Market Overview

Depomed Announces Fourth Quarter and Full Year 2017 Financial Results


- Annual Net Revenues of $381 Million -

- Collegium, Slán Transactions and Expanded Neurology Field Force Position Company for Improved Profitability in 2018 and Beyond –

- New Corporate Headquarters Expected to be Operational in the Third Quarter -

- Conference Call Scheduled for Today at 4:30 PM EST; Dial In Information Below -

NEWARK, Calif., Feb. 27, 2018 (GLOBE NEWSWIRE) -- Depomed, Inc. (NASDAQ:DEPO) today reported financial results for the quarter and twelve months ended December 31, 2017 and provided an update to the business.

"2017 was a challenging year for Depomed, and in response we have taken decisive steps to strengthen and diversify our business," said Arthur Higgins, President and CEO of Depomed. "During the fourth quarter, we not only introduced but also began to implement our new three pillar strategy of Maintain, Grow and Build positioning the company for improved profitability in 2018 and beyond."

Business and Financial Highlights

  • Full year net revenues were $381 million
  • Full year GAAP net loss of ($102) million or ($1.63) per share
  • Full year non-GAAP adjusted EBITDA of $117 million
  • Fourth quarter 2017 net revenues were $94 million
  • Fourth quarter 2017 GAAP net loss of ($33) million or ($0.52) per share
  • Fourth quarter 2017 non-GAAP adjusted EBITDA of $33 million
  • Fourth quarter 2017 ending cash and marketable securities were $128 million
  • NUCYNTA® Commercialization Agreement with Collegium Pharmaceutical provides minimum royalties on net sales of NUCYNTA® and NUCYNTA ER® 
  • Acquisition of rights to cosyntropin (Synthetic ACTH Depot) creates new specialty/orphan franchise
  • Lazanda® sale to Slán Medicinal Holdings
  • Company restructuring and corporate headquarters relocation aligns with new business model

Collegium Pharmaceutical Commercialization Agreement Maintains a Strong NUCYNTA® Franchise

In January 2018, Depomed closed a Commercialization Agreement with Collegium Pharmaceutical, Inc. ("Collegium") under which Collegium will commercialize both NUCYNTA Extended Release and NUCYNTA Immediate Release and, in exchange, for the first four years of the agreement, Depomed expects to receive a minimum royalty of $135 million per year.

Slán Medicinal Holdings Strategic Asset Transaction Diversifies Portfolio and Creates New Specialty/Orphan Franchise

In November 2017, Depomed entered into a Strategic Asset Transaction with Slán Medicinal Holdings Limited ("Slán") under which Depomed acquired from Slán the rights to market the specialty drug candidate, cosyntropin (Synthetic ACTH Depot) in the United States and divested its Lazanda (fentanyl) nasal spray CII to Slán. This transaction formed the foundation of Depomed's new Specialty/ Orphan portfolio. Under the terms of the agreement, West Therapeutic Development, a subsidiary of Slán, is expected to submit a New Drug Application with the U.S. Food and Drug Administration for a to-be-disclosed first indication for cosyntropin in late 2018, with the goal of a potential launch in late 2019 or early 2020. In parallel, Depomed is pursuing a second indication for cosyntropin in infantile spasms, a specific seizure type seen in infantile epilepsy syndrome.

Neurology Salesforce Expansion Expected to Grow Business

In September 2017, Depomed expanded its Neurology salesforce to 90 representatives who are focused on Gralise®, CAMBIA®, and Zipsor®. The Company believes this sales platform will increase sales of these products and allow for the potential addition of other neurology-based product acquisitions.

Corporate Restructuring and Corporate Headquarters Relocation Aligns with New Business Model

In December 2017, Depomed announced a restructuring and headquarters relocation to align Depomed's staff, office size and location with its new business model. The restructuring reduces headquarters' staff by approximately 40% and the headquarters' office space requirement by 50%. The Company is in negotiations to move to a yet to be disclosed location and expects to be fully operational in its new headquarters in the third quarter of 2018.

Puerto Rico Product Supply Update

Results for the fourth quarter of 2017 were negatively impacted by shortages of certain dosage strengths of NUCYNTA ER.  While Depomed's manufacturing partner for NUCYNTA ER has informed us that their plant is now fully operational, they are still working to fill back orders.  As a result, there have been spot outages of certain strengths of NUCYNTA ER. While this situation may continue into the future, the Company believes that, based on current information, supply should return to normalized levels by mid-March 2018.

Cebranopadol Development Update

In January 2018, consistent with the Company's decision to cease commercialization of opioids, Depomed provided to Grünenthal GmbH ("Grünenthal"), 120 days' written notice of the termination of the December 2015 license agreement between Depomed and Grünenthal and returned to Grünenthal the U.S. and Canadian rights to cebranopadol, an opioid analgesic in development for the treatment of moderate to severe chronic nociceptive and neuropathic pain.   

Revenue Summary

(in thousands, unaudited)  
    Three Months Ended    Twelve Months Ended  
    December 31,   December 31,  
    2017   2016   2017 (1)   2016  
Product sales, net:                  
Nucynta products   $   60,018   $   74,693   $   239,539   $   281,261  
Gralise       20,208       24,995       77,034       88,446  
Cambia       7,749       8,373       31,597       31,273  
Lazanda       1,770       7,454       15,010       26,547  
Zipsor       4,415       8,160       16,700       27,539  
       Total product sales, net       94,160       123,675       379,880       455,066  
Royalties       248       236       844       831  
Total revenues (GAAP Basis)   $    94,408   $    123,911   $    380,724   $    455,897  
(1) In the the first quarter of 2017, the Company reserved an incremental $4.7 million associated with a dispute with a pharmacy benefit manager.  This dispute was settled in the fourth quarter of 2017 at an amount equal to the Company'sreserve.  The $4.7 million has been allocated to the specific products subject to the dispute and settlement.  

2018 Financial Guidance
The Company is providing the following 2018 financial guidance.

  Neurology Franchise Net Sales $120 to $125 million
  GAAP SG&A Expense $123 to $133 million
  GAAP R&D Expense $11 to $16 million
  Non-GAAP SG&A Expense $110 to $120 million
  Non-GAAP R&D Expense $10 to $15 million
  GAAP Net Loss ($72) to ($82) million
  Non-GAAP Adjusted EBITDA $125 to $135 million

As the Company is no longer responsible for the commercialization of the NUCYNTA franchise, the Company is not providing revenue guidance on total revenue. The difference between GAAP Expenses and Non-GAAP Expenses relates to stock based compensation.

Non-GAAP Financial Measures

To supplement our financial results presented on a U.S. generally accepted accounting principles, or GAAP, basis, we have included information about non‑GAAP adjusted earnings, non‑GAAP adjusted earnings per share and non-GAAP adjusted EBITDA, non‑GAAP financial measures, as useful operating metrics. We believe that the presentation of these non‑GAAP financial measures, when viewed with our results under GAAP and the accompanying reconciliation, provides supplementary information to analysts, investors, lenders, and our management in assessing the Company's performance and results from period to period. We use these non‑GAAP measures internally to understand, manage and evaluate the Company's performance, and in part, in the determination of bonuses for executive officers and employees. These non‑GAAP financial measures should be considered in addition to, and not a substitute for, or superior to, net income or other financial measures calculated in accordance with GAAP. Non‑GAAP adjusted earnings and non‑GAAP adjusted earnings per share are not based on any standardized methodology prescribed by GAAP and represent GAAP net income (loss) and GAAP earnings (loss) per share adjusted to exclude amortization, IPR&D and non‑cash adjustments related to product acquisitions, stock‑based compensation expense, non‑cash interest expense related to debt,  costs associated with the special meeting requests made by an activist investor and CEO transition, costs associated with an attempted debt refinancing, restructuring costs, adjustments associated with non-recurring legal settlements and disputes, and to adjust for the tax effect related to each of the non-GAAP adjustments. Non‑GAAP adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and represents GAAP net income (loss) adjusted to exclude interest income, interest expense, amortization, IPR&D and non‑cash adjustments related to product acquisitions, stock‑based compensation expense, depreciation, taxes, transaction costs, restructuring costs, adjustments related to non-recurring legal settlements and disputes, costs associated with an attempted debt refinancing, the special meeting requests made by an activist investor, and CEO transition. Non‑GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non‑GAAP measures used by other companies.

Conference Call and Webcast

Depomed will host a conference call today, Tuesday, February 27, 2018 beginning at 4:30 p.m. EST (1:30 p.m. PST) to discuss its results. This event can be accessed in three ways:

  • From the Depomed website:  Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.
  • By telephone: Participants can access the call by dialing (844) 839-0046 (United States) or (857) 270-6032 (International) referencing Conference ID 2157887.
  • By replay: A replay of the webcast will be located under the Investor Relations section of Depomed's website approximately two hours after the conclusion of the live call and will be available for three months.

About Depomed

Depomed is a leading specialty pharmaceutical company committed to putting the patient first in everything it does. Depomed is focused on enhancing the lives of patients, families, physicians, providers and payors through the commercialization of products in the areas of pain and neurology, and in the development of drugs in areas of unmet medical need. Depomed currently markets three medicines focused on neuropathic pain and migraine through its neurology and pain franchises and its emerging specialty/orphan franchise is focused on orphan drug indications and areas of unmet medical need. To learn more about Depomed, visit

"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, the commercialization of Gralise, CAMBIA, and Zipsor, royalties associated with Collegium's commercialization of NUCYNTA and NUCYNTA ER, Depomed's financial outlook for 2018 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 most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. 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.


Christopher Keenan
VP, Investor Relations and Corporate Communications

Dan Peisert
VP, Business Development

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