Depomed Reports Second Quarter 2005 Financial Results.MENLO PARK Menlo Park. 1 Residential city (1990 pop. 28,040), San Mateo co., W Calif.; inc. 1874. Electronic equipment and aerospace products are manufactured in the city. Menlo College and a Stanford Univ. research institute are there. 2 Uninc. , Calif. -- Depomed, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DEPO DEPO Delegated Episcopal Pastoral Oversight DEPO Devils Postpile National Monument (US National Park Service) DEPO Defence Export Promotion Organization (Pakistan) DEPO Double Even Pass Odd ) today announced its financial results for the quarter ended June 30, 2005. For the quarter, a net loss of $7.0 million or $0.18 per share was reported, compared to a net loss of $7.6 million or $0.22 per share for the second quarter of 2004. Cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments at June 30, 2005 were $16.9 million, which does not include the $25 million Glumetza(TM) milestone payment received from Biovail after quarter close nor the $30 million Proquin(R) XR license payment due from Esprit Pharma. Research and development expense for the quarter ended June 30, 2005 was $5.1 million compared to $6.2 million for the quarter ended June 30, 2004. Revenue from collaborative agreements increased to $410,000 in the second quarter of 2005 from none in the same period of 2004 as a result of product development services performed under our collaborative agreement with Boehringer Ingelheim Pharmaceuticals, Inc. "As anticipated, 2005 is proving to be a breakout year for Depomed, as evidenced by our two products approved by the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. in the second quarter and the significant partnership we forged with Esprit Pharma for the commercialization of Proquin XR," said John F. Hamilton Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , vice president and chief financial officer of Depomed. "Through our partners, we expect both Glumetza and Proquin XR to be launched by the fourth quarter of this year, generating our first product revenue. "We further improved our financial outlook in the second quarter by entering into two new revenue-generating collaboration agreements. The first was with Boehringer Ingelheim Pharmaceuticals to develop a controlled release dosage form A dosage form is the physical form of a dose of medication, such as a capsule or injection. The route of administration is dependent on the dosage form of a given drug. of an undisclosed pharmaceutical compound. The second was with New River Pharmaceuticals (NASDAQ:NRPH NRPH New River Pharmaceuticals Company ) to create pharmaceutical products using Depomed's patented oral drug delivery technology with New River's proprietary drug compounds. "Additionally, with the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of the Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. , we strengthened our balance sheet and eliminated a potential source of dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. . Finally, our Gabapentin gabapentin /gab·a·pen·tin/ (-pen´tin) an anticonvulsant related to ? (GABA), used in the treatment of partial seizures. gab·a·pen·tin n. GR(TM) Phase II clinical trial Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II is now two-thirds enrolled and we anticipate completion at the end of this year or early in 2006, demonstrating our continued commitment to advancing additional GR drugs through our pipeline." About Depomed Depomed, Inc. is a specialty pharmaceutical company utilizing its innovative Gastric gastric /gas·tric/ (gas´trik) pertaining to, affecting, or originating in the stomach. gas·tric adj. Of, relating to, or associated with the stomach. Retention (GR) system to develop novel oral products and improved, extended release formulations of existing oral drugs. GR-based products are designed to provide once daily administration and reduced gastrointestinal gastrointestinal /gas·tro·in·tes·ti·nal/ (-in-tes´ti-n'l) pertaining to or communicating with the stomach and intestine. gas·tro·in·tes·ti·nal adj. Abbr. side effects Side effects Effects of a proposed project on other parts of the firm. , improving patient convenience, compliance and pharmacokinetic profiles. Proquin(R) XR (ciprofloxacin hydrochloride ciprofloxacin hydrochloride Ciloxam, Cipro, Cipro I.V., Cipro XR, Ciproxin (UK) Pharmacologic class: Fluoroquinolone Therapeutic class: Anti-infective Pregnancy risk category C ) once daily, extended-release extended-release /ex·tend·ed-re·lease/ (ek-stend´ed-re-les´) allowing a twofold or greater reduction in frequency of administration of a drug in comparison with the frequency required by a conventional dosage form. tablets have been approved by the FDA for the treatment of uncomplicated urinary tract infections urinary tract infection (UTI),n infection in one or more of the structures that make up the urinary system. Occurs more often in women and is most commonly caused by bacteria. . In addition, regulatory applications for once daily Glumetza(TM) (Metformin metformin /met·for·min/ (met-for´min) an antihyperglycemic agent that potentiates the action of insulin, used in the treatment of type 2 diabetes mellitus. met·for·min n. GR(TM)) for the treatment of Type II diabetes Type II diabetes Type II diabetes is the most common form of diabetes and usually appears in middle aged adults. It is often associated with obesity and may be delayed or controlled with diet and exercise. Mentioned in: Diabetic Ketoacidosis have been approved in the U.S. and Canada. The company is also conducting a Phase II trial in post herpetic herpetic /her·pet·ic/ (her-pet´ik) pertaining to or of the nature of herpes; relating to or caused by herpesviruses. herpetic pertaining to or of the nature of herpes; relating to or caused by herpesviruses. neuralgia neuralgia (n  răl`jə, ny–), acute paroxysmal pain along a peripheral sensory nerve. with their product, Gabapentin
GR(TM). Additional information about Depomed may be found at its web
site, www.depomedinc.com."Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The statements that are not historical facts contained in this release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties including, but not limited to those related to our research and development efforts, including pre-clinical and clinical testing; regulation by the FDA and other government agencies; the timing of regulatory applications and product launches; and other risks detailed in the company's Securities and Exchange Commission filings, including the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events.
DEPOMED, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------- -------------
Revenue:
Collaborative
agreements $409,718 $-- $409,718 $119,725
Collaborative
agreements
with affiliates -- -- -- --
License revenue 18,750 -- 37,500 --
------------ ------------ ------------- -------------
Total revenue 428,468 -- 447,218 119,725
Operating expenses:
Research and
development 5,053,603 6,164,977 10,070,461 11,742,192
General and
administrative 3,216,391 1,372,666 4,932,455 2,515,416
Purchase of in-
process research
and development -- -- -- --
------------ ------------ ------------- -------------
Total operating
expenses 8,269,994 7,537,643 15,002,916 14,257,608
------------ ------------ ------------- -------------
Loss from
operations (7,841,526) (7,537,643) (14,555,698) (14,137,883)
Other income (expenses):
Equity in loss
of joint venture -- -- -- --
Gain on
extinguishment
of debt 1,058,935 -- 1,058,935 --
Gain from
Bristol-Myers
legal settlement -- -- -- --
Interest and
other income 197,097 138,659 368,971 284,656
Interest expense (226,545) (231,110) (459,684) (457,812)
------------ ------------ ------------- -------------
Total other income
(expenses) 1,029,487 (92,451) 968,222 (173,156)
------------ ------------ ------------- -------------
Net loss before
income taxes (6,812,039) (7,630,094) (13,587,476) (14,311,039)
Provision for
income taxes -- -- -- --
------------ ------------ ------------- -------------
Net loss (6,812,039) (7,630,094) (13,587,476) (14,311,039)
Deemed dividend on
preferred stock (210,283) -- (403,940) --
------------ ------------ ------------- -------------
Net loss applicable
to common
shareholders $(7,022,322) $(7,630,094) $(13,991,416) $(14,311,039)
============ ============ ============= =============
Basic and diluted
net loss per
common share $(0.18) $(0.22) $(0.36) $(0.41)
============ ============ ============= =============
Shares used in
computing basic
and diluted net
loss per
common share 39,752,902 34,629,307 39,406,482 34,607,152
============ ============ ============= =============
Period From
Inception
(August 7, 1995)
to June 30, 2005
--------------
Revenue:
Collaborative agreements $5,374,050
Collaborative agreements with affiliates 5,101,019
License revenue 68,750
--------------
Total revenue 10,543,819
Operating expenses:
Research and development 111,433,530
General and administrative 30,610,525
Purchase of in-process
research and development 298,154
--------------
Total operating expenses 142,342,209
--------------
Loss from operations (131,798,390)
Other income (expenses):
Equity in loss of joint venture (19,817,062)
Gain on extinguishment of debt 1,058,935
Gain from Bristol-Myers legal settlement 18,000,000
Interest and other income 2,763,747
Interest expense (3,680,331)
--------------
Total other income (expenses) (1,674,711)
--------------
Net loss before income taxes (133,473,101)
Provision for income taxes (99,000)
--------------
Net loss (133,572,101)
Deemed dividend on preferred stock (403,940)
--------------
Net loss applicable to common shareholders $(133,976,041)
==============
DEPOMED, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, Dec. 31,
2005 2004 (1)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $1,061,769 $953,295
Marketable securities 15,884,461 17,151,544
Accounts receivable 409,718 --
Prepaid and other current assets 484,728 442,349
Raw materials inventory 105,000 --
------------- -------------
Total current assets 17,945,676 18,547,188
Property and equipment, net 3,667,537 3,941,127
Other assets 233,298 380,268
------------- -------------
$21,846,511 $22,868,583
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,773,346 $1,733,474
Accrued compensation 1,093,305 910,723
Accrued clinical trial expense 302,981 59,942
Other accrued liabilities 501,190 496,142
Capital lease obligation, current
portion -- 32,412
Long-term debt, current portion 5,528 73,008
Deferred revenue, current portion 75,000 75,000
Other current liabilities 93,073 93,073
------------- -------------
Total current liabilities 4,844,423 3,473,774
Promissory note -- 10,280,591
Deferred revenue, non-current portion 456,250 493,750
Other long-term liabilities 170,635 217,170
Commitments
Shareholders' equity:
Preferred stock, no par value,
5,000,000 shares authorized; Series A
convertible preferred stock, 25,000
shares designated, 15,821 shares
issued and outstanding at June 30,
2005 and December 31, 2004 12,015,000 12,015,000
Common stock, no par value, 100,000,000
shares authorized; 39,796,585
and 34,691,190 shares issued and
outstanding at June 30, 2005
and December 31, 2004, respectively 138,490,833 117,070,946
Deferred compensation (493,915) (621,980)
Deficit accumulated during the
development stage (133,572,101) (119,984,625)
Accumulated other comprehensive loss (64,614) (76,043)
------------- -------------
Total shareholders' equity 16,375,203 8,403,298
------------- -------------
$21,846,511 $22,868,583
============= =============
(1) The balance sheet as of December 31, 2004 was derived from the
audited balance sheet included in the Company's 2004 Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on
March 16, 2005.
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