Santarus Inc. (SNTS, Financial) filed Quarterly Report for the period ended 2010-09-30.
Santarus Inc. has a market cap of $193.3 million; its shares were traded at around $3.3 with a P/E ratio of 5.2 and P/S ratio of 1.1. SNTS is in the portfolios of Jim Simons of Renaissance Technologies LLC.
License fees and royalties were $16.0 million for the three months ended September 30, 2010 and $2.0 million for the three months ended September 30, 2009. The $14.0 million increase in license fees and royalties was primarily due to the $15.0 million upfront fee we paid to Pharming in connection with the license and supply agreements we entered into in September 2010. The increase also included $200,000 paid to Biogen under our license agreement and license fee amortization from the $5.0 million upfront fee we are paying to S2 and VeroScience under a distribution and license agreement we entered into in September 2010. The $5.0 million upfront fee has been capitalized and is being amortized to license fee expense over the estimated useful life of the asset on a straight-line basis through early 2015. The increase in license fees and royalties was offset in part by a decrease in royalties due to the University of Missouri due to lower sales of our Zegerid prescription products.
Restructuring Charges. As a result of our restructuring plan, we recorded a restructuring charge of $7.3 million in the three months ended September 30, 2010, consisting of $5.2 million in one-time termination benefits including pay during the Worker Adjustment and Retraining Notification Act, or WARN, notice period in lieu of work, severance and healthcare benefits, $1.7 million in contract termination costs and $352,000 of non-cash stock-based compensation. Our decision to cease promotion of our Zegerid prescription products and implement a corporate restructuring resulted from Pars decision to launch a generic version of our Zegerid prescription products in late June 2010. The corporate restructuring included a workforce reduction of approximately 34%, or 113 employees, in our commercial organization and certain other operations. We also determined to significantly reduce the number of contract sales representatives that we utilize. We provided 60-day WARN notices to the affected employees to inform them that their employment would end at the conclusion of the 60-day period. We began notifying affected employees in July 2010 and substantially completed our restructuring plan in the third quarter of 2010.
Product Sales, Net. Product sales, net were $72.8 million for the nine months ended September 30, 2010 and $87.0 million for the nine months ended September 30, 2009 and consisted of sales of Zegerid Capsules and Zegerid Powder for Oral Suspension as well as sales of the authorized generic version of our Zegerid Capsules under our distribution and supply agreement with Prasco. The $14.2 million decrease in product sales, net was comprised of approximately $19.0 million related to a decrease in the sales volume of our Zegerid products, including the related authorized generic products, offset in part by approximately $4.8 million related to increased average selling prices. These decreases in volume resulted from Pars commencement of its commercial sale of its generic version of our Zegerid Capsules prescription products in late June 2010.
Other License Revenue. Other license revenue was $245,000 for the nine months ended September 30, 2010 and $6.2 million for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, other license revenue was comprised of the remaining amortization of the $2.5 million upfront payment we received in October 2009 in connection with our license agreement with Norgine. The $2.5 million upfront payment was amortized on a straight-line basis over a three-month period through early January 2010, which represented the period during which we had significant responsibilities under the agreement. For the nine months ended September 30, 2009, license revenue was comprised of the amortization of upfront payments we received from GSK in December 2007 and Schering-Plough in November 2006.
Cost of Product Sales. Cost of product sales was $6.6 million for the nine months ended September 30, 2010 and $6.0 million for the nine months ended September 30, 2009, or approximately 9% and 7% of net product sales, respectively. Cost of product sales consists primarily of raw materials, third-party manufacturing costs, freight and indirect personnel and other overhead costs associated with the sales of our Zegerid prescription products as well as shipments to Prasco of the authorized generic version of Zegerid Capsules. Cost of product sales also includes reserves for excess, dated or obsolete commercial inventories based on an analysis of inventory on hand and on firm purchase commitments compared to forecasts of future sales. The increase in our cost of product sales as a percentage of net product sales was primarily attributable to a reserve of approximately $1.5 million recognized in the nine months ended September 30, 2010 against on-hand inventories of our Zegerid products in connection with the launch of generic and authorized generic versions of prescription Zegerid Capsules and our related decision to cease promotion of Zegerid.
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Santarus Inc. has a market cap of $193.3 million; its shares were traded at around $3.3 with a P/E ratio of 5.2 and P/S ratio of 1.1. SNTS is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Product Sales, Net. Product sales, net were $11.0 million for the three months ended September 30, 2010 and $31.5 million for the three months ended September 30, 2009 and consisted of sales of Zegerid Capsules and Zegerid Powder for Oral Suspension as well as sales of the authorized generic version of Zegerid Capsules under our distribution and supply agreement with Prasco. The $20.5 million decrease in product sales, net was comprised of approximately $21.1 million related to a decrease in the sales volume of our Zegerid products, including the related authorized generic products, offset in part by approximately $631,000 related to increased average selling prices. These decreases in volume resulted from Par Pharmaceutical, Inc.s, or Pars, commencement of its commercial sale of its generic version of our Zegerid Capsules prescription products in late June 2010.License fees and royalties were $16.0 million for the three months ended September 30, 2010 and $2.0 million for the three months ended September 30, 2009. The $14.0 million increase in license fees and royalties was primarily due to the $15.0 million upfront fee we paid to Pharming in connection with the license and supply agreements we entered into in September 2010. The increase also included $200,000 paid to Biogen under our license agreement and license fee amortization from the $5.0 million upfront fee we are paying to S2 and VeroScience under a distribution and license agreement we entered into in September 2010. The $5.0 million upfront fee has been capitalized and is being amortized to license fee expense over the estimated useful life of the asset on a straight-line basis through early 2015. The increase in license fees and royalties was offset in part by a decrease in royalties due to the University of Missouri due to lower sales of our Zegerid prescription products.
Restructuring Charges. As a result of our restructuring plan, we recorded a restructuring charge of $7.3 million in the three months ended September 30, 2010, consisting of $5.2 million in one-time termination benefits including pay during the Worker Adjustment and Retraining Notification Act, or WARN, notice period in lieu of work, severance and healthcare benefits, $1.7 million in contract termination costs and $352,000 of non-cash stock-based compensation. Our decision to cease promotion of our Zegerid prescription products and implement a corporate restructuring resulted from Pars decision to launch a generic version of our Zegerid prescription products in late June 2010. The corporate restructuring included a workforce reduction of approximately 34%, or 113 employees, in our commercial organization and certain other operations. We also determined to significantly reduce the number of contract sales representatives that we utilize. We provided 60-day WARN notices to the affected employees to inform them that their employment would end at the conclusion of the 60-day period. We began notifying affected employees in July 2010 and substantially completed our restructuring plan in the third quarter of 2010.
Product Sales, Net. Product sales, net were $72.8 million for the nine months ended September 30, 2010 and $87.0 million for the nine months ended September 30, 2009 and consisted of sales of Zegerid Capsules and Zegerid Powder for Oral Suspension as well as sales of the authorized generic version of our Zegerid Capsules under our distribution and supply agreement with Prasco. The $14.2 million decrease in product sales, net was comprised of approximately $19.0 million related to a decrease in the sales volume of our Zegerid products, including the related authorized generic products, offset in part by approximately $4.8 million related to increased average selling prices. These decreases in volume resulted from Pars commencement of its commercial sale of its generic version of our Zegerid Capsules prescription products in late June 2010.
Other License Revenue. Other license revenue was $245,000 for the nine months ended September 30, 2010 and $6.2 million for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, other license revenue was comprised of the remaining amortization of the $2.5 million upfront payment we received in October 2009 in connection with our license agreement with Norgine. The $2.5 million upfront payment was amortized on a straight-line basis over a three-month period through early January 2010, which represented the period during which we had significant responsibilities under the agreement. For the nine months ended September 30, 2009, license revenue was comprised of the amortization of upfront payments we received from GSK in December 2007 and Schering-Plough in November 2006.
Cost of Product Sales. Cost of product sales was $6.6 million for the nine months ended September 30, 2010 and $6.0 million for the nine months ended September 30, 2009, or approximately 9% and 7% of net product sales, respectively. Cost of product sales consists primarily of raw materials, third-party manufacturing costs, freight and indirect personnel and other overhead costs associated with the sales of our Zegerid prescription products as well as shipments to Prasco of the authorized generic version of Zegerid Capsules. Cost of product sales also includes reserves for excess, dated or obsolete commercial inventories based on an analysis of inventory on hand and on firm purchase commitments compared to forecasts of future sales. The increase in our cost of product sales as a percentage of net product sales was primarily attributable to a reserve of approximately $1.5 million recognized in the nine months ended September 30, 2010 against on-hand inventories of our Zegerid products in connection with the launch of generic and authorized generic versions of prescription Zegerid Capsules and our related decision to cease promotion of Zegerid.
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