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Riding on a strong growth momentum ahead of its second-quarter earnings release, the shares of Santarus, Inc. closed at $25.57 on Jul 12, 2013. Just last week, Santarus had hit a 52-week high of $24.07 and it touched $25.71 on Friday’s trading session, representing an upside of 6.8%.

The Zacks Rank #2 (Buy) specialty biopharmaceutical company has consistently delivered positive earnings surprises for the last three quarters. In the first quarter of 2013, the company posted a surprise of 108.33%.

Santarus reported revenues of almost $80 million in the first quarter of 2013. Going forward, performance should be driven by Uceris (mild-to-moderate ulcerative colitis), Zegerid (heartburn and other symptoms of gastroesophageal reflux disease) and Glumetza (type II diabetes).

Uceris, which generated sales of $6.6 million in first quarter of 2013, should continue growing on a sequential basis over the rest of 2013. The Zegerid re-launch should aid revenues as well. Glumetza, targeting the lucrative diabetes market, is expected to witness sales growth from the second quarter of 2013.

Santarus also possesses a strong pipeline consisting of interesting candidates like Ruconest for hereditary angioedema (HAE). The US Food and Drug Administration (FDA) is reviewing the marketing application of Ruconest for the acute treatment of HAE and will render a decision by Apr 2014. Santarus also plans to develop the candidate for the prophylaxis treatment of HAE and acute pancreatitis.

On a price-to-sales basis, Santarus is trading at 7.7x, reflecting a huge premium of 133.3% compared with the peer group average of 3.3x. On a price-to-book basis, the stock is also trading at a premium to the peer group average. However, given the company’s strong fundamentals, the premium valuation is justified.

At present, companies like Jazz Pharmaceuticals , Cadence Pharmaceuticals Inc. and NPS Pharmaceuticals, Inc. look more attractive with a Zacks Rank #1 (Strong Buy).

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