Boston, MA 03/14/2014 (wallstreetpr) – Depomed Inc (NASDAQ:DEPO) is a specialty pharmaceutical company. The company licenses out its drug technologies and collects royalties on the same. The company is now set to receive $10 million after the U.S. Food and Drug Administration approved a drug developed by Mallinckrodt PLC using its technology. The drug is target at pain treatment.
Depomed Inc (NASDAQ:DEPO) licensed its drug delivery technology called Acuform to Mallinckrodt, a Dublin, Ireland based pharmaceutical company with headquarters in St. Louis, U.S. The company used Acuform in its drug Xartemis that is meant as a therapy for acute pain.
Shares of Depomed Inc (NASDAQ:DEPO) gained 10.67 percent to $14.94 in the last session. The gain came on the back a significant volume of shares changing hands. The excitement in the stock in the previous session saw the stock touching a new 52-week high at $15.39.
According to Depomed Inc (NASDAQ:DEPO) chief executive Jim Schoeneck, they expect significant revenue from royalty payments from the sale of Mallinckrodt’s drug.
Move to profits
Following a lucrative deal with PDL BioPharma, Depomed Inc (NASDAQ:DEPO) was able to swing to profits in the fourth quarter and it hopes that they days quarters are will even be better.
In the fourth quarter, Depomed Inc (NASDAQ:DEPO) reported $41.8 million profit or $0.72 per share. That compared with loss of $3.7 million or $0.07 per share in the corresponding quarter a year earlier. Revenue in the quarter was down 4.1 percent to $22.5 million. However, even with the slip in revenue figure year-over-year, the fourth quarter data still managed to beat estimates on both fronts. Analysts had predicted loss of $0.20 and revenue of $19.1 million.
The deal that defined performance strength
Depomed Inc (NASDAQ:DEPO)’s encouraging performance was largely due to the deal it entered in October with PDL BioPharma Inc (NASDAQ:PDLI). The deal allowed it to receive $240.5 million in cash for which it has now transferred its royalty rights of Type 2 diabetes products to PDL BioPharma Inc (NASDAQ:PDLI). The deal allows PDL BioPharma Inc (NASDAQ:PDLI) to receive royalty and milestone payment on the products until they total twice the amount of money it has given out.
