DepoMed, Inc. (DEPO) -Buzz Stock of the Day

Posted on Monday, January 31st, 2011

Shares of drug maker DepoMed, Inc. (Nasdaq: DEPO) surged as much as 37 percent from Friday’s closing price in morning trading on Monday after the company announced that its one-a-day pain drug for shingles, Gralise was approved by the U.S. Food and Drug Administration. The announcement was made last Friday at 7:30 p.m. EST.

“Importantly, the label stated that Gralise is not interchangeable with other gabapentin products. We view this as a major victory that is preventing substitution at the pharmacist level,” Roth Capital Partners analyst Scott Henry told Reuters.

Shares of DepoMed climbed as high as $8.60 per share, up from Friday’s closing price of $6.24. Shares opened markedly higher, at $8.50 on Monday.

The drug is licensed to Abbot Products, Inc. (NYSE: ABT) in the U.S., Canada and Mexico, and the FDA approval triggers a milestone payment of $48 million from Abbott to Depomed.  The licensing deal also includes sales milestone payments of up to $300 million, and calls for Depomed to receive royalties of 14 percent-20 percent on sales of Gralise.

“We are delighted with the approval of Gralise, which marks the third FDA approval of a product developed by DepoMed. Further, FDA has granted GRALISE Orphan Drug status, recognizing GRALISE as an important treatment option for patients who suffer from the pain of PHN,” said Dr. Michael Sweeney, DepoMed’s Vice President of Research and Development, in a statement. ” We are also very pleased with the product label FDA has approved.”

DepoMed’s other FDA approved drugs include Glumetza for the treatment of type 2 diabetes in the United States and Canada; and Proquin XR for the treatment of uncomplicated urinary tract infection in the United States.

The Menlo Park-based company also has collaboration and license agreements with Solvay Pharmaceuticals, Inc.; PharmaNova, Inc.; Santarus, Inc.; Merck & Co., Inc.; Covidien, Ltd.; TEVA Pharmaceuticals USA, Inc.; King Pharmaceuticals, Inc.; Esprit Pharma, Inc.; LG Life Sciences, Ltd.; Rottapharm/Madaus S.r.l.; PharmaNova, Inc.; and Supernus Pharmaceuticals, Inc.

Shares of Depomed, Inc. are up about 65 percent over the past three months.

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