Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Depomed (NASDAQ:ASRT) jumped by more than 10% today after the company reported better-than-expected fourth quarter sales and earnings yesterday.
So what: Net product sales at the specialty pharmaceuticals company jumped by 80% to $33.9 million in the fourth quarter. Revenue growth was led by a 55% lift in sales of Gralise to $18.1 million and the inclusion of $6.3 million in revenue for the migraine drug Cambia, which Depomed relaunched in February. The company also reported that sales of its fentanyl nasal spray Lazanda increased by 244% to $2.67 million in the quarter.
The company's full year sales were similarly impressive. Total net product sales for the full year reached $114.2 million, up from $58.3 million in 2013 -- again, thanks to rising Gralise and Cambia sales.
The increase in revenue helped Depomed deliver $0.21 in adjusted EPS during the fourth quarter, which was $0.14 better than analysts expectations, and $0.26 for the full year.
Now what: Depomed is actively transitioning its business to focus on pain and neurology indications, and in January, the company announced that it is acquiring Johnson & Johnson's opioid pain reliever Nucynta for $1.05 billion. The Nucynta acquisition nets Depomed a new flagship product with annualized sales of $176 million that it plans to relaunch with a sales team of 250 people.
Since the company expects that its deal to acquire Nucynta will be immediately accretive and since Nucynta enjoys patent protection until at least 2022, the acquisition offers Depomed a unique opportunity to leverage its existing relationships with pain doctors. It will be a while before investors know how successful Depomed is at expanding Nucynta's sales, but the company does plan on updating its financial guidance for 2015 once the Nucynta acquisition closes. Since Depomed already expects to deliver ex-Nucynta net product sales of between $152 and $162 million this year, Depomed's growth could make this a stock to watch.