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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.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Thadd VargasSVPMarch 1463,869No14,079 shares81.9%
Matthew GoslingSVPMarch 1421,875No11,396 shares65.7%
James SchoeneckCEOMarch 1417,000No96,306 shares15.0%

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.

MonthInsider selling / sharesInsider buying / shares
March 2014102,7440
February 201400
January 201400
December 201335,2710
November 201300
October 201300
September 201300
August 201300
July 201300
June 201300
May 2013025,000
April 201300
March 201302,000
February 201300
January 201300

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

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

(Source: Earnings release)

Pipeline

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

(click to enlarge)

(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.

CompanyDEPOZGNXPCRXPOZN
Market Cap:836.43M493.97M2.40B266.70M
Employees:26511430816
Qtrly Rev Growth (yoy):0.530.052.212.46
Revenue:134.21M33.01M85.55M10.32M
Gross Margin:0.95-0.070.111.00
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:19.53N/AN/AN/A
PEG (5 yr expected):-6.10-0.24N/A0.43
P/S:6.3615.5128.1525.78
Insider Ownership:0.40%0.10%13.37%2.30%

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.

CompanyInsider buying / sharesInsider selling / shares
ZGNX67,0000
PCRX0159,887
POZN022,500

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.

Source: Depomed: 3 Different Insiders Have Sold Shares This Month