Depomed third quarter 2012 revenue increases to $33.3 million

DepomedNov 5 2012

Depomed, Inc. (Nasdaq: DEPO) today reported financial results for the quarter and nine months ended September 30, 2012.

2012 Third Quarter and Recent Business Highlights

• Financial Highlights:
  • Revenue of $33.3 million for the third quarter and $64.2 million for the nine months ended September 30
  • Net loss of ($1.5) million or ($0.03) per share for the third quarter and ($26.1) million or ($0.47) per share for the nine months ended September 30
  • $87.7 million of cash and marketable securities and no debt
• Gralise^® (gabapentin) Highlights:
  • Gralise product sales of $4.8 million for the third quarter
  • Gralise prescription demand now over 3,500 per week
  • Approximately 8,500 physicians have prescribed Gralise since launch
• Zipsor® (diclofenac potassium) Highlights:
  • Zipsor product sales of $4.9 million for the third quarter
  • Depomed promotion commenced at the end of July 2012
• Glumetza^® (metformin hydrochloride extended release tablets) Highlights:
  • Royalty of $11.6 million on third quarter Glumetza sales
• Technology and R&D Highlights:
  • License agreement with Janssen Pharmaceuticals for Nucynta ER; $10 million upfront payment received in September; royalties started July 2, 2012 and continue through 2021
  • Serada NDA accepted by FDA; Advisory Committee meeting tentatively scheduled for March 4, 2013; PDUFA date of May 31, 2013

"During the third quarter, Gralise prescriptions continued to grow, we relaunched Zipsor, Glumetza royalties for the quarter exceeded $11 million, we expanded our portfolio of license and development agreements with our license to Janssen for Nucynta ER and received a $10 million upfront payment. In October, the FDA accepted our NDA for Serada and set a tentative date for an Advisory Committee. We believe that we are well on our way toward transforming Depomed into a sustainably profitable specialty pharmaceutical company.  We are developing a pain franchise with our two marketed products, Gralise and Zipsor.  We have a Glumetza royalty stream that should exceed $40 million for 2012, a broad base of six license and development agreements that should provide us significant milestones and royalties over the next several years, a pipeline of product candidates and a strong balance sheet," said Jim Schoeneck, president and chief executive officer of Depomed.

Depomed Third Quarter Financial Highlights
Total revenue for the third quarter of 2012 was $33.3 million, consisting of $4.8 million of Gralise product sales, $4.9 million of Zipsor product sales, $12.2 million of royalties and $11.4 million of license and other revenue. License and other revenue includes recognition of the $10 million upfront payment received from Janssen under the license agreement for Nucynta ER.

This compares to revenues of $16.5 million in the third quarter of 2011. Third quarter 2011 revenues included $9.2 million of Glumetza product sales.  Revenues for third quarter 2012 do not reflect any Glumetza product sales as a result of the restructuring of the Santarus agreement in August 2011.  Prior to the restructuring of the agreement, Depomed recognized revenues and cost of goods from Glumetza sales and paid Santarus a promotion fee that was included in expenses.

Operating expenses were $33.1 million for the third quarter of 2012.  This compares with $24.7 million for third quarter 2011. Operating expenses increased primarily due to sales and marketing expenses associated with Gralise, which was launched in October 2011, and Zipsor which was acquired in June 2012. Operating expenses for the third quarter of 2012 also include $1.0 million of intangible amortization associated with the Zipsor acquisition and one-time research and development expenses of $1.8 million for the NDA filing fee for Serada and $0.6 million for the payment of a license milestone to a licensor of one of the Serada patents. Operating expenses for third quarter 2012 did not reflect any promotion fee expense, compared with $6.0 million in promotion fee expense for third quarter 2011.

Net loss for third quarter 2012 was ($1.5) million, or ($0.03) per share, compared to net loss of ($8.6) million, or ($0.15) per share for third quarter 2011.

Cash, cash equivalents and marketable securities were $87.7 million as of September 30, 2012 compared to $139.8 million as of December 31, 2011.