Press Releases
| Depomed Reports Third Quarter 2008 Financial Results |
MENLO PARK, Calif.--(BUSINESS WIRE)--Oct. 30, 2008--Depomed, Inc. (NASDAQ: DEPO) today reported financial results for the third quarter ended September 30, 2008. Depomed reported a net loss of $271,000, or $0.01 per share, for the third quarter of 2008 compared to net income of $44.3 million, or $0.92 per share, for the third quarter of 2007. Net loss for the third quarter of 2008 included a one-time recognition of $6.3 million in product sales of GLUMETZA related to previously deferred revenue, which had the effect of reducing net loss by $5.3 million. Net income for the 2007 third quarter was primarily attributable to the termination of the company's license and supply agreements with Esprit Pharma for Proquin XR, which resulted in recognition of $46.1 million in license revenue, $2.5 million in royalty revenue, and a $5.0 million one-time termination gain. Revenue for the three months ended September 30, 2008 was $14.1 million, and included a one-time recognition of $6.3 million in product sales of GLUMETZA related to previously deferred revenue, compared to $52.9 million for the three months ended September 30, 2007, which included a one-time recognition of $48.6 million in revenue associated with the termination of the company's license and supply agreements with Esprit Pharma in July 2007. Regarding the one-time recognition of $6.3 million in product sales of GLUMETZA related to previously deferred revenue, prior to the third quarter of 2008, the company was unable to reasonably estimate product returns of GLUMETZA at the time of shipment and deferred recognition of revenue on product shipments of GLUMETZA until the product was dispensed to the end user through patient prescriptions. After two years of selling GLUMETZA, the company determined it had the information needed during the third quarter of 2008 to reasonably estimate returns on product shipments and recognized previously deferred revenue, net of estimated returns, contractual allowances and discounts. Beginning in the third quarter and on a forward basis, the company will recognize revenue on product shipments of GLUMETZA when title transfers to the customer, providing for estimates of future product returns. Operating expenses for the three months ended September 30, 2008 were $12.2 million compared to $8.2 million for the three months ended September 30, 2007. Operating expenses for the three months ended September 30, 2007 included a one-time gain of $5.0 million related to the termination of the Esprit Pharma agreements, which had the effect of reducing operating expenses for that period. Stock-based compensation expense for the third quarter of 2008 was $729,000. Cash, cash equivalents and marketable securities were $85.5 million as of September 30, 2008 compared to $69.5 million as of December 31, 2007. "In the third quarter, we fulfilled several of our key objectives for 2008 by commencing the Phase 3 program for DM-5689 in menopausal hot flashes (formerly referred to as Gabapentin GR(R)), signing a GLUMETZA promotion agreement with Santarus which generated $12 million in upfront fees, and by advancing our early-stage product pipeline through a grant from The Michael J. Fox Foundation to develop DM-1992, a novel gastric retentive controlled-release dosage form of Levodopa/Carbidopa for the treatment of Parkinson's Disease," stated Carl A. Pelzel, president and chief executive officer of Depomed. Third Quarter 2008 and Other Recent Highlights
Conference Call Depomed will host a conference call and webcast to discuss second quarter 2008 financial results and other aspects of its business today, Thursday, October 30, at 5:00 p.m. ET. The webcast can be accessed on the investor section of the Depomed website at www.depomedinc.com. About Depomed Depomed, Inc. is a specialty pharmaceutical company with two approved products on the market and other product candidates in its pipeline. The company utilizes its proven, proprietary AcuForm(TM) drug delivery technology 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. GLUMETZA(R) (metformin hydrochloride extended release tablets) is approved for use in adults with type 2 diabetes and promoted by Santarus, Inc. in the United States. Proquin(R) XR (ciprofloxacin hydrochloride) is approved in the United States for the once-daily treatment of uncomplicated urinary tract infections and is being marketed in the United States within the urology, Ob/Gyn and long-term care specialties by Watson Pharmaceuticals. Product candidate DM-1796 (formerly referred to as Gabapentin GR(R)) is in Phase 3 clinical development for the treatment of neuropathic pain, and product candidate DM-5689 (formerly referred to as Gabapentin GR(R)) is in Phase 3 clinical development for menopausal hot flashes. Additional information about Depomed may be found on its website, www.depomedinc.com. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties. The inclusion of forward-looking statements, including those related to expectations regarding clinical programs, product development, and potential benefits of our products and product candidates, should not be regarded as a representation that any of our plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in our business, including, without limitation, risks and uncertainties related to: 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; our ability to successfully commercialize our products; the success of our collaborative arrangements with development and commercialization partners; and other risks detailed in our filings with the Securities and Exchange Commission filings, including our most recent Annual Report on Form 10-K and our 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. We undertake no obligation to revise or update this release to reflect events or circumstances that occur after the date of this release.
DEPOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues:
Product sales $13,011 $ 3,832 $23,756 $ 7,666
Royalties 516 2,546 1,060 2,625
License revenue 584 46,481 1,311 50,003
Collaborative and other
revenue -- 1 -- 3
---------- ---------- ---------- ----------
Total revenues 14,111 52,860 26,127 60,297
Costs and expenses:
Cost of sales 2,396 724 4,567 1,598
Research and
development 6,998 4,724 17,748 19,425
Selling, general and
administrative 5,250 8,483 16,998 21,033
Gain on termination of
Esprit Pharma
agreement -- (5,000) -- (5,000)
Gain on litigation
settlement -- -- (7,500) --
---------- ---------- ---------- ----------
Total costs and expenses 14,644 8,931 31,813 37,056
---------- ---------- ---------- ----------
Income (loss) from
operations (533) 43,929 (5,686) 23,241
Other income (expense):
Interest and other
income 515 638 1,871 1,504
Interest expense (249) -- (254) --
---------- ---------- ---------- ----------
Total other income
(expense) 266 638 1,617 1,504
Net income (loss) before
income taxes (267) 44,567 (4,069) 24,745
Provision for income
taxes (4) (248) (4) (252)
---------- ---------- ---------- ----------
Net income (loss) (271) 44,319 (4,073) 24,493
Deemed dividend on
preferred stock (183) (174) (538) (511)
---------- ---------- ---------- ----------
Net income (loss)
applicable to common
stock shareholders $ (454) $44,145 $(4,611) $23,982
Basic net income (loss)
applicable to common
stock shareholders per
common share $ (0.01) $ 0.93 $ (0.10) $ 0.53
Diluted net income (loss)
applicable to common
stock shareholders per
common share $ (0.01) $ 0.92 $ (0.10) $ 0.52
Shares used in computing
basic net income (loss)
per common share 48,123,668 47,630,945 48,011,004 45,334,269
Shares used in computing
diluted net income
(loss) per common share 48,123,668 47,786,334 48,011,004 45,801,242
DEPOMED, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, December 31,
2008 2007
------------- ------------
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $14,120 $14,374
Marketable securities 71,332 39,091
Accounts receivable 3,612 3,390
Unbilled accounts receivable 510 233
Inventories 3,008 3,263
Prepaid and other current assets 3,111 2,418
------------- ------------
Total current assets 95,693 62,769
Marketable securities -- 16,058
Property and equipment, net 1,116 1,621
Other assets 197 197
------------- ------------
$97,006 $80,645
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,345 $ 1,134
Accrued compensation 1,930 1,558
Accrued clinical trial expense 844 322
Other accrued liabilities 5,129 3,322
Deferred product sales 1,437 6,489
Deferred license revenue 2,529 1,453
Other current liabilities 302 56
Current portion of long-term debt 2,621 --
------------- ------------
Total current liabilities 16,137 14,334
Deferred license revenue, non-current
portion 30,376 20,763
Long-term debt, net of current portion 6,499 --
Other long-term liabilities 598 28
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
outstanding at September 30, 2008 and
December 31, 2007, with an aggregate
liquidation preference of $18,159 12,015 12,015
Common stock, no par value, 100,000,000
shares authorized; 48,140,927 and
47,865,529 shares issued and
outstanding at September 30, 2008 and
December 31, 2007, respectively 170,527 168,287
Accumulated deficit (138,965) (134,892)
Accumulated other comprehensive gain
(loss) (181) 110
------------- ------------
Total shareholders' equity 43,396 45,520
------------- ------------
$97,006 $80,645
============= ============
(1) Derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2007.
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