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Biotech / Medical : Santarus (SNTS)

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To: michael_f_murphy who started this subject	5/25/2004 10:41:06 PM
From: charlyt	of 16

UBS CC Notes Quite impressed and I'm glad I own some of this. - Upcoming PDUFA date: June 15th. - Pivotal trials for capsule and chewable formulations 2H '04 - They own worldwide rights to Rapinex. - Will market themselves. Hiring sales managers now. Will build sales force of 230 reps after approval. With this they will target 38,000 MDs that write scripts generating half of the U.S. proton pump inhibitor (PPI) sales. - Despite comments about marketing themselves, it was said that U.S. co-promotion is being explored. I would guess in areas their own sales force won't hit. Ex-U.S. co-promotion deals being looked into. I would imagine an international partner would be required. - PPI market is $13 billion U.S. and $20 billion worldwide. Prevacid, Nexium, and Protonix are main U.S. competition. All are over $1 billion drugs. - 15-20% of scripts are patients switching from one drug in the class to another. One third of scripts are from patients getting a PPI for the first time. This is a favorable situation for a new drug launch. - In their trial vs. Prilosec, peak levels for Rapinex attained in 30-40 min vs. 90 min for Prilosec. Because of the immediate release, their effect is from the beginning compared to 90-120 minutes after dosing for the competitors. - Management has prior experience marketing GI drugs. My opinion is that Santarus has tremendous upside. Even just capturing 5% of the U.S. PPI market that they can hit with their own sales force would generate ~$300 million sales. Additional upside could be announcement of any co-promotion deals, which would surely have a substantial upfront payment for a drug at this stage of development. All this being said, I am no less nervous heading into mid-June. You would think that it would be a slam dunk approval as it is a formulation of Prilosec which has been on the market for 15 years and is safe enough to be sold OTC. But you never know...

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