Depomed: Unique Proprietary Technology Gives Its Products a Clear Advantage

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Includes: DEPO, KG
by: Top Textrader

Anyone in the pharmaceutical world will tell you it pays to be different. Depomed (NASDAQ:DEPO) is attempting to see just how much it pays.

The company has already differentiated its products from others by marketing products developed from a proprietary technology named AcuForm. The technology is a drug delivery platform that improves upon the pharmacokinetics of a drug, and allows for greater bioavailibility, and absorption of the product when it is in the body.

This unique advantage allows drug compounds to be administered in larger doses to a patient without having to worry about an increase in side effects, while also providing shorter and more convenient dosing regimens.

This $200 million company takes popular best-selling drug compounds and reformulates them with the new technology, and then markets the new and improved version, to patients.

DEPO already sells two products Glumetza and ProQuin. Glumetza treats type II diabetes and Proquin treats urinary tract infections. Glumetza is an AcuForm-enhanced version of metformin. Metformin is an effective medicine that was first marketed in France in 1979. By incorporating its AcuForm technology with the medicine, DEPO is able to market the product as its own. The situation involving Proquin is similar. ProQuin is a uniquely formulated product of ciprofloxacin. It is more familiarly known as Cipro, a popular urinary tract antibiotic that is marketed by Bayer (BAY).

DEPO is working on several reformulations, including a drug for the treatment of Gastroesophageal Reflux Disease [GERD], and estimates that this will be the next drug that it launches.

Currently, King Pharmaceuticals (KG) is doing most of the selling for DEPO. The companies have a 50/50 agreement on the profits returned by the drugs. This past quarter, the company reported a huge jump in sales revenues year over year, from $1.3 million to $3.8 million. The downside in the earnings report was that the company did see an increase in drug development, marketing, and patent dispute costs.

At a recent Bank of America (NYSE:BAC) healthcare conference, company management made it clear that Glumetza is important to the success of the firm, because it is in a huge marketplace that writes more than 49 milion prescriptions. After defining the marketplace, management was quick to add that it is seeing strong double digit TRX script growth, quarter over quarter.

Because the company is growing its sales, and seems to have a proprietary technology that the FDA is allowing to come to market, I will continue to track it. Later this week, DEPO is presenting at the 6th Annual Needham & Company, LLC Biotechnology & Medical Technology Conference. I will be listening.

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