Santarus Reports Fourth Quarter and Full Year 2012 Financial Results

  Santarus Reports Fourth Quarter and Full Year 2012 Financial Results

      Company achieves record annual revenues of $218.0 million in 2012;

2012 net income of $18.6 million and $0.27 diluted EPS more than triple prior
                                 year period

Business Wire

SAN DIEGO -- March 4, 2013

Santarus, Inc. (NASDAQ: SNTS), today reported financial and operating results
for the quarter and year ended December 31, 2012.

Key financial results for the fourth quarter of 2012 include:

  *Total revenues of $70.2 million grew 65% compared with $42.6 million for
    the fourth quarter of 2011
  *Net income of $5.5 million, or $0.08 diluted earnings per share (EPS),
    which included a $10.0 million expense for a success-based clinical
    milestone, increased significantly compared with $1.9 million, or $0.03
    diluted EPS for the fourth quarter of 2011
  *Adjusted earnings before interest, taxes, depreciation and amortization
    (EBITDA) improved to $9.6 million in the fourth quarter of 2012 compared
    with $4.5 million for the fourth quarter of 2011
  *Cash, cash equivalents and short-term investments were $94.7 million as of
    December 31, 2012, an increase of $36.1 million compared with $58.6
    million at December 31, 2011

“We believe that 2012 was an inflection year for Santarus, with strong revenue
growth and greatly improved earnings and cash flow compared with 2011,” said
Gerald T. Proehl, president and chief executive officer of Santarus. “In
addition to our commercial progress and the favorable outcome on the ZEGERID^®
(omeprazole/ sodium bicarbonate) patent litigation at the appellate court, we
were successful in advancing our clinical pipeline, including reporting
positive Phase III results for both RUCONEST^® (recombinant human C1 esterase
inhibitor) in hereditary angioedema (HAE) and for rifamycin SV MMX^® in
travelers’ diarrhea. We also initiated a major Phase IIIb clinical study with
UCERIS^™ (budesonide) extended release tablets as add-on therapy to 5-ASA
drugs and completed enrollment in a Phase I clinical study with SAN-300, a
monoclonal antibody.”

Mr. Proehl added, “Our momentum has continued into 2013 with the mid-January
U.S. Food and Drug Administration (FDA) approval of UCERIS for the induction
of remission in patients with active, mild to moderate ulcerative colitis and
the commercial launch of UCERIS and relaunch of ZEGERID a few weeks ago. We
believe 2013 is shaping up to be another robust year for Santarus.”

Business Highlights

Commercial products:

  *UCERIS: On January 14, 2013, the FDA approved UCERIS for the induction of
    remission in patients with active, mild to moderate ulcerative colitis,
    and on February 14, 2013, Santarus announced the commercial launch of
    UCERIS. The company has expanded its sales organization for the commercial
    launch of UCERIS, adding 85 new sales representatives. The sales
    organization, which now totals 235 sales representatives, promotes both
    UCERIS and ZEGERID to gastroenterologists in addition to promoting the
    company’s three diabetes/metabolic products to endocrinologists and other
    physicians.
  *ZEGERID: In December 2012, the U.S. Court of Appeals for the Federal
    Circuit denied Par Pharmaceutical, Inc.’s request that the Federal Circuit
    rehear its earlier decision that reversed in part a lower court decision
    of invalidity involving patents covering ZEGERID capsules and powder for
    oral suspension prescription products. The Federal Circuit also remanded
    the case to the District Court for further proceedings pertaining to
    damages. The ZEGERID patents at issue expire in July 2016.
  *GLUMETZA^® (metformin HCl extended release tablets): New prescriptions
    grew 28% and total prescriptions increased 31% for the 12 months ended
    December 31, 2012 compared with the prior 12 months.
  *CYCLOSET^® (bromocriptine mesylate) tablets: New prescriptions increased
    49% and total prescriptions were up 85% for the 12 months ended December
    31, 2012 compared with the prior 12 months.
  *FENOGLIDE^® (fenofibrate) tablets: New prescriptions were up 45% and total
    prescriptions increased 35% in the fourth quarter of 2012 compared with
    the fourth quarter of 2011. Santarus obtained exclusive rights to
    commercialize FENOGLIDE in the U.S. market in December 2011 and began
    promoting FENOGLIDE in early February 2012.

Investigational drugs:

  *RUCONEST: Santarus expects to submit a Biologics License Application (BLA)
    for RUCONEST to the FDA in the second quarter of 2013 for the treatment of
    acute attacks of angioedema in patients with HAE. In November 2012,
    Santarus announced that when compared to placebo, RUCONEST demonstrated a
    significantly shorter time to beginning of relief of symptoms, the primary
    endpoint, in a pivotal Phase III clinical study that was conducted to
    evaluate the safety and efficacy of RUCONEST 50 IU/kg for the treatment of
    acute attacks of angioedema in patients with HAE.
  *Rifamycin SV MMX: In September 2012, Santarus announced that patients
    treated with rifamycin SV MMX demonstrated statistically significant
    improvement in reducing time to last unformed stool in patients with
    travelers’ diarrhea, the primary endpoint of a Phase III clinical study to
    evaluate the safety and efficacy of rifamycin SV MMX versus placebo.
  *SAN-300: Santarus completed a Phase I clinical study in healthy subjects
    with SAN-300, an anti-VLA-1 antibody, testing both intravenous and
    subcutaneous formulations. Santarus plans to begin a Phase IIa clinical
    study with its subcutaneous formulation of SAN-300 in patients with
    rheumatoid arthritis in the fourth quarter of 2013. SAN-300 targets a
    collagen receptor, VLA-1 (α1β1 integrin), which is believed to play a
    major role in the migration, retention and proliferation of activated T
    cells and monocytes at sites of chronic inflammation. Santarus holds
    exclusive worldwide rights to SAN-300.

Fourth Quarter 2012 Financial Results

Total revenues increased to $70.2 million for the fourth quarter of 2012,
compared with $42.6 million for the fourth quarter of 2011 as indicated below
($ in millions):


                          Three Months Ended  Increase
                           December 31,         (Decrease)
                           2012       2011
Product sales, net
GLUMETZA                   $  42.6     $ 28.5   $  14.1
ZEGERID                       20.8       9.4       11.4
CYCLOSET                      4.5        3.8       0.7
FENOGLIDE                    1.5       -        1.5   
Total product sales, net      69.4       41.7      27.7
Other revenue                0.8       0.9      (0.1  )
Total revenues             $  70.2     $ 42.6   $  27.6


Net income for the fourth quarter of 2012 was $5.5 million, diluted EPS was
$0.08 and adjusted EBITDA was $9.6 million. Net income for the 2012 fourth
quarter included the expense of a $10.0 million clinical milestone for the
successful completion of a Phase III clinical study with RUCONEST. In the
fourth quarter of 2011 the company reported net income of $1.9 million,
diluted EPS of $0.03, and adjusted EBITDA of $4.5 million.

The cost of product sales was $5.2 million, or approximately 7% of net product
sales, for the fourth quarter of 2012, compared with $3.3 million, or
approximately 8% of net product sales, for the fourth quarter of 2011. The
decrease in the cost of product sales as a percentage of net product sales was
primarily attributable to certain fixed costs being applied to increased sales
volumes and increased sales prices.

License fees and royalties were $26.2 million for the fourth quarter of 2012
compared with $10.3 million for the fourth quarter of 2011. License fees and
royalties include royalties on GLUMETZA net sales, the gross margin split on
CYCLOSET net sales, royalties on ZEGERID net sales and amortization of upfront
payments. In addition, license fees and royalties for the fourth quarter of
2012 included a $10.0 million expense for the successful completion of the
RUCONEST Phase III clinical study.

Research and development (R&D) expenses totaled $7.7 million for the fourth
quarter of 2012, compared with $7.4 million for the fourth quarter of 2011.

Selling, general and administrative (SG&A) expenses were $25.0 million for the
fourth quarter of 2012 and $19.5 million for the fourth quarter of 2011. The
$5.5 million increase in SG&A expenses was primarily attributable to expansion
of the company’s commercial presence, including costs associated with the
addition of 40 contract sales representatives in January 2012, increases in
compensation costs, and expenses attributable to launch preparation activities
for UCERIS.

Full Year 2012 Results

Total revenues for 2012 were $218.0 million compared with $118.8 million for
2011 as indicated below ($ in millions):


                          Years Ended        Increase
                           December 31,        (Decrease)
                           2012     2011
Product sales, net
GLUMETZA                   $ 145.0   $ 36.4    $  108.6
ZEGERID                      48.0      43.3       4.7
CYCLOSET                     14.5      8.5        6.0
FENOGLIDE                   7.1      -         7.1   
Total product sales, net     214.6     88.2       126.4
Other revenue^1             3.4      30.6      (27.2 )
Total revenues             $ 218.0   $ 118.8   $  99.2


^1Other revenue included $27.3 million of GLUMETZA promotion revenue in 2011

Net income was $18.6 million, or $0.27 diluted EPS, in 2012, compared with net
income of $4.7 million, or $0.07 diluted EPS, in 2011. Adjusted EBITDA was
$36.9 million in 2012 compared with adjusted EBITDA of $13.9 million in 2011.

As of December 31, 2012, Santarus had cash, cash equivalents and short-term
investments of $94.7 million, an increase of approximately $12.8 million in
the fourth quarter. Cash, cash equivalents and short-term investments were
$58.6 million as of December 31, 2011.

Financial Outlook for 2013

Santarus is affirming its financial outlook for full year 2013 as introduced
in the company’s business update conference call on January 15, 2013 and
introducing its outlook for diluted EPS and non-GAAP adjusted diluted EPS:

  *Total revenues of approximately $320 million to $325 million.
  *Net income of approximately $50 million to $54 million, and diluted EPS of
    $0.63 to $0.68.
  *Adjusted EBITDA, or non-GAAP adjusted earnings, of approximately $73
    million to $79 million and non-GAAP adjusted diluted EPS of $0.92 to
    $1.00.

The EPS estimates assume 79 million fully diluted shares.

Additional information for selected estimated expenses for 2013 is as follows:

  *License fees will include a $5 million expense for a success-based
    milestone assuming FDA acceptance for review of the RUCONEST BLA.
  *Research and development expenses of approximately $34 million to $38
    million.
  *SG&A expenses of approximately $131 million to $134 million, which include
    an incremental estimated $38 million to $40 million investment associated
    with the previously disclosed sales force expansion of 85 sales
    representatives and promotional and other costs associated with the UCERIS
    launch and ZEGERID relaunch.

Non-GAAP Financial Measures

In this press release, Santarus used adjusted EBITDA, or adjusted earnings, as
a key operating metric. Adjusted EBITDA, or adjusted earnings, 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, or
non-GAAP adjusted earnings, to GAAP net income for the full year 2012 and 2011
and reconciling the company’s adjusted EBITDA, or non-GAAP adjusted earnings
guidance to GAAP net income guidance for the year ending December 31, 2013.


Santarus, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA (Non-GAAP Adjusted
Earnings)
($ in millions)
(unaudited)

                                        Three Months Ended   Years Ended
                                         December 31,          December 31,
                                         2012       2011      2012    2011
GAAP net income                          $   5.5     $  1.9    $ 18.6   $ 4.7
Interest (income) expense                    0.1        0.1      0.3      0.4
Income tax expense                           0.5        0.1      1.3      0.3
Depreciation and amortization                1.5        0.9      6.1      3.1
Stock-based compensation                     1.8        1.4      6.7      5.4
Stock issuance for regulatory                -          -        3.7      -
milestone
Loss on contingent consideration            0.2       0.1     0.2     -
Adjusted EBITDA                          $   9.6     $  4.5    $ 36.9   $ 13.9



Santarus, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings
Guidance for the Year Ending December 31, 2013
(in millions, except EPS)

                                                        
GAAP net income                                           $50 - $54
Interest (income) expense                                 0
Income tax expense                                        4
Depreciation and amortization                             7 - 8
Stock-based compensation                                  12 - 13
Non-GAAP adjusted earnings                                $73 - $79
                                                          
Non-GAAP adjusted EPS, diluted                            $0.92 - $1.00
                                                          
Shares used in computing non-GAAP adjusted EPS, diluted   79


Conference Call

Santarus has scheduled an investor conference call regarding this announcement
at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) today, March 4, 2013.
Individuals interested in participating in the call may do so by dialing
866-819-7280 for domestic callers, or 678-374-2322 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 10201664. 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.

About Santarus

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 five products. UCERIS^™ ^ (budesonide) extended release
tablets for the induction of remission in patients with active, mild to
moderate ulcerative colitis and ZEGERID^® (omeprazole/sodium bicarbonate) for
the treatment of certain upper gastrointestinal disorders are promoted to
gastroenterologists. 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 FENOGLIDE^® (fenofibrate) tablets, which is indicated as
an adjunct to diet to reduce high cholesterol, are promoted to
endocrinologists and other physicians who treat patients with type 2 diabetes.
Full prescribing and safety information for Santarus’ products are available
at www.santarus.com.

Santarus’ product development pipeline includes the investigational drug
RUCONEST^® (recombinant human C1 esterase inhibitor) for treatment of acute
attacks of hereditary angioedema. The company expects to submit a biologics
license application (BLA) to the U.S. Food and Drug Administration for
RUCONEST in the second quarter of 2013. Santarus is also developing rifamycin
SV MMX^®, which is in Phase III clinical testing for treatment of travelers’
diarrhea. In addition, the company has completed a Phase I clinical program
with SAN-300, an investigational monoclonal antibody. 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 sales trends and financial
results and the timing and outcome of various matters relating to Santarus'
development products, including the Phase IIIb clinical study for UCERIS, the
submission of the BLA for RUCONEST, the Phase III clinical study for rifamycin
SV MMX and the planned Phase IIa clinical study for SAN-300.

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 successfully launch UCERIS and generate revenues from its
currently promoted commercial products and its authorized generic ZEGERID
products; Santarus' ability to successfully advance the development of, obtain
regulatory approval for and ultimately commercialize, its investigational
drugs, including the UCERIS Phase IIIb clinical study, the submission of the
RUCONEST BLA, the Phase III clinical study for rifamycin SV MMX and the
planned Phase IIa clinical study for SAN-300; Santarus' ability to maintain
patent protection for its products, including the difficulty in predicting the
timing and outcome of ongoing and any future patent litigation; Santarus'
ability to achieve continued progress under its strategic alliances, and the
potential for early termination of, or reduced payments under, these
agreements; Santarus' dependence on strategic partners for certain aspects of
its development programs, including risks related to their financial
stability; adverse side effects, inadequate therapeutic efficacy or other
issues related to Santarus' products 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' products; fluctuations in quarterly and annual results; Santarus'
ability to obtain additional financing as needed to support its operations or
future product acquisitions; 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. RUCONEST^® is a trademark of Pharming Group N.V.


Santarus, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

                                                  December 31,  December 31,
                                                   2012           2011
Assets
Current assets:
Cash and cash equivalents and short-term           $   94,736     $   58,608
investments
Accounts receivable, net                               31,024         20,274
Inventories, net                                       9,897          5,129
Prepaid expenses and other current assets             6,678         3,714
Total current assets                                   142,335        87,725
Long-term restricted cash                              950            1,050
Property and equipment, net                            945            578
Intangible assets, net                                 16,254         21,787
Goodwill                                               2,913          2,913
Other assets                                          352           -
Total assets                                       $   163,749    $   114,053
                                                                  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities           $   45,824     $   35,413
Allowance for product returns                         20,574        13,895
Total current liabilities                              66,398         49,308
Deferred revenue, less current portion                 1,639          2,163
Long-term debt                                         9,876          10,000
Other long-term liabilities                            2,884          2,494
Total stockholders' equity                            82,952        50,088
Total liabilities and stockholders' equity         $   163,749    $   114,053



Santarus, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

                Three Months Ended               Years Ended
                 December 31,                      December 31,
                 2012            2011             2012            2011
Revenues:
Product sales,   $ 69,414         $ 41,665         $ 214,538        $ 88,153
net
Promotion          -                -                -                27,339
revenue
Royalty           799            887            3,417          3,295      
revenue
Total revenues     70,213           42,552           217,955          118,787
Costs and
expenses:
Cost of            5,177            3,255            15,640           8,852
product sales
License fees       26,239           10,277           69,783           17,898
and royalties
Research and       7,719            7,420            25,808           18,383
development
Selling,
general and       24,985         19,483         86,552         68,229     
administrative
Total costs       64,120         40,435         197,783        113,362    
and expenses
Income from        6,093            2,117            20,172           5,425
operations
Other income
(expense):
Interest           16               (1         )     29               15
income
Interest          (78        )    (117       )    (337       )    (459       )
expense
Total other
income            (62        )    (118       )    (308       )    (444       )
(expense)
Income before      6,031            1,999            19,864           4,981
income taxes
Income tax        535            83             1,309          312        
expense
Net income       $ 5,496         $ 1,916         $ 18,555        $ 4,669      
                                                                    
Net income per
share:
Basic            $ 0.09          $ 0.03          $ 0.30          $ 0.08       
Diluted          $ 0.08          $ 0.03          $ 0.27          $ 0.07       
Weighted
average shares
outstanding
used to
calculate net
income per
share:
Basic              63,294,102       60,941,657       62,696,950       60,531,259
Diluted            72,877,439       63,272,065       69,150,415       62,814,561


Contact:

Santarus, Inc.
Martha L. Hough, 858-314-5824
VP Finance & Investor Relations
or
Debra P. Crawford, 858-314-5708
Chief Financial Officer
or
INVESTOR CONTACT:
Westwicke Partners, LLC
Stefan Loren, Ph.D., 858-356-5930
sloren@westwicke.com
or
Robert Uhl, 858-356-5932
robert.uhl@westwicke.com