Depomed: 3 Different Insiders Have Sold Shares This Month

Mar.17.14 | About: Depomed Inc. (DEPO)

Summary

Three insiders sold Depomed stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

All three of these insiders decreased their holdings by more than 10%.

Depomed (NASDAQ:DEPO) is headquartered in the United States and focuses on developing products for pain and diseases of the central nervous system.

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Insider selling during the last 30 days

Here is a table of Depomed's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Thadd Vargas SVP March 14 63,869 No 14,079 shares 81.9%
Matthew Gosling SVP March 14 21,875 No 11,396 shares 65.7%
James Schoeneck CEO March 14 17,000 No 96,306 shares 15.0%
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There have been 102,744 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Depomed's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
March 2014 102,744 0
February 2014 0 0
January 2014 0 0
December 2013 35,271 0
November 2013 0 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 0 25,000
April 2013 0 0
March 2013 0 2,000
February 2013 0 0
January 2013 0 0
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There have been 138,015 shares sold, and there have been 27,000 shares purchased by insiders since January 2013. The month of March 2014 has seen the most insider selling.

Financials

Depomed reported the full-year 2013 financial results on March 12 with the following highlights:

Revenue $134.2 million
Net income $43.3 million
Cash $276.0 million
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The three insiders sold their shares after these results.

Outlook

Depomed's 2014 guidance is as follows:

Product sales $115-$125 million
Total revenues $200-$215 million
GAAP EPS $0.21-$0.36
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(Source: Earnings release)

Pipeline

Depomed has four own approved products, and several partner product candidates in the various stages of development.

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(Source: Depomed)

On March 12, Depomed announced that the U.S. Food and Drug Administration approved Mallinckrodt plc's (NYSE:MNK) New Drug Application (NDA) for Xartemis XR. The NDA approval triggered a $10 million milestone payment to Depomed under Depomed's license agreement with Mallinckrodt.

Competition

Depomed's competitors include Zogenix (NASDAQ:ZGNX), Pacira Pharmaceuticals (NASDAQ:PCRX), and Pozen (NASDAQ:POZN). Here is a table comparing these companies.

Company DEPO ZGNX PCRX POZN
Market Cap: 836.43M 493.97M 2.40B 266.70M
Employees: 265 114 308 16
Qtrly Rev Growth (yoy): 0.53 0.05 2.21 2.46
Revenue: 134.21M 33.01M 85.55M 10.32M
Gross Margin: 0.95 -0.07 0.11 1.00
EBITDA: 14.80M -50.51M -47.67M -16.75M
Operating Margin: 0.07 -1.58 -0.62 -1.63
Net Income: 43.31M -80.86M -63.91M -16.71M
EPS: 0.75 -0.75 -1.93 -0.55
P/E: 19.53 N/A N/A N/A
PEG (5 yr expected): -6.10 -0.24 N/A 0.43
P/S: 6.36 15.51 28.15 25.78
Insider Ownership: 0.40% 0.10% 13.37% 2.30%
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Depomed has the second-lowest insider ownership among these four companies.

Here is a table of these competitors' insider activities during the last six months.

Company Insider buying / shares Insider selling / shares
ZGNX 67,000 0
PCRX 0 159,887
POZN 0 22,500
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Only Depomed has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Depomed, and there have not been any insiders buying Depomed during the last 30 days. All three of these insiders decreased their holdings by more than 10%. Depomed has an insider ownership of 0.40%.

There are three analyst buy ratings, one neutral rating, and zero sell ratings with an average price target of $11.63. Before going short Depomed, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst price targets, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.