DepoMed Management Discusses Q2 2012 Results - Earnings Call Transcript

DepoMed (DEPO)

Q2 2012 Earnings Call

August 02, 2012 5:00 pm ET


August J. Moretti - Chief Financial Officer and Senior Vice President

James A. Schoeneck - Chief Executive Officer, President and Director

Jack Anders

Matthew M. Gosling - Senior Vice President and General Counsel


Scott R. Henry - Roth Capital Partners, LLC, Research Division

Jason N. Butler - JMP Securities LLC, Research Division

Jason Napodano - Zacks Investment Research Inc.

James F. Molloy - ThinkEquity LLC, Research Division



Good afternoon, and welcome to the DepoMed Reports Second Quarter Fiscal Year 2012 Financial Results. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to August Moretti, Chief Financial Officer of DepoMed. Please go ahead.

August J. Moretti

Thank you, operator. Good afternoon, and welcome to our second quarter financial results and business update conference call. With me today are Jim Schoeneck, President and CEO of DepoMed; Matt Gosling, Senior Vice President and General Counsel; Dr. Mike Sweeney, Chief Medical Officer; and Jack Anders, Senior Director of Finance.

Before we get started, I'd like to remind you that some matters discussed on this call contain forward-looking statements that involve risks and uncertainties, including those relating to the commercial launches of Gralise and Zipsor, the efforts of Santarus to commercial Glumetza, the submission of a new drug application for Serada, our projected revenue on expenses and the ability of DepoMed to support operations based on existing cash resources.

Actual results may differ materially from the results predicted, and recorded results should not be considered an indication of future performance. These and other risk factors are more fully discussed in our annual report on Form 10-K and our quarterly report on Form 10-Q for the first quarter of this year. And they will be fully discussed in the quarterly report on Form 10-Q that we will file with the SEC in the next day or so. In each case, under the caption Risk Factors.

DepoMed disclaims any obligation to update or revise any forward-looking statement made on this call as a result of new information or future developments.

As a reminder, Depomed's policy is to only provide financial guidance and guidance on corporate goals for the current fiscal year and to provide, update or reconfirm its guidance only by issuing a press release or filing updated guidance with the SEC in a publicly-accessible document or providing or updating guidance on a publicly-accessible conference call or webcast investor presentation.

Financial guidance relating to current cash, cash equivalents and investments is based upon balances as of June 30, 2012. All other guidance, including guidance relating to the company's expected expense levels, is as of today, August 2, 2012.

I'll now turn the call over to Jim Schoeneck.

James A. Schoeneck

Thanks, Augie. And thank, all of you, for joining us on the call today. DepoMed has continued to make substantial progress since our last call. Today, I'll summarize the developments in our business, and then I'll turn the call back over to Augie to discuss our quarterly financial results. After that, we'll open the call to questions.

The launch of Gralise is progressing well with increasing prescriptions in numbers of prescribing physicians. Gralise products sales for the quarter were $3.2 million, and in June, we recorded over 10,000 monthly prescriptions for the first time. In July, we hit an all-time weekly high of 2,739 prescriptions.

To date, more than 6,000 healthcare professionals have written prescriptions for Gralise. And the majority of prescriptions are being written by pain specialists and neurologists. With the addition of our flex representatives and the progress in our managed care contracting, we expect Gralise to grow, and perhaps accelerated growth, in the second half of 2012.

Our 78 flex representatives are now on the field, actively promoting Gralise as of the 1st of July. These pharmaceutically experienced and seasoned salespeople are working hand-in-hand with our existing sales force and provide approximately 60% of the calls of a full-time rap. As a reminder, we believe that adding these flex reps will increase our total physician calls by approximately 30%, and we expect to see their impact during the third and fourth quarter of 2012.

In managed care, we continue to focus on our reimbursement position and commercial plans and improving access in Med D and Medicaid. I'm happy to report that we recently signed an agreement with CVS Caremark's commercial plan, which moves Gralise to tier 2 formulary status. CVS Caremark provides pharmaceutical benefit coverage for over 50 million lives on behalf of managed care plans and employers. We are currently initiating efforts to begin the pull-through of additional Gralise prescriptions through these channels.

I hope that we are able to provide you with similar good news about Gralise managed care coverage during our upcoming presentations and conference calls.

As previously reported, we raised the price of Gralise in May. While we began selling Gralise at the new price immediately after that announcement, our revenue recognition will not reflect the new price until later this year. Augie will review the specifics of that with you later in the call.

As we've stated before, we believe we have a strong intellectual property protection around Gralise. We continue to build our patent portfolio and we now have 8 Orange Book listed patents for Gralise, with 4 of these listed patents having terms running to 2022 and 2024. In addition, we added to our defensive patents not in the Orange Book and have over 10 patent applications still under prosecution that relate to Gralise.

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