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What: Shares of biotechnology company Santarus popped as much as 16% after announcing the Food and Drug Administration approval of Uceris for active, mild-to-moderate ulcerative colitis, following an update to its 2012 and 2013 guidance.
So what: The big news, of course, is the approval of Uceris -- which, when combined with its existing pipeline, is expected to generate close to $110 million in additional revenue for Santarus in 2013 based on its revenue projections. Commercial launch of the drug will begin in March, and Santarus plans on hiring 85 sales representatives to help with the launch. For 2013, Santarus is expecting research and development expenses to total $34 million to $38 million with net income of $50 million to $54 million, or approximately $0.79-$0.85 in EPS.
Now what: For those interested, yes, I do prefer my crow with ketchup. Just a few days ago, I didn't expect Uceris to gain FDA approval, and that opinion was quickly debunked by the FDA ruling. While revenue is expected to increase from $210 million in 2012 to a midpoint of $322.5 million in 2013, I'd prefer to sit back and watch this drug launch from a distance. Santarus has had a huge run already, and while the midpoint of its income guidance places the company at just 15 times forward earnings as of this writing -- a reasonable figure by most standards -- I'm inclined to see how well Uceris runs out of the gate. Perhaps by summer, we'll have a better indication of that, but for now I'm perfectly happy remaining on the sidelines.
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The article Why Santarus' Shares Soared originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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