Depomed Inc (DEPO) Announces 3Q:16 Financial Results; Shares Down 13%

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

Depomed Inc (NASDAQ:DEPO) reported financial results and highlighted operational achievements for the quarter ended September 30, 2016.

“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,” saidJim 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.”

Business and Financial Highlights

  • Third quarter 2016 revenues were $111 million, compared to $105 million for third quarter of 2015, an increase of 5%
  • Quarterly net loss of ($12.9) million or ($0.21) per share
  • Quarterly non-GAAP adjusted earnings of $20.9 million, or $0.28 per share
  • Quarterly non-GAAP adjusted EBITDA of $35.4 million
  • Favorable District Court ruling in the company’s patent litigation against all three filers of Abbreviated New Drug Applications (ANDAs) of the NUCYNTA franchise with expected market exclusivity until December 2025
  • Settlement agreement reached with Starboard Value LP including the addition of three independent directors, James P. Fogarty,Robert G. Savage and James L. Tyree, to Depomed’s Board of Directors
  • Introduction of a new aspartame-free formulation of CAMBIA® (diclofenac potassium for oral solution)

NUCYNTA Franchise Highlights

  • Third quarter 2016 net sales of $65 million
  • Net sales of $396 million since acquisition on April 2, 2015
  • NUCYNTA ER® reached record all-time monthly high prescription volume of over 30,000 in August, an increase of 20.4% overAugust 2015
  • NUCYNTA ER reached record all-time monthly high market share of 6.85% of branded long acting opioids and 1.99% of total long acting opioids in September

Product Portfolio Highlights

  • Gralise® third quarter 2016 net sales were $21 million
  • Cambia® third quarter 2016 net sales were a record $9.1 million, an increase of 29% compared to $7 million in the same period last year. Cambia total branded market share reached an all-time high in August
  • Lazanda® third quarter 2016 net sales were a record $8.2 million, an increase of 50% compared to $5.4 million in the same period last year. Lazanda total market share reached an all-time high in September. (Original Source)

Shares of Depomed are down nearly 13% to $20.01 in after-hours trading Monday. DEPO has a 1-year high of $27.02 and a 1-year low of $12.25. The stock’s 50-day moving average is $24.71 and its 200-day moving average is $20.54.

On the ratings front, Depomed has been the subject of a number of recent research reports. In a report issued on October 28, Roth Capital analyst Scott Henry reiterated a Buy rating on DEPO, with a price target of $28, which represents a potential upside of 22% from where the stock is currently trading. Separately, on October 27, Mizuho’s Irina Rivkind Koffler reiterated a Hold rating on the stock and has a price target of $27.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Scott Henry and Irina Rivkind Koffler have a yearly average loss of 2.9% and a return of 13.8% respectively. Henry has a success rate of 35% and is ranked #3630 out of 4162 analysts, while Koffler has a success rate of 44% and is ranked #99.

Overall, 3 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 21.7% 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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