Jason Napodano, CFA
Research analyst, medium-term horizon, biotech, small-cap

Depomed Shares Offer 50% Upside Over The Next Six Months

On August 6, 2014, Depomed, Inc. (NASDAQ:DEPO) reported financial results for the second quarter ended June 30, 2014. Total revenues in the quarter were $67.7 million, up 126% from the second quarter 2013 and handily beating Street expectations of only $38.0 million. However, we note almost all the upside came from greater than expected recognition of non-cash royalties associated with the PDL BioPharma transaction in October 2013. Revenues from product sales totaled $28.2 million, up 100% year-over-year and dead-on with our forecast. Licensing and milestone revenues of $5.8 million were up 658% from the second quarter 2014 and generally in-line with our thinking. The table below provides greater detail on each line item:

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For the

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