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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

 

 

OR

 

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

FOR THE TRANSITION PERIOD FROM                  TO                   

 

 

COMMISSION FILE NUMBER 000-23267

 

DEPOMED, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

CALIFORNIA

 

94-3229046

(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

 

(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

 

1360 O’BRIEN DRIVE
MENLO PARK, CALIFORNIA 94025

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

 

(650) 462-5900

  (REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.

 

YES

 

ý

 

NO

 

o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes  o   No  ý

 

The number of issued and outstanding shares of the Registrant’s Common Stock, no par value, as of August 11, 2003 was 25,719,825.

 

 

 

DEPOMED, INC.

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements (Unaudited):

 

 

Balance Sheets at June 30, 2003 and December 31, 2002

 

 

Statements of Operations for the three-month and six-month periods ended
June 30, 2003 and 2002, and for the period from inception (August 7, 1995)
to June 30, 2003

 

 

Statements of Cash Flows for the six-month periods ended June 30,
2003 and 2002, and for the period from inception (August 7, 1995)
to June 30, 2003

 

 

Notes to Financial Statements

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Item 4. Controls and Procedures

 
PART II - OTHER INFORMATION

 

Item 4. Submission of Matters to a Vote of Security Holders

 

Item 6. Exhibits and Reports on Form 8-K

 

Signatures

 

 

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

 

DEPOMED, INC.
(A Development Stage Company)

 

BALANCE SHEETS

 

 

 

June 30, 2003

 

December 31, 2002

 

 

 

(Unaudited)

 

(See Note 1)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

9,372,605

 

$

11,533,326

 

Marketable securities

 

13,061,159

 

8,684,647

 

Accounts receivable

 

340,314

 

301,869

 

Prepaid and other current assets

 

621,977

 

534,351

 

Total current assets

 

23,396,055

 

21,054,193

 

 

 

 

 

 

 

Property and equipment, net

 

1,853,261

 

1,833,208

 

Other assets

 

326,136

 

291,876

 

 

 

$

25,575,452

 

$

23,179,277

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

3,501,350

 

$

4,803,672

 

Accrued compensation

 

533,727

 

429,491

 

Accrued clinical trial expense

 

873,142

 

2,381,609

 

Other accrued liabilities

 

155,467

 

218,548

 

Capital lease obligation, current portion

 

20,030

 

14,870

 

Long-term debt, current portion

 

384,726

 

420,850

 

Other current liabilities

 

38,731

 

305,166

 

Total current liabilities

 

5,507,173

 

8,574,206

 

 

 

 

 

 

 

Capital lease obligation, non-current portion

 

21,575

 

22,653

 

Long-term debt, non-current portion

 

183,194

 

362,567

 

Promissory note to related party

 

9,004,913

 

8,618,717

 

 

 

 

 

 

 

Preferred stock, no par value; 5,000,000 shares authorized;

 

 

 

 

 

Series A convertible exchangeable preferred stock: 25,000 shares designated, 12,015 shares issued and outstanding at June 30, 2003 and December 31, 2002

 

12,015,000

 

12,015,000

 

 

 

 

 

 

 

Commitments

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ deficit:

 

 

 

 

 

Common stock, no par value, 100,000,000 shares authorized;

 

 

 

 

 

25,719,725 and 16,460,566 shares issued and outstanding at June 30, 2003 and December 31, 2002

 

76,390,458

 

56,679,288

 

Deferred compensation

 

(990,765

)

—

 

Deficit accumulated during the development stage

 

(76,566,257

)

(63,095,890

)

Accumulated other comprehensive income

 

10,161

 

2,736

 

Total shareholders’ deficit

 

(1,156,403

)

(6,413,866

)

 

 

$

25,575,452

 

$

23,179,277

 

 

See accompanying notes to Financial Statements.

 

3

 

DEPOMED, INC.
(A Development Stage Company)

 

STATEMENTS OF OPERATIONS
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Period From
Inception
(August 7, 1995)
to June 30,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

 

2003

 

2002

 

2003

 

2002

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Collaborative agreements

 

$

118,640

 

$

14,004

 

$

505,626

 

$

151,513

 

$

4,316,649

 

Collaborative agreements with affiliates

 

—

 

596,563

 

—

 

1,080,771

 

5,101,019

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

118,640

 

610,567

 

505,626

 

1,232,284

 

9,417,668

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

6,295,284

 

4,948,975

 

12,060,364

 

9,536,580

 

66,902,453

 

General and administrative

 

839,144

 

1,320,125

 

1,609,169

 

1,950,097

 

16,890,433

 

Purchase of in-process research and development

 

—

 

—

 

—

 

—

 

298,154

 

 

 

 

 

 

 

 

 

 

 

 

 

Total o