A Specialty Pharmaceutical Leader Focused in Pain and Neurology. Jefferies Global Healthcare Conference June 3, 2014

Transcription

1 A Specialty Pharmaceutical Leader Focused in Pain and Neurology Jefferies Global Healthcare Conference June 3, 2014

2 Note on Forward-Looking Statements Statements made in this presentation that are not historical facts are forward-looking statements that involve risks and uncertainties. The inclusion of forward-looking statements, including those related to our commercialization plans for Gralise, CAMBIA, Zipsor and Lazanda, the efforts of our collaboration partners to obtain regulatory approval of product candidates and commercialize products, financial projections and expectations, and intellectual property and other litigation to which we are a party, should not be regarded as a representation that any of our plans will be achieved. Actual results may differ materially from those described in this presentation due to the risks and uncertainties inherent in our business, including, without limitation, risks and uncertainties related to: our ability to successfully commercialize our products; the success of our collaborative arrangements with development and commercialization partners; our research and development efforts, regulation by the FDA and other government agencies; the timing of regulatory approvals and product launches; and other risks detailed in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and our most recent Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to revise or update this presentation to reflect events or circumstances that occur after the date of this presentation. 2

3 Commercial Vision and Product Acquisitions have Transformed DEPO into a Leading Specialty Pharmaceutical Company with a Strong Growth Trajectory Only marketed product (Glumetza) sold by partner ~$1 million in sales from direct-marketed product (as of YE) $77 million in cash for building company Development stage-focused management and BOD Technology generating revenue through upfronts and milestones Four marketed products with high growth potential and lengthy periods of expected exclusivity Product revenue guidance of >$ million $213 million in cash (March 2014) supporting product acquisition initiatives Commercial Specialty Pharma oriented management and BOD Technology generating revenue through milestones and royalties 3

4 Depomed: Track Record of Creating Value from Products and Deals Reworked Santarus deal and tripled net revenue >100% y/y revenue growth in % sales growth following acquisition Relaunch with improved patient access and support following acquisition TYPE 2 DIABETES DEAL Milestones & royalties sold for $240M Acquired 4

5 Depomed: A Commercial-focused Organization with Value-generating Acquisition Strategy Three product acquisitions in pain and neurology Now four direct-marketed products sold by DEPO No debt DIRECT MARKETED PRODUCT REVENUE (MILLIONS) $300 YE CASH BALANCE (MILLIONS) $150 $250 $125 $200 $100 $75 $50 $150 $100 $25 $50 $ (guidance) $

6 Depomed s Broad Set of Marketed Products in Pain and Neurology Drive Current and Future Revenues DEVELOPMENT REGISTRATION MARKETED DEPOMED PRODUCTS Gralise (PHN) 9 orange book patents; 7 defensive patents; last OB patent to expire Feb 2024 CAMBIA (Acute migraine) Zipsor (Mild/Mod pain) ANDA settlement with expected protection to Jan orange book patents; last to expire Feb 2029 Lazanda (BTCP) 2 orange book patents; patents pending; last OB patent to expire Oct 2024 PARTNER PRODUCTS Nucynta ER (JNJ) Royalty through 2021 Xartemis XR (MNK) Approval March 2014; $10 million milestone Royalty 15 years+ from first sale MNK-155 (MNK) NDA accepted May 2014; Royalty 15 years+ from first sale Ironwood (IRWD) IW-3718 for refractory GERD; phase 2 initiated March

7 Depomed s Partnerships, Technology and IP Continue to Provide Cash, Revenue and Upside $240.5 million royalty sale to PDL (October 2013) Sale of non-core diabetes royalties and milestones Provides growth capital without dilution Partner products provide future revenue and upside Nucynta ER (Johnson & Johnson) - royalty to 2021 Xartemis XR and MNK-155 (Mallinckrodt) potential abuse-resistant opioids with milestones and high single digit royalties for 15+ year term; Xartemis XR approved by the FDA March 2014 MNK-155 NDA accepted for filing 2014; PDUFA date January 2015 IW-3718 (Ironwood) now in Phase 2 Potential cash flow from IP litigation against Purdue and Endo Over past 7 years, Depomed generated >$500 million in non-dilutive capital 7

8 Depomed Quarterly Financial Performance (GAAP) Quarter Ended 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14 Product Sales $9.1 $14.1 $16.3 $18.8 $21.5 Total Revenues $26.2 $30.0 $37.5 $40.6 $76.5 Total Costs and $(31.7) $(29.4) $(30.6) $(33.1) $(40.8) Expenses Income(Loss)from $(5.5) $0.5 $6.8 $7.5 $35.7 Operations Income(Loss)Per Share $(0.10) $0.01 $0.11 $0.72 $0.30 Cash at 3/31/14 $213MM Cash Per Share at 3/31/14 $3.70 8

9 Depomed 2014 Financial Guidance Product Sales $115 to $125 mm Total Revenues $200 to $215 mm GAAP EPS $0.21 to $0.36 Non-GAAP EPS breakeven to $0.16 Cash flow breakeven or better Guidance provided is as of May 8, Depomed is not confirming or updating that guidance, and actual results may differ. Reconciliation can be found at the end of this presentation. Non-GAAP EPS is adjusted to exclude (1) non-cash revenue and costs related to the sale of future proceeds to PDL, (2) non-cash interest expense on liability resulting from the debt accounting treatment related to the sale od future proceeds to PDL, (3) amortization related to product acquisitions and (4) stock based compensation expense and to adjust (5) the income tax provision to reflect the estimated amounts payable in cash. 9

10 Gralise for Postherpetic Neuralgia Indicated for the management of postherpetic neuralgia (PHN) Large and growing market opportunity >$60 million run rate as of April 2014 Promoted by >160 sales professionals who also sell CAMBIA and Zipsor Additional managed care contracts to improve coverage in

11 Gralise Clinical Differentiation Drives Growth Effective 24-hour pain control with once-daily dosing (with evening meal) Low incidence of dizziness and daytime sleepiness Titration to an effective, therapeutic dose (1800 mg) in 2 weeks Not interchangeable with other gabapentin products BENEFITS Proven Efficacy QD dosing Significant improvements in dizziness and somnolence DRUG REDUCTION IN PAIN SCORE DOSING DIZZINESS SOMNOLENCE Gralise (1,800mg) x daily 10.9% 4.5%* Neurontin (1,800-2,400mg) -2.2 to x daily 31%-33% 17%-20% Lyrica ( mg) -1.8 to x daily 12%-28% 15%-24% * Somnolence data not statistically different versus placebo 11

12 Monthly Scripts Gralise Monthly Prescriptions Continue to Build; Annual Run Rate of >$60 million 25,000 Total Prescriptions 20,000 15,000 10,000 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 Over 22,400 unique prescribers since launch Source: Symphony Healthcare Analytics PHAST 12

13 Strong Gralise IP Protection Expected to Provide Long-Term Market Exclusivity Gralise patent protection Orange Book listed patents to Feb defensive patents to Oct 2022 Additional patents pending Patent litigation ANDA litigation down to 1 filer, from 6 Trial with Actavis (first filer) completed May 2014 Favorable Markman ruling, January 2014 Settlements with two defendants, April 2014 January 1, 2024 entry (earlier under certain circumstances) Other filers withdrew or converted to Paragraph 3 13

14 CAMBIA Adds Differentiated Migraine Product to Depomed in December 2013 Acquired December 2013 for $48.7 million The only single agent in its therapeutic class approved for treatment of migraine attacks in adults in the U.S. Powdered formulation of diclofenac dissolves in liquid, provides rapid relief of pain and is easy to take Principally prescribed by neurologists 14

15 CAMBIA Positioned for Long-term Growth and Great Overlap with Gralise Bolsters portfolio in pain and neurology, strengthening Depomed s position with neurologists Settled ANDA litigation with expected generic entry in January 2023 Strong growth product CAMBIA prescriptions were up 30 percent in Q compared to Q with prior owner s 35-rep sales force $23 million annual run rate at April 2014 Creates synergies with Gralise commercial efforts nearly 70% of CAMBIA Rxs are written by neurologists, half of whom already prescribe Gralise Very little overlap with Zipsor, as neurologists only write 3.5% of Zipsor Rxs CAMBIA Writers Gralise Writers 15

16 Zipsor 16

17 Zipsor Acquisition in 2012 Expanded Pain Franchise and Was Immediately Accretive Broad indication for mild to moderate pain Rapidly dispersed, liquid-filled capsule provides acute pain relief in <1 hour Acquired in 2012 for ~$28 million Current annual run rate >$25 million (as of April 2014) Highly profitable with gross margin over 95% Depomed halted sales decline and resumed growth of product in

18 Monthly Scripts Zipsor Continues to Contribute to Depomed s Top and Bottom Line 9,000 Total Prescriptions 7,000 5,000 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 Source: Symphony Healthcare Analytics PHAST 18

19 Lazanda (fentanyl) Nasal Spray Expands Depomed s Pain Franchise, Acquired Late July 2013 Indicated for the management of breakthrough pain in cancer patients 18 years of age and older who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain May only be dispensed by physicians enrolled in the TIRF REMS Access program Only fentanyl product delivered nasally Rapid onset of action to handle breakthrough cancer pain May be used by patients with oral mucositis Opportunity for growth 19

20 Lazanda is a Great Fit for Depomed Attractive synergies and economics Brings third product focused on pain and leverages current infrastructure Purchase price of $4 million with LTM sales of $3.3 million (SHA June 2013) Opportunity for growth Relaunched by Depomed late 2013 Dedicated sales force focused on TIRF REMS prescribers New Signature Support program to assist physicians and patients Improved reimbursement support and co-pay assistance 20

21 Lazanda Annualized Gross Weekly Revenue Since Re-Launch $16,000,000 Annualized Gross Revenue $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Source: Symphony Healthcare Analytics PHAST (SHA Weekly Revenue x 52 weeks) 21

22 Three Acuform Technology Licenses Provide Significant Revenue Potential Both Near Term and Over the Next Decade Acetaminophen / opiate combination products with abuse resistance potential Xartemis XR approved March 2014; earned $10 million approval milestone and high single digit royalty starting 1Q 2014 MNK-155 NDA accepted for filing May 2014; $5 million milestone to Depomed $10 million approval milestone for MNK-155 possible in 2015 High single-digit royalties for 15+ years from first sale of each product NUCYNTA ER $10 million upfront; royalty revenue through 2021 New gastrointestinal program IW-3718 New program for refractory GERD Phase 2 initiated in March 2014; milestone earned Milestones and royalties 22

23 Depomed (DEPO): a Specialty Pharmaceutical Leader Focused in Pain and Neurology Four proprietary, marketed products with long-term, high growth opportunity Track record of creating value from product acquisitions Significant cash to acquire additional products to fuel growth Partnerships, technology and IP continue to provide value and upside 23

24 Non-GAAP Financial Measures Depomed is using for its 2014 guidance 2014 non-gaap adjusted earnings and non-gaap adjusted earnings per share. These operating metrics are non-gaap financial measures that Depomed believes provide supplementary information to investors. The Company uses these non-gaap measures in connection with its own planning and forecasting purposes and for measuring the Company s performance. These non-gaap financial measures should be considered in addition to, and not a substitute for, or superior to financial measures calculated in accordance with GAAP. Non-GAAP adjusted earnings and non-gaap adjusted earnings per share guidance for the year ending December 31, 2014 are not based on any standardized methodology prescribed by GAAP and represent GAAP net income and GAAP earnings per share adjusted to exclude (1) non-cash PDL royalty revenue, net of related cost, (2) non-cash interest expense on the liability related to the sale of future royalties and milestones to PDL, (3) amortization related to product acquisitions and (4) stock-based compensation expense, and to adjust (5) the income tax provision to reflect the estimated amounts payable in cash. 24

25 Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS Guidance for the Year Ending 12/31/14 GAAP EPS $ Non-cash PDL royalties, net ( ) Non-cash interest expense related to sale to PDL of royalties and milestones Amortization related to product Acquisition Stock based compensation Non-cash income tax adjustment Non-GAAP adjusted EPS $

26 Thank You Contact: August Moretti