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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 SEPTEMBER 30, 2004

 

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  ý  No  o

 

The number of issued and outstanding shares of the Registrant’s Common Stock, no par value, as of October 29, 2004 was 34,643,263.

 

 


 

DEPOMED, INC.

 

 

PART I – FINANCIAL INFORMATION

 

 

 

PAGE

Item 1. Condensed Consolidated Financial Statements (Unaudited):

 

 

 

 

 

Condensed Consolidated Balance Sheets at September 30, 2004 and December 31, 2003

3

 

 

 

 

Condensed Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2004 and 2003, and for the period from inception (August 7, 1995) to September 30, 2004

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2004 and 2003, and for the period from inception (August 7, 1995) to September 30, 2004

5

 

 

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

 

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

12

 

 

 

Item 4. Controls and Procedures

26

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 6. Exhibits and Reports on Form 8-K

26

 

 

 

Signatures

27

 


 

PART I – FINANCIAL INFORMATION

ITEM 1.            CONSOLIDATED FINANCIAL STATEMENTS

 

DEPOMED, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30,
2004

 

December 31,
2003

 

 

 

 

 

(See Note 1)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,263,857

 

$

20,044,698

 

Marketable securities

 

22,037,366

 

24,210,562

 

Accounts receivable

 

27,675

 

278,452

 

Prepaid and other current assets

 

455,735

 

692,191

 

Total current assets

 

23,784,633

 

45,225,903

 

Property and equipment, net

 

3,454,134

 

2,140,610

 

Other assets

 

326,136

 

326,136

 

 

 

$

27,564,903

 

$

47,692,649

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,409,807

 

$

2,024,221

 

Accrued compensation

 

742,961

 

809,509

 

Other accrued liabilities

 

621,669

 

468,981

 

Capital lease obligation, current portion

 

32,781

 

26,384

 

Long-term debt, current portion

 

128,992

 

289,555

 

Deferred revenue, current portion

 

75,000

 

—

 

Total current liabilities

 

3,011,210

 

3,618,650

 

Capital lease obligation, non-current portion

 

—

 

12,808

 

Long-term debt, non-current portion

 

—

 

73,012

 

Promissory note, non-current portion

 

10,053,372

 

9,412,025

 

Deferred revenue, non-current portion

 

512,500

 

—

 

Commitments

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock, no par value; 5,000,000 shares authorized; Series A convertible preferred stock; 25,000 shares designated, 15,821 and 12,015 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively

 

12,015,000

 

12,015,000

 

Common stock, no par value, 100,000,000 shares authorized; 34,643,263 and 34,569,212 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively

 

116,875,654

 

116,540,841

 

Deferred compensation

 

(704,902

)

(863,872

)

Deficit accumulated during the development stage

 

(114,125,034

)

(93,110,988

)

Accumulated other comprehensive loss

 

(72,897

)

(4,827

)

Total shareholders’ equity:

 

13,987,821

 

34,576,154

 

 

 

$

27,564,903

 

$

47,692,649

 

 

See accompanying notes to Condensed Consolidated Financial Statements.

 

3


 

DEPOMED, INC.

 (A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

Period From
Inception
(August 7, 1995) to
September 30,
2004

 

 

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Collaborative agreements

 

$

51,594

 

$

364,550

 

$

171,319