Company Update (NASDAQ:DEPO): Here’s Why Depomed Inc Shares Are Falling 20% Today

Depomed, Inc. Logo. (PRNewsFoto/Depomed, Inc.)

Depomed Inc (NASDAQ:DEPO) investors are having a rough day after the drug maker posted weak third-quarter results and lowered its guidance. DEPO reported $110.5 million in 3Q:16 revenues and non-GAAP EPS of $0.28 relative to consensus estimates $126.8M and $0.35. The company lowered its previous FY:16 guidance of $480-$505 million in revenues to $455-465 million, and non GAAP adjusted earnings to $79-85 million from $95-$105 million.

Depomed shares reacted to the news, are falling nearly 19% to $18.53 in Tuesday’s trading session.

“Although our third quarter revenues increased by 5% over the previous year’s quarter, they did not meet our expectations, as several factors, including a disconnect between prescription demand and wholesaler shipments, influenced net sales of the NUCYNTA franchise and Gralise.  Prescriptions for NUCYNTA ER grew 4% over the second quarter, while shipments to wholesalers were down 1%.  Prescriptions for NUCYNTA and Gralise were equal to the second quarter, however, shipments were down 6% and 12%, respectively,” said Jim Schoeneck, President and CEO of Depomed. “In addition, we made adjustments to our reserve accounts, including managed care and PBM rebate submissions from prior quarters, which impacted our product net sales.”

Continued Mr. Schoeneck, “For the rest of 2016 and beyond, we are fully committed to continuing the successful relaunch of our Nucynta franchise and building prescription demand for our products.  For the third quarter, NUCYNTA ER reached all time high monthly market share and total prescriptions, with year-over-year prescription growth of approximately 20%. In addition, the rest of our portfolio achieved revenues of $45 million, an increase of 13% year-over-year.  Finally, Depomed’s recent NUCYNTA ANDA patent litigation win marked a major milestone for the company, giving us more than 9 years to continue to grow the NUCYNTA franchise, with exclusivity established until December 2025.”

On the ratings front, Depomed has been the subject of a number of recent research reports. In a report released today, Cantor analyst Chiara Russo reiterated a Hold rating on DEPO, with a price target of $23, which represents a potential upside of 20% from where the stock is currently trading. Separately, on the same day, JMP’s Jason Butler reiterated a Buy rating on the stock .

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Chiara Russo and Jason Butler have a yearly average loss of 3.0% and 3.6% respectively. Russo has a success rate of 43% and is ranked #3499 out of 4181 analysts, while Butler has a success rate of 33% and is ranked #3452.

Overall, 4 research analysts have assigned a Hold rating and 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $28.00 which is 45.8% above where the stock opened today.

Depomed, Inc. is a pharmaceutical company, which manufactures and distributes pharmaceutical products to treat pain and other central nervous system conditions. Its brands include Gralise, Zipsor, Lazanda, Cambia, NUCYNTA ER and NUCYNTA. 

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