Depomed, Inc. (NASDAQ:DEPO) today reported financial results for the
second quarter ended June 30, 2009.
Revenue for the three months ended June 30, 2009 was $11.6 million
compared to $6.3 million for the three months ended June 30, 2008.
Operating expenses for the three months ended June 30, 2009 were $20.0
million and included $5.6 million in promotion fee expense related to
the Company’s promotion agreement for GLUMETZA® with
Santarus. Operating expenses for same period in 2008 were $2.4 million
and included a one-time gain of $7.5 million on litigation related to
the settlement of the Company’s patent litigation against IVAX
Corporation in April 2008, which had the effect of reducing operating
expenses for the quarter. The increases in operating expenses in 2009
were due to the Santarus promotion fees and the Company’s ongoing Phase
3 clinical trials for SeradaTM for the treatment of
menopausal hot flashes, which began in September 2008. Stock-based
compensation expense was $0.6 million for each of the three months ended
June 30, 2009 and June 30, 2008.
Net loss for the three months ended June 30, 2009 was $9.6 million, or
$0.19 per share, compared to net income of $3.5 million, or $0.07 per
share, for the three months ended June 30, 2008. Net income for the
three months of 2008 was primarily attributable to a one-time gain of
$7.5 million on litigation related to the settlement of the patent
infringement suit against IVAX Corporation.
Cash, cash equivalents and marketable securities were $84.0 million as
of June 30, 2009 compared to $82.1 million as of December 31, 2008. The
company will receive an additional $10.0 million in August 2009 pursuant
to the transaction with Merck & Co., Inc. described below.
“We are excited to have completed enrollment for both our Phase 3
clinical programs in menopausal hot flashes and post-herpetic neuralgia,
and we look forward to reporting top-line results early next quarter. We
are also pleased to have closed a patent licensing deal with Merck. With
the $10 million upfront fee from the Merck transaction, and potential
for further milestone and royalty payments, along with Glumetza’s recent
all-time high prescription numbers, we are executing our strategy to
strengthen our cash position by leveraging our technology and portfolio
assets while advancing our key pipeline products,” said Carl A. Pelzel,
president and chief executive officer of Depomed.
Second Quarter 2009 and Recent Highlights
-
Licensed patents covering metformin extended-release technology to
Merck & Co., Inc. on a non-exclusive basis for a $10 million upfront
fee, a milestone payment upon filing of the NDA, and modest royalties
on net product sales (July 2009)
-
Completed enrollment of Phase 3 clinical program of DM-1796 in
post-herpetic neuralgia (June 2009)
-
Named Shay Weisbrich vice president of marketing (June 2009)
-
Hosted Investor Day in New York City (May 2009)
Conference Call
Depomed will host a conference call today, Thursday, July 30, beginning
at 5:00 p.m. ET, 2:00 p.m. PT to discuss its results. The conference
call will be available via a live webcast on the investor relations
section of Depomed’s website at http://www.depomed.com.
Access the website 15 minutes prior to the start of the call to download
and install any necessary audio software. An archived webcast replay
will be available on the Company’s website for three months.
About Depomed
Depomed, Inc. is a specialty pharmaceutical company with two product
candidates in Phase 3 clinical development, two approved products on the
market and other product candidates in its early stage pipeline. Product
candidate DM-1796 is in Phase 3 clinical development for the treatment
of neuropathic pain and has been licensed to Solvay Pharmaceuticals.
Product candidate SeradaTM is in Phase 3 clinical development for
menopausal hot flashes. GLUMETZA® (metformin hydrochloride extended
release tablets) is approved for use in adults with type 2 diabetes and
promoted by Santarus, Inc. in the United States. Depomed formulates its
products and product candidates with its proven, proprietary Acuform®
drug delivery technology, which is designed to improve existing oral
medications, allowing for extended, controlled release of medications to
the upper gastrointestinal tract. Benefits of Acuform-enhanced
pharmaceuticals include the convenience of once-daily administration,
improved treatment tolerability and enhanced compliance and efficacy.
Additional information about Depomed may be found on its website, www.depomed.com.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995.
The statements that are not historical facts contained in this release
are forward-looking statements that involve risks and uncertainties
including, but not limited to, those related to our business strategy;
potential business development transactions; our research and
development efforts, including pre-clinical and clinical testing;
regulation by the FDA and other government agencies; the timing of
regulatory applications and product launches; and other risks detailed
in the company’s Securities and Exchange Commission filings, including
the company’s Annual Report on Form 10-K and most recent Quarterly
Report on Form 10-Q. You are cautioned not to place undue reliance on
these forward-looking statements which speak only as of the date hereof.
The company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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DEPOMED, INC.
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CONDENSED STATEMENTS OF OPERATIONS
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(in thousands, except share and per share amounts)
|
|
(Unaudited)
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|
|
|
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Three Months Ended June 30,
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Six Months Ended June 30,
|
|
|
|
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2009
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2008
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2009
|
|
2008
|
|
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Revenues:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
8,408
|
|
$
|
5,519
|
|
$
|
15,248
|
|
$
|
10,745
|
|
|
Royalties
|
|
529
|
|
433
|
|
993
|
|
545
|
|
|
License revenue
|
|
2,671
|
|
363
|
|
5,239
|
|
727
|
|
|
Total revenues
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|
11,608
|
|
6,315
|
|
21,480
|
|
12,017
|
|
|
|
|
|
|
|
|
|
|
|
|
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Costs and expenses:
|
|
|
|
|
|
|
|
|
|
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Cost of sales
|
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1,229
|
|
962
|
|
2,261
|
|
2,171
|
|
|
Research and development
|
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10,024
|
|
4,680
|
|
20,045
|
|
10,750
|
|
|
Selling, general and administrative
|
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9,945
|
|
5,241
|
|
18,947
|
|
11,748
|
|
|
Gain on litigation settlement
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—
|
|
(7,500
|
)
|
—
|
|
(7,500
|
)
|
|
Total costs and expenses
|
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21,198
|
|
3,383
|
|
41,253
|
|
17,169
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income (loss) from operations
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|
(9,590
|
)
|
2,932
|
|
(19,773
|
)
|
(5,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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Other income (expense):
|
|
|
|
|
|
|
|
|
|
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Interest and other income
|
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236
|
|
553
|
|
550
|
|
1,356
|
|
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Interest expense
|
|
(263
|
)
|
(5
|
)
|
(548
|
)
|
(5
|
)
|
|
Total other income (expense)
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|
(27
|
)
|
548
|
|
2
|
|
1,351
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss) before income taxes
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|
(9,617
|
)
|
3,480
|
|
(19,771
|
)
|
(3,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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Provision for income taxes
|
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2
|
|
-
|
|
1
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss)
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(9,615
|
)
|
3,480
|
|
(19,770
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)
|
(3,801
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)
|
|
|
|
|
|
|
|
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|
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Deemed dividend on preferred stock
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-
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(180
|
)
|
-
|
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(355
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)
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss) applicable to common stock shareholders
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|
$
|
(9,615
|
)
|
$
|
3,300
|
|
$
|
(19,770
|
)
|
$
|
(4,156
|
)
|
|
|
|
|
|
|
|
|
|
|
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Basic net income (loss) applicable to common stock shareholders per
common share
|
|
$
|
(0.19
|
)
|
$
|
0.07
|
|
$
|
(0.39
|
)
|
$
|
(0.09
|
)
|
|
Diluted net income (loss) applicable to common stock shareholders
per common share
|
|
$
|
(0.19
|
)
|
$
|
0.07
|
|
$
|
(0.39
|
)
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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Shares used in computing basic net income (loss) per common share
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51,263,620
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|
48,041,855
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|
51,235,735
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|
47,954,052
|
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Shares used in computing diluted net income (loss) per common share
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51,263,620
|
|
48,405,333
|
|
51,235,735
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|
47,954,052
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DEPOMED, INC.
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CONDENSED BALANCE SHEETS
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(in thousands, except share amounts)
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|
|
|
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June 30,
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December 31,
|
|
|
|
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2009
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2008
|
|
|
|
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(Unaudited)
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(1)
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ASSETS
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|
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Current assets:
|
|
|
|
|
|
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Cash and cash equivalents
|
|
$
|
8,153
|
|
$
|
22,127
|
|
|
Marketable securities
|
|
59,659
|
|
59,932
|
|
|
Accounts receivable
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|
4,154
|
|
3,099
|
|
|
Unbilled accounts receivable
|
|
564
|
|
576
|
|
|
Inventories
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|
2,366
|
|
2,849
|
|
|
Prepaid and other current assets
|
|
1,979
|
|
5,404
|
|
|
Total current assets
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76,875
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|
93,987
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|
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Marketable securities
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16,169
|
|
—
|
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Property and equipment, net
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|
666
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|
900
|
|
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Other assets
|
|
197
|
|
197
|
|
|
|
|
$
|
93,907
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|
$
|
95,084
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|
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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|
|
|
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Current liabilities:
|
|
|
|
|
|
|
Accounts payable
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|
$
|
865
|
|
$
|
559
|
|
|
Accrued compensation
|
|
1,559
|
|
2,601
|
|
|
Accrued clinical trial expense
|
|
1,098
|
|
661
|
|
|
Other accrued liabilities
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|
8,229
|
|
9,027
|
|
|
Deferred product sales
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|
1,618
|
|
1,702
|
|
|
Deferred license revenue
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|
10,684
|
|
4,362
|
|
|
Other current liabilities
|
|
132
|
|
110
|
|
|
Current portion of long-term debt
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|
3,528
|
|
3,356
|
|
|
Total current liabilities
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|
27,713
|
|
22,378
|
|
|
Deferred license revenue, non-current portion
|
|
46,648
|
|
33,209
|
|
|
Long-term debt, non-current portion
|
|
4,099
|
|
5,775
|
|
|
Other long-term liabilities
|
|
542
|
|
569
|
|
|
Commitments
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
Preferred stock, no par value, 5,000,000 shares authorized; Series A
convertible preferred stock, 25,000 shares designated, 18,158 shares
issued, and zero shares outstanding at June 30, 2009 and December
31, 2008
|
|
—
|
|
—
|
|
|
Common stock, no par value, 100,000,000 shares authorized;
51,352,266 and 51,171,377 shares issued and outstanding at June 30,
2009 and December 31, 2008, respectively
|
|
184,747
|
|
183,196
|
|
|
Accumulated deficit
|
|
(169,964
|
)
|
(150,194
|
)
|
|
Accumulated other comprehensive gain
|
|
122
|
|
151
|
|
|
Total shareholders’ equity
|
|
14,905
|
|
33,153
|
|
|
|
|
$
|
93,907
|
|
$
|
95,084
|
|
|
|
|
|
|
|
|
|
|
|
(1) Derived from the audited financial statements included in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2008.
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Depomed, Inc.
Sheilah Serradell, 650-462-5900
sserradell@depomed.com
