Depomed, Inc. (Nasdaq: DEPO) today reported financial results for the quarter ended September 30, 2013.
Third Quarter 2013 Financial and Operational Summary
Total revenues were $37.5 million and included recognition of a $5.0 million milestone payment from Mallinckrodt related to the NDA filing of MNK-795. Excluding this milestone and a $10 million upfront payment from Janssen in the third quarter of 2012, total revenues of $32.5 million grew 39% compared to $23.3 million for the third quarter of 2012.
Product revenues of $16.3 million grew 68% compared to $9.7 million for the third quarter of 2012.
Gralise® (gabapentin) net sales of $9.8 million grew 104% compared to $4.8 million for the third quarter of 2012.
Zipsor® (diclofenac potassium) net sales of $6.0 million grew 22% compared to $4.9 million for the third quarter of 2012.
Glumetza® (metformin hydrochloride extended-release) royalties from Santarus, Inc. of $14.6 million, compared to $11.6 million for the third quarter of 2012.
Net income of $6.5 million or $0.11 per share, compared to a net loss of ($1.5) million or ($0.03) per share for the third quarter of 2012.
Cash and marketable securities of $85.4 million as of September 30, 2013; does not include proceeds of the $240.5 million from PDL BioPharma announced in October 2013.
Depomed acquired and launched Lazanda® (fentanyl) Nasal Spray for the treatment of breakthrough pain in cancer patients 18 years of age and older who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain.
In October, Depomed sold its royalty and milestone interest in its type 2 diabetes portfolio to PDL BioPharma, generating $240.5 million.
"In the third quarter, we demonstrated significant revenue growth in both Gralise and Zipsor, and we are excited about the addition of Lazanda at the end of July," said Jim Schoeneck, President and Chief Executive Officer of Depomed. "Our recent sale of our non-core type 2 diabetes royalties, including Glumetza, to PDL BioPharma for $240.5 million gives the company significant flexibility to expand our business through acquisitions of marketed or late stage assets. With over $320 million in cash currently on our balance sheet, pending final tax considerations, and the strength of our core business in pain and neurology, we believe we are well positioned to become a leader in the central nervous system specialty pharmaceutical area."
Third Quarter 2013 Financial Results
Total revenues increased to $37.5 million for the third quarter of 2013, compared to $33.3 million for the third quarter of 2012 as indicated below:
Selling general and administrative expense was $26.4 million for the third quarter of 2013 compared to $26.8 million for the third quarter of 2012. Third quarter 2013 expenses included two months of selling general and administrative expenses associated with Lazanda.
Research and development expense was $1.3 million for the third quarter of 2013 compared to $5.3 million for the third quarter of 2012. The decrease is primarily related the Company ceasing all expenditure on Sefelsa™ during the first quarter of 2013 and the clinical trial expenses associated with our Phase 2 clinical trial of DM-1992 in third quarter 2012.
Net income for the third quarter of 2013 was $6.5 million or $0.11 per share, compared to a net loss of ($1.5) million or ($0.03) per share for the third quarter of 2012.
Cash and marketable securities were $85.4 million as of September 30, 2013 as compared to $74.2 million as of June 30, 2013. This does not include proceeds from the sale of type 2 diabetes milestones and royalties to PDL BioPharma, announced in October 2013.
Revised 2013 Guidance in Light of PDL Transaction
Depomed is revising the financial outlook previously given for the full year of 2013 resulting from the sale of milestone and royalty interests in Depomed's type 2 diabetes portfolio to PDL Biopharma in October 2013.
Operating expenses of approximately $116 to $118 million, which includes intangible amortization related to the acquisitions of Zipsor and Lazanda.
Depomed is revising its revenue guidance for 2013 to a range of approximately $113 to $116 million. This guidance removes revenues related to the type 2 diabetes interests sold to PDL for the fourth quarter of 2013 and does not include a potential $10 million approval milestone from Mallinckrodt. Depomed is still reviewing the accounting for the PDL transaction, which could have an effect on reported revenues under US GAAP.
Year-end 2013 cash and marketable securities of $318 to $322 million prior to consideration of taxes that may result from the PDL transaction and does not include receipt of a potential $10 million approval milestone from Mallinckrodt before year end.
Depomed will host a conference call today, Tuesday, November 5 beginning at 5:00 p.m. EST (2:00 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.