Depomed Reports Third Quarter 2014 Financial Results

NEWARK, Calif., Nov. 5, 2014 /PRNewswire/ -- Depomed, Inc. DEPO today reported financial results and highlighted operational achievements for the quarter ended September 30, 2014.

"We exceeded $30M in quarterly product sales for the first time, representing an 88% increase over the same quarter last year, and driven by growth from Gralise, Cambia and Lazanda," said Jim Schoeneck, President and Chief Executive Officer of Depomed. "We continue to demonstrate our ability to integrate product acquisitions that fit our strategic focus in pain and neurology and contribute significantly to revenue growth.

"In addition, our court wins validate our intellectual property and the innovative nature of our products.  We now expect market exclusivity for Gralise until 2024," Schoeneck added. "Plus, our recent $345 million convertible note offering arms us with over a half billion dollars in cash and equivalents to pursue additional high growth opportunities that fit our strategy. With the progress we've made in 2014 and the new additions to our management team, we believe that Depomed is poised for further breakout in 2015 and beyond."

Third Quarter Financial and Company Highlights

• Record quarterly product sales of $30.6 million increased 88% compared to $16.3 million for the third quarter of 2013; total revenue of $51.5 million
• Two favorable verdicts in U.S. Federal District Court: 
  • In Gralise ANDA litigation vs. Actavis, all claims and counterclaims found in favor of Depomed; expected generic entry now in 2024 
  • Gralise Orphan Drug Exclusivity ruling in Depomed's favor vs. FDA
• Successfully completed upsized $345 million seven-year convertible note offering (2.5% coupon/37.5% conversion premium/5 year call feature)
• Quarterly net income of $6.5 million, or  $0.11 earnings per share
• Quarterly non-GAAP adjusted earnings of $2.1 million, or $0.03 per share
• Cash and marketable securities of $560 million as of September 30, 2014; available to fund future acquisitions
• Added two experienced senior executives – Srini Rao, M.D., Ph.D. as Chief Medical Officer and Scott Shively as Chief Commercial Officer
• Depomed added to S&P 600 Small Cap Index

Third Quarter Product Highlights

Gralise® (gabapentin):

• Product sales of $16.3 million increased 66% compared to $9.8 million in third quarter 2013 and increased 8% compared to $15.1 million in second quarter of 2014
• In August, the U.S. District Court for the District of New Jersey ruled in favor of Depomed in the company's patent infringement lawsuit against Actavis, upholding the validity of seven Depomed patents and providing expected market exclusivity until 2024
• In September, the Federal District Court for the District of Columbia ruled in favor of Depomed vs. U.S. Food and Drug Administration, resulting in an order requiring the FDA to grant Gralise seven years of orphan drug exclusivity for the management of postherpetic neuralgia (PHN)

Cambia® (diclofenac potassium for oral solution):

• Product sales of $5.8 million for third quarter of 2014 increased 16% compared to $5.0 million for second quarter of 2014
• Since re-launching Cambia approximately six months ago, Depomed has increased new prescriptions by 25%

Lazanda® (fentanyl) Nasal Spray (CII):

• Product sales of $2.3 million for third quarter 2014, up over 400% compared to $0.4 million for third quarter 2013 and an increase of 64% compared to $1.4 million for second quarter 2014
• Less than one year after re-launching Lazanda, Depomed now sells more product in one quarter than was sold in the entire year prior to its acquisition
• Due to the increasing traction and market opportunity, Depomed is increasing the size of its dedicated Lazanda sales force by 50%

Zipsor® (diclofenac potassium):

• Product sales of $6.1 million in third quarter 2014, up from $6.0 million for third quarter of 2013, and up 25% for the first three quarters of 2014 compared to the same period in 2013
• Since acquiring the Zipsor program for approximately $26 million two years ago, Depomed has now realized almost $50 million in net sales with gross margins currently over 95%

Revenue Summary

2014 Financial Outlook

Depomed is increasing its guidance for total revenues and GAAP earnings per share for full year 2014, narrowing and reducing slightly the lower end of its guidance for product sales narrowing its guidance for non-GAAP adjusted earnings per share and reiterating its guidance for cash flow for full year 2014:

• Product sales of approximately $113 to $117 million
• Total revenues of approximately $232 to $242 million, which includes non-cash revenues related to the PDL transaction and $15 million in milestones already received in 2014 from Mallinckrodt
• GAAP earnings per share of approximately $0.48 to $0.58 per share, which includes the non-cash PDL revenues and non-cash PDL interest expense
• Non-GAAP adjusted earnings per share of $0.06 to $0.14 per share
• Cash flow of at least break-even excluding payment of approximately $59 million in taxes in the first quarter of 2014 related to fiscal year 2013

The increase in guidance regarding total revenues and GAAP earnings per share are entirely due to increased estimates of non-cash PDL royalty revenues resulting from net sales of Glumetza by Salix Pharmaceuticals.  The GAAP earnings per share and non-GAAP adjusted earnings per share guidance reflects the impact of the issuance of convertible notes in September using the if converted method.  The if converted method of calculating earnings per share adds back interest expense related to the convertible notes, net of tax, to earnings and assumes all 17.9 million shares underlying the convertible notes are converted to common shares.

Non-GAAP Reconciliation

The following table reconciles the Company's non-GAAP adjusted earnings per share guidance to GAAP earnings per share guidance for the year ending December 31, 2014

Conference Call

Depomed will host a conference call today, Wednesday, November 5^th, beginning at 4:30 p.m. EST (1:30 p.m. PST) to discuss its results. Participants can access the call by dialing 877-317-6789 (United States) or 412-317-6789 (international). The conference call will also 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 is a specialty pharmaceutical company that commercializes products for pain and neurology related disorders.  Gralise^® (gabapentin) is a once-daily treatment approved for the management of postherpetic neuralgia. CAMBIA^® (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug indicated for acute treatment of migraine attacks with or without aura in adults (18 years of age or older). Zipsor^® (diclofenac potassium) Liquid Filled Capsules is a non-steroidal anti-inflammatory drug indicated for relief of mild to moderate acute pain in adults.  Lazanda^® (fentanyl) Nasal Spray (CII) is an intranasal fentanyl drug used to manage breakthrough pain in adults (18 years of age or older) who are already routinely taking other opioid pain medicines around-the-clock for cancer pain. Gralise and various partner product candidates are formulated with Depomed's proven, proprietary Acuform^® drug delivery technology.   Additional information about Depomed may be found at 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 the commercialization of Gralise, CAMBIA, Zipsor and Lazanda, Depomed's financial outlook for 2014 and expectations regarding financial results and potential business opportunities and other risks detailed in the company's Securities and Exchange Commission filings, including the company's Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014. The inclusion of forward-looking statements should not be regarded as a representation that any of the company's plans or objectives will be achieved. 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.

INVESTOR CONTACT:
August J. Moretti
Depomed, Inc.
510-744-8000
amoretti@depomed.com

MEDIA CONTACT:
Mark Corbae
Canale Communications for Depomed
619-849-5375
mark@canalecomm.com

 

 

 

SOURCE Depomed, Inc.