Depomed Reports Record Sales in Third Quarter 2015 and Raises Full Year 2015 Guidance

NEWARK, Calif., Nov. 9, 2015 /PRNewswire/ -- Depomed, Inc. (Nasdaq: DEPO) today reported financial results and highlighted operational achievements for the quarter ended September 30, 2015.

“Depomed is now one of the top U.S. companies in pain and neurology. In the third quarter, the company achieved historic highs in product sales, driven by significant growth in both prescriptions and market share,” said Jim Schoeneck, President and CEO of Depomed. “Our new flagship franchise NUCYNTA, which we began promoting in June, led the way with revenue growing 15% over the prior quarter. In October, we hit all-time weekly prescription highs for NUCYNTA ER, Gralise and Cambia, reflecting the outstanding work of our sales force across the entire product line. Depomed increased cash by $107 million in the six months since the close of the NUCYNTA transaction, providing significant financial flexibility to pay down debt and to pursue additional acquisitions, as we continue to create substantial value for shareholders. Based on our financial performance, we are raising 2015 product sales guidance to $336 to $348 million, which is more than triple our 2014 product sales. In addition, we are raising our 2015 non-GAAP adjusted EBITDA to $108 to $116 million, up from our prior guidance of $95 to 110 million and our non-GAAP adjusted earnings to $58 to $66 million, up from our prior guidance of $40 to $50 million. And our 2015 numbers include just three quarters of NUCYNTA revenue. We believe that we are only at the very beginning of a story with substantial revenue and earnings growth ahead for years to come.”

Business and Financial Highlights

• Record quarterly net product sales for the third quarter of 2015 were $105 million, an increase of 242% compared to $31 million for third quarter of 2014, and an increase of 11% compared to $94 million for second quarter of 2015
• NUCYNTA flagship franchise recorded third quarter net sales of $65 million, the first full quarter since Depomed relaunched the product, compared to $57 million for second quarter of 2015
• Third quarter ending cash was $175 million, an increase of $52 million over June 30, 2015 and $107 million for the first six months since the NUCYNTA acquisition (~ $1.75 per outstanding share in 6 months)
• Quarterly non-GAAP adjusted earnings of $25 million, or $0.33 per share
• Quarterly non-GAAP adjusted EBITDA of $38 million
• Quarterly GAAP net loss of ($12 million), or ($0.20) loss per share
• Continued success in defending and enforcing Intellectual property rights:
  • Favorable decisions in Inter Partes Review pave way to proceed with cases against Purdue Pharmaceuticals (“Purdue”) and Endo Pharmaceuticals, Inc. (“Endo”) regarding infringement of patents by Purdue’s OxyContin® CR and Endo’s OPANA® ER

Prescription Growth and Market Share Highlight Product Performance

• NUCYNTA growth accelerating
  • Third quarter net sales were $65 million, an increase of 15% compared to the second quarter of 2015
  • Total NUCYNTA ER prescriptions were 80,000 in third quarter, an increase of 8% compared to the second quarter of 2015
  • NUCYNTA ER weekly prescription volume records set in consecutive weeks in October
  • NUCYNTA ER year-over-year 4-week rolling prescription volume growth of over 15%
  • NUCYNTA ER total prescription share in the total LAO market has increased to 1.65% up from 1.49% since just prior to relaunch of the product in mid-June 2015
• Portfolio products continue pattern of impressive year-over-year prescription growth
  • Gralise® third quarter net sales were $21 million, an increase of 29% compared to $16 million the third quarter of 2014. Total prescriptions of 83,000 were up 11% compared to the same period last year
  • Cambia® third quarter net sales were a record $7.0 million, an increase of 21% compared to $5.8 million in the third quarter of 2014. Total prescriptions of 34k were up 25% compared to the same period last year

  • Record Lazanda® third quarter net sales were $5.4 million, an increase of 139% compared to $2.3 million for the third quarter of 2014, and an increase of 41% compared to $3.9 million in the second quarter of 2015. Total sprays of 157,000 in the third quarter 2015 were up 114% compared to third quarter 2014

Opportunities for Sustained Growth·

• NUCYNTA is strongly positioned for future growth
  • Depomed’s first full quarter promoting NUCYNTA complete with its experienced pain and neurology sales force, over three times more than previous promotional effort
  • Successful deployment of marketing and medical programs supporting NUCYNTA
  • Positive physician feedback indicative of traction gaining in chronic lower back pain market
  • Education on dosing and titration has potential for improved patient experience
  • Diabetic peripheral neuropathy market represents a largely untapped opportunity
• Continued strong formulary coverage expected in 2016 for our portfolio providing broad patient access to Depomed products
• Lengthy market exclusivity expected for NUCYNTA beyond 2023 and potentially to 2028, with rest of portfolio maintaining at least 6 years and up to 9 years exclusivity
• Potential future cash flow from IP litigation against Purdue and Endo
• Exceptional cash generation supports our “Acquire-Integrate-Grow” strategy