Shares of the biopharmaceutical company Santarus jumped as much as 30% in early trading, although the spike had moderated a bit by midmorning, after the company announced FDA approval for an over-the-counter dose of the heartburn medication Zegerid.

The drug uses Santarus technology and is marketed by Schering-Plough, which is now part of Merck (MRK). For Santarus, the approval means an immediate cash payment of $20 million from Schering-Plough, as well as royalties from ongoing sales. The publicity from the over-the-counter product will increase awareness of the Zegerid brand, CEO Gerald Proehl said in a statement.

Because most prescriptions of Zegerid are at a higher dose than the 20-milligram over-the-counter product, the increased brand awareness generated by the new product should help prescription sales, says Annabel Samimy, an analyst at Thomas Weisel Partners. Santarus reports that 96% of Zegerid prescriptions are for a 40 milligram dose.

The company still faces ongoing patent litigation, and today s stock price spike could reflect investors hoping to jump in before an expected favorable decision, Samimy says. Santarus had successfully sued Par Pharmaceutical for patent infringement; an upcoming ruling will decide the patent s validity.

Bottom line: The stock will remain volatile pending the final decision on the patent case.

Walgreens Down

The drugstore chain Walgreen saw shares fall more than 4% in early trading after it reported November same-store sales that missed analysts estimates.

The company reported that overall sales for the month were up 8.7% over a year ago. Comparable same-store sales were up 3.9%, comparable pharmacy sales were up 5.7%, and comparable front-end sales were up just 0.8%, all disappointing the Street. The company cited the introduction of new generic drugs as a drag on pharmacy sales. Total sales in all categories increased more than same-store sales, as Walgreen opened 47 stores in November, for a total of 7,648 locations.

The company is scheduled to report earnings for the first quarter of fiscal 2010 on Dec. 21. Earnings could provide some comfort to investors disappointed by today s same-store sales report, says Derek Leckow, an investment analyst at Barrington Research. The shift to more generic drugs drags down the top line, but should lead to improved margins and earnings, Leckow says.

The company has also made changes in the product mix in the front of its stores, shifting away from some seasonal and discretionary items in order to focus more on pharmacy products, says Jeff Jonas, an analyst with Gabelli & Company. That change could make for tough comparisons on front-end sales through the spring. A slowing rate of expansion should also help margins improve longer term, as older stores tend to be more profitable, Jonas adds.

Bottom line: The fiscal first-quarter earnings report later this month should provide investors with a better sense of how shifts in the company s product mix are impacting both the top and bottom lines.