MENLO PARK, Calif.--(BUSINESS WIRE)--Oct. 29, 2009--
Depomed, Inc. (NASDAQ: DEPO) today reported financial results for the
third quarter ended September 30, 2009.
Revenue for the three months ended September 30, 2009 was $23.0 million
compared to $14.1 million for the three months ended September 30, 2008.
Revenue for the three months ended September 30, 2009 included a $10.0
million license payment from Merck & Co. Inc. related to the Company’s
license arrangement with Merck for fixed dose combinations of
sitagliptin and extended release metformin entered into in July 2009.
Revenue for the three months ended September 30, 2008 included a
one-time recognition of $6.3 million in product sales of GLUMETZA
related to previously deferred revenue, resulting from a change in the
Company’s accounting for GLUMETZA product sales.
Operating expenses for the three months ended September 30, 2009 were
$20.2 million. Operating expenses for the third quarter of 2009 included
$6.7 million in promotion fee expense related to the Company’s promotion
agreement for GLUMETZA® with Santarus due to increased
GLUMETZA product sales. Operating expenses for same period in 2008 were
$12.2 million and included $5.6 million in promotion fee expense. The
increases in operating expenses in 2009 were due to the increased
Santarus promotion fees and increased expenses related to the Company’s
Phase 3 clinical trials for SeradaTM for the treatment of
menopausal hot flashes and DM-1796 for postherpetic neuralgia.
Stock-based compensation expense was $0.8 million for the three months
ended September 30, 2009 as compared to $0.7 million for the three
months ended September 30, 2008.
Net income for the three months ended September 30, 2009 was $1.4
million, or $0.03 per share, compared to a net loss of $0.3 million, or
$0.01 per share, for the three months ended September 30, 2008. Net
income for the three months of 2009 was primarily attributable to the
one-time $10.0 million license payment received from Merck, which
resulted in a profitable quarter. 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.
Cash, cash equivalents and marketable securities were $88.6 million as
of September 30, 2009 compared to $82.1 million as of December 31, 2008.
“We achieved a number of significant milestones in the third quarter and
early fourth quarter. We completed a transaction with Merck that
resulted in a profitable quarter and an even stronger balance sheet,
GLUMETZA prescriptions reached all-time highs, and we completed all
three of our Phase 3 studies. We are very pleased with the positive
results in our Phase 3 postherpetic neuralgia study with DM-1796, and
look forward to working with our partner Solvay to complete the NDA for
the product. We believe that the commercial potential of DM-1796 is
significant, as DM-1796 targets a very large neuropathic pain market.
Our Phase 3 results demonstrated that DM-1796 has the potential to
address unmet needs of current treatments with its once-daily dosing and
lower side effects, and thus is highly clinically differentiated,”
commented Carl Pelzel, Depomed’s president and chief executive officer.
“As we move DM-1796 forward with Solvay, we are also continuing to
analyze the mixed results in our Phase 3 menopausal hot flash program
with Serada to determine the best path forward toward approval,” Mr.
Pelzel added.
Third 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)
-
Announced results of Phase 1 clinical program in Parkinson’s patients
for DM-1992, Depomed’s proprietary extended release formulation of
levodopa/carbidopa (August 2009)
-
Announced positive results of Phase 3 clinical program for DM-1796 in
post-herpetic neuralgia (October 2009)
-
Announced results of Phase 3 clinical program for Serada in menopausal
hot flashes (October 2009)
-
Announced completion of the 1st formulation under
collaboration with Covidien (October 2009)
Conference Call
Depomed will host a conference call today, Thursday, October 29,
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 one product
candidate through Phase 3 clinical development, another in Phase 3
clinical development, two approved products on the market and other
product candidates in its early stage pipeline. Product candidate
DM-1796 has completed Phase 3 clinical development and has been licensed
to Solvay Pharmaceuticals. A New Drug Applications for DM-1796 is
expected to be filed with the FDA in the first quarter of 2010. Product
candidate SeradaTM is in Phase 3 clinical development for
menopausal hot flashes. 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. Depomed
formulates its products and product candidates with its proven,
proprietary Acuform(R) 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.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
|
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|
|
|
|
|
|
|
|
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Three Months Ended September 30,
|
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Nine Months Ended September 30,
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|
|
|
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2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
9,859
|
|
$
|
13,011
|
|
$
|
25,107
|
|
$
|
23,756
|
|
|
Royalties
|
|
464
|
|
516
|
|
1,457
|
|
1,060
|
|
|
License and collaborative revenue
|
|
12,691
|
|
584
|
|
17,930
|
|
1,311
|
|
|
Total revenues
|
|
23,014
|
|
14,111
|
|
44,494
|
|
26,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
1,367
|
|
2,396
|
|
3,628
|
|
4,567
|
|
|
Research and development
|
|
9,300
|
|
6,998
|
|
29,345
|
|
17,748
|
|
|
Selling, general and administrative
|
|
10,931
|
|
5,250
|
|
29,878
|
|
16,998
|
|
|
Gain on litigation settlement
|
|
—
|
|
—
|
|
—
|
|
(7,500
|
)
|
|
Total costs and expenses
|
|
21,598
|
|
14,644
|
|
62,851
|
|
31,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
1,416
|
|
(533
|
)
|
(18,357
|
)
|
(5,686
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
181
|
|
515
|
|
731
|
|
1,871
|
|
|
Interest expense
|
|
(240
|
)
|
(249
|
)
|
(788
|
)
|
(254
|
)
|
|
Total other income (expense)
|
|
(59
|
)
|
266
|
|
(57
|
)
|
1,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income taxes
|
|
1,357
|
|
(267
|
)
|
(18,414
|
)
|
(4,069
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
16
|
|
(4
|
)
|
17
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
1,373
|
|
(271
|
)
|
(18,397
|
)
|
(4,073
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend on preferred stock
|
|
—
|
|
(183
|
)
|
—
|
|
(538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stock shareholders
|
|
$
|
1,373
|
|
$
|
(454
|
)
|
$
|
(18,397
|
)
|
$
|
(4,611
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) applicable to common stock shareholders per
common share
|
|
$
|
0.03
|
|
$
|
(0.01
|
)
|
$
|
(0.36
|
)
|
$
|
(0.10
|
)
|
|
Diluted net income (loss) applicable to common stock shareholders
per common share
|
|
$
|
0.03
|
|
$
|
(0.01
|
)
|
$
|
(0.36
|
)
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic net income (loss) per common share
|
|
51,598,316
|
|
48,123,668
|
|
51,357,924
|
|
48,011,004
|
|
|
Shares used in computing diluted net income (loss) per common share
|
|
52,459,484
|
|
48,123,668
|
|
51,357,924
|
|
48,011,004
|
|
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DEPOMED, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
(Unaudited)
|
|
(1)
|
|
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ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
17,650
|
|
$
|
22,127
|
|
|
Marketable securities
|
|
53,338
|
|
59,932
|
|
|
Accounts receivable
|
|
5,042
|
|
3,099
|
|
|
Unbilled accounts receivable
|
|
441
|
|
576
|
|
|
Inventories
|
|
2,154
|
|
2,849
|
|
|
Prepaid and other current assets
|
|
972
|
|
5,404
|
|
|
Total current assets
|
|
79,597
|
|
93,987
|
|
|
Marketable securities
|
|
17,660
|
|
—
|
|
|
Property and equipment, net
|
|
1,033
|
|
900
|
|
|
Other assets
|
|
197
|
|
197
|
|
|
|
|
$
|
98,487
|
|
$
|
95,084
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,853
|
|
$
|
559
|
|
|
Accrued compensation
|
|
1,879
|
|
2,601
|
|
|
Accrued clinical trial expense
|
|
2,242
|
|
661
|
|
|
Other accrued liabilities
|
|
9,739
|
|
9,027
|
|
|
Deferred product sales
|
|
1,604
|
|
1,702
|
|
|
Deferred license revenue
|
|
10,684
|
|
4,362
|
|
|
Other current liabilities
|
|
103
|
|
110
|
|
|
Current portion of long-term debt
|
|
3,636
|
|
3,356
|
|
|
Total current liabilities
|
|
32,740
|
|
22,378
|
|
|
Deferred license revenue, non-current portion
|
|
43,977
|
|
33,209
|
|
|
Long-term debt, non-current portion
|
|
3,149
|
|
5,775
|
|
|
Other long-term liabilities
|
|
510
|
|
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 September 30, 2009 and
December 31, 2008
|
|
—
|
|
—
|
|
|
Common stock, no par value, 100,000,000 shares authorized;
51,751,099 and 51,171,377 shares issued and outstanding at September
30, 2009 and December 31, 2008, respectively
|
|
186,526
|
|
183,196
|
|
|
Accumulated deficit
|
|
(168,591
|
)
|
(150,194
|
)
|
|
Accumulated other comprehensive gain
|
|
176
|
|
151
|
|
|
Total shareholders’ equity
|
|
18,111
|
|
33,153
|
|
|
|
|
$
|
98,487
|
|
$
|
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.
Source: Depomed, Inc.
Depomed, Inc.
Sheilah Serradell, 650-462-5900
sserradell@depomed.com
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