DepoMed Inc. (DEPO)
Q3 2012 Results Earnings Call
November 5, 2012 5:00 PM ET
August Moretti - Chief Financial Officer
Jim Schoeneck - President and CEO
Matt Gosling - Senior Vice President and General Counsel
Dr. Mike Sweeney - Chief Medical Officer
Jack Anders - Senior Director, Finance
Scott Henry - Roth Capital
Jason Napodano - Zacks
Chris Raydans - JMP Securities
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After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions)
Please note, this event is being recorded. I would now like to turn the conference over to August Moretti, Chief Financial Officer. Please go ahead.
Thank you, Operator. Good afternoon. And welcome to our third quarter financial results and business update conference call. With me today are Jim Schoeneck, President and Chief Executive Officer 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 would like to remind you that the 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 filing and acceptance of a new drug application for Serada, the completion of our Phase 2 clinical trial of DM-1992, litigation against the FDA relating to Orphan Drug exclusivity for Gralise, our projected revenue and 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 quarterly report on Form 10-Q that we filed with the SEC earlier today, most particularly 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 September 30, 2012. All other guidance, including guidance relating to the company’s expected expense levels is as of today, November 5, 2012.
I’ll now turn the call over to Jim Schoeneck.
Thanks, Augie, and thank to you for joining us on the call today. DepoMed continues to make substantial progress since our last call. Today, I will summarize the developments in our business. Then I will turn the call back to Augie to discuss our quarterly financial results. After that we’ll open the call to questions.
To summarize, we’ve had a number of positive developments during the third quarter. Our Gralise launch continues to build nicely. Zipsor was re-launched after our acquisition of the product and Glumetza royalties continue to increase.
Our NDA for Serada was formally accepted for filing in October and the FDA gave us a tentative date of March 4, 2013 for an advisory committee meeting to consider the application for Serada. And now let me give you more details on these developments.
We continue to see increasing released weekly prescriptions and increasing number of prescribing physicians. During the third quarter, we recognized revenue on a prescription basis. As we monitor and analyze the Gralise business, we expect to change to revenue recognition on a sell in basis at some point in the future perhaps as early as fourth quarter.
Gralise sales for the quarter were $4.8 million. We reported over 37,000 total prescriptions in the quarter, a 28% increase over second quarter. In the week ended October 26th, we hit a new all time weekly prescription high of 3,400 -- 3,543 prescriptions. Please note, we expect prescriptions to temporarily go down in the week of November 2nd, due to the devastating effects of Superstorm Sandy.
More than 8,500 healthcare providers have written prescriptions for Gralise since the launch and the majority of those prescriptions have been written by pain specialists and neurologists.
The important developments with our sales force in the third quarter. In September, we converted all of our full time reps to direct employees. We now have 155 full time territories as we chose to merge certain territories due to managed-care reimbursements. In addition, in July we added 78 flex reps to our force focusing their efforts on primary care physicians. We expect to see the impact of the flex reps beginning in Q4.
In Q3, we increased our managed care coverage with Gralise. We previously announced that we had contract with CVS Caremark for unrestricted Tier 2 status for Gralise in their commercial plans.
CVS Caremark provides pharmaceutical benefit coverage over 50 million lives on behalf of managed care plans and employers. We are now implementing programs to pull additional Gralise prescriptions through these channels.
With the addition of our flex reps and the progress in managed care contracting, we expect Gralise to continue to grow and perhaps accelerate as we move into 2013. We will focus our expanded managed care efforts on managed care and Med D coverage, and we will report on our progress during the upcoming presentations and conference calls.