . More information about Santarus is available on the company's Web site at www.santarus.com. Santarus cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The inclusion of forward-looking statements, including Santarus' achievement of future performance and financial results, 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, ZEGERID Capsules, ZEGERID Powder for Oral Suspension and any other products that Santarus or its strategic partners may market; Santarus' ability to maintain adequate levels of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. from managed care organizations and other third party payors for its ZEGERID products and any future products; Santarus' dependence on a number of third parties, such as Schering-Plough under the OTC license agreement, Otsuka America under the co-promotion agreement, and inVentiv under the contract sales agreement; the scope and validity of patent protection for Santarus' products and Santarus' and its strategic partner's ability to commercialize products without infringing the patent rights of others; unexpected adverse side effects Side effects Effects of a proposed project on other parts of the firm. or inadequate therapeutic efficacy of Santarus' products that could delay or prevent product development or commercialization, or that could result in recalls or product liability claims; competition from other pharmaceutical or biotechnology companies Top 100 Biotechnology Companies The following is a list of the top 100 biotechnology companies ranked by revenue. The first nine companies qualify for the list of the top 50 pharmaceutical companies. ; other difficulties or delays relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the development, testing, manufacturing and marketing of, and maintaining regulatory approvals for, Santarus' products; fluctuations in quarterly and annual results; Santarus' ability to obtain additional financing as needed as needed prn. See prn order. to support its operations; 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of Section 21E of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Santarus([R]) and ZEGERID([R]) are trademarks of Santarus, Inc. [TABLE OMITTED] [TABLE OMITTED] |
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