By Jason Napodano, CFA
On February 20, 2013, Depomed, Inc. (DEPO) reported financial results for the fourth quarter and full year 2012. Total revenues in the quarter were $26.6 million, essentially in-line with our estimate for total revenues of $26.8 million. Revenues increased 119% year-over-year thanks to strong growth in Gralise and royalties on Glumetza, and new revenues from recently acquired Zipsor. For the full year 2012, revenues totaled $90.8 million, down 32% from 2011 when the company recognized one-time payments from Abbott Labs (ABT) totaling $48 million for the returning of rights to Gralise.
Net loss for the fourth quarter totaled $3.7 million, or $0.07 per share. This was slightly better than our expectations for a loss of $0.09 per share. Both SG&A expense and R&D expense were lower than we modeled. SG&A at $24.0 million was down sequentially from the $26.8 million in the third quarter 2012. R&D expense of $3.2 million was also down meaningfully from the $5.3 million in the third quarter 2012. We note R&D in the third quarter 2012 included an expense of $1.8 million for the Sefelsa (formerly Serada) new drug application (NDA) and $0.6 million in milestone expense to PharmaNova related to the NDA application submission under the company’s sub-license agreement for Sefelsa. For the full year 2012, net loss total $29.8 million, or $0.53 per share.
Depomed exited the fourth quarter ended December 31, 2012 with $77.9 million in cash and investments, down from $139.8 million at the end of 2011. Cash usage in 2012 was $61.9 million, which included $26.4 million in payment for the acquisition of Zipsor in the second quarter 2012. Cash of $77.9 million was in-line with our model
…Guidance For 2013…
Management provided initial financial guidance for the full year 2013 on its update call on February 20, 2013. Because of the uncertainty surrounding the outcomes of the Sefelsa FDA advisory committee on March 4, 2013 and the FDA review with a PDUFA date of May 31, 2013, guidance currently excludes any additional investment in Sefelsa after the date of the FDA advisory committee meeting.
For the full year 2013, we currently model total revenues of $129.3 million. We model total operating expenses of $125.5 million, resulting in EPS for the full year of $0.02. We forecast the company will turn cash flow positive, Sefelsa notwithstanding, in the second half of 2013. Depomed should exit 2013, assuming no new business development activities, with roughly $75 million in cash and investments.
- Total revenues of approximately $125 to $135 million, which includes approximately $6 million in anticipated milestones under the company’s collaborative arrangements.
- Operating expenses of approximately $120 to $130 million, which includes approximately $4 million of intangible amortization related to the acquisition of Zipsor.
- Year-end 2013 cash and investments of $70 to $80 million