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FOR IMMEDIATE RELEASE
Depomed Comments on Recent Reports Regarding Horizon Pharmas Business Model
Reports Confirm Concerns Raised by Depomeds Board in Rejecting Horizons Unsolicited Exchange Offer
NEWARK, Calif., October 22, 2015 Depomed, Inc. (NASDAQ: DEPO) (Depomed or the Company) today issued the following statement in response to numerous recent reports surrounding Horizon Pharma plcs (NASDAQ: HZNP) (Horizon) business model, in particular concerns raised about aggressive drug pricing practices and Horizons use of specialty pharmacies:
Depomeds Board unanimously rejected Horizon Pharmas unsolicited exchange offer on September 11, 2015. In Depomeds Schedule 14D-9 filed with the SEC on September 14, 2015, the Company highlighted the Boards reservations about Horizons business model and strategy, while observing that the nature of Horizons business model had the potential to lead to significant volatility in the price of Horizon stock. Importantly, numerous reports in the past days from major media outlets to the firm that establishes one of the largest drug formularies have reiterated and validated these serious concerns.
For example:
· A September 23, 2015 note issued by Express Scripts, one of the largest managers of drug formularies, to its clients criticizes Horizons price increases, comparing Horizon to Turing Pharmaceuticals, and notes that Horizon, after purchasing the rights to Vimovo and with its own product, Duexis, soon increased the prices on these older products more than tenfold. This isnt innovation. Akin to a spike in gas and plywood prices just ahead of a hurricane, this is profiteering.
· An October 19, 2015 article in The New York Times discusses significant concerns about Horizons Prescriptions Made Easy (PME) program and notes that Duexis is a combination of two old drugs, the generic equivalents of Motrin and Pepcid, which if prescribed separately would cost no more than $20 or $40 a month, however Duexis, which contains both in a single pill, costs about $1,500 a month.
As noted in Depomeds September 14, 2015 letter to shareholders:
· We believe the frequency and magnitude of Horizons price increases are unsustainable: Horizon has implemented dramatically high price increases across most of its product portfolio, including increases of over 1,500% for Rayos® and nearly 1,200% for Vimovo® since those products were acquired or launched in 2012 and 2013, respectively. We do not believe these pricing strategies are conducive to building a stable and sustainable company that will create and deliver long-term value for its shareholders.
· Many of Horizons drugs have recently been removed from the largest PBMs: Due to Horizons dramatic price increases and what, in our view, is a lack of meaningful product differentiation, many of Horizons drugs have recently been removed from the largest PBM drug formularies and remain on the exclusion lists of the two largest PBMs through 2016.
We believe that as Horizon continues to increase the prices of its products well beyond the prices of competitive products, the trend of Horizon products being excluded from drug formularies may accelerate, posing further risks to Horizons business and long-term prospects.
· In our view Horizons Prescriptions Made Easy (PME) drug discount program has caused significant deterioration to Horizons realized net sales as a percentage of gross sales (gross to net): Horizons drug formulary exclusions have resulted in millions of patients not having access to Horizon products through their health insurance plans. Through Horizons PME drug discount program, Horizon covers up to 100% of the cost of its products that are not covered by such plans. Although Horizon believes that the continued expansion of its PME program will allow it to mitigate the impact of the drug formulary exclusions, we believe that Horizons reliance on PME discounts to generate growth in prescription volumes has caused significant deterioration in Horizons gross to net for many of its products. For example, the net sales as a percent of gross sales for each of Rayos and Pennsaid® 2% dropped from 60% to 45% and 36% to 27%, respectively, from the first quarter of 2015 to the second quarter of 2015.
Importantly, and in contrast to Horizons standard business practices, Depomed believes that each of our products has strong drug formulary access, demonstrates value to insurers as brands to secure coverage and not to be excluded, all while offering patients affordable co-pay access and are priced in line with market leading, branded competitors. In addition, unlike Horizon, less than 2% of the sales volume for Depomeds products, excluding Lazanda, were dispensed through specialty pharmacies. The Companys cancer pain product Lazanda and all other similar drugs are often dispensed through specialty pharmacies in order to secure managed care payment authorization for these highly potent and restricted drugs.
The Company also notes that had Depomeds Board allowed Horizon to proceed with its hostile offer, and with the haste insisted upon by Horizon, Depomed shareholders today would be receiving only about $14.00 for each share of Depomed stock.
Morgan Stanley & Co. LLC and Leerink Partners LLC are serving as financial advisors to Depomed and Baker Botts L.L.P. and Gibson, Dunn & Crutcher LLP are serving as legal counsel.
About Depomed
Depomed is a specialty pharmaceutical company that commercializes products for pain and neurology related disorders. Our NUCYNTA® franchise includes NUCYNTA® ER (tapentadol) extended release tablets indicated for the management of pain, including neuropathic pain associated with diabetic peripheral neuropathy (DPN), severe enough to require daily, around-the-clock, long-term opioid treatment, and NUCYNTA® (tapentadol), an immediate release version of tapentadol, for management of moderate to severe acute pain in adults. Gralise® (gabapentin) is a once-daily treatment approved for the management of postherpetic neuralgia. CAMBIA® (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug indicated for acute treatment of migraine attacks with or without aura in adults (18 years of age or older). Zipsor® (diclofenac potassium) Liquid Filled Capsules is a non-steroidal anti-inflammatory drug indicated for relief of mild to moderate acute pain in adults. Lazanda® (fentanyl) Nasal Spray is an intranasal fentanyl drug used to manage breakthrough pain in adults (18 years of age or older) who are already routinely taking other opioid pain medicines around-the-clock for cancer pain. Gralise, Nucynta ER and various partner product candidates are formulated with Depomeds proven, proprietary Acuform® drug delivery technology. Additional information about Depomed may be found at www.depomed.com.
Forward-Looking Statements & Other Legal Information
The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties including, but not limited to, those related to Depomeds prospects as a standalone business, Depomeds business strategy, expectations regarding Depomeds future financial results and the ability to create shareholder value, expectations regarding anticipated growth and the future contributions and potential of NUCYNTA, and other risks detailed in the companys Securities and Exchange Commission (SEC) filings, including the companys Annual Report on Form 10-K for the year ended December 31, 2014 and its most recent Quarterly Report on Form 10-Q. The inclusion of forward-looking statements should not be regarded as a representation that any of the companys plans, objectives or expectations will be achieved. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Our solicitation of revocations in the GREEN and GOLD cards allows Depomed shareholders to take action only with respect to the revocation of consents to the calling and holding of the proposed special meetings. Any action that you may take pursuant to such solicitation will not have a direct impact on the Horizon exchange offer, will not directly limit your ability to participate with respect to the exchange offer and will not constitute an affirmative vote for or against the exchange offer. Permission to include quoted materials was neither sought nor obtained.
Investor Contact:
Depomed, Inc.
August J. Moretti
Chief Financial Officer
510-744-8000
amoretti@depomed.com
or
Christopher Keenan
VP, Investor Relations and Corporate Communication
510-744-8000
ckeenan@depomed.com
Innisfree M&A Incorporated
Larry Miller / Jonathan Salzberger / Scott Winter
212-750-5833
Media Contact:
Joele Frank, Wilkinson Brimmer Katcher
Eric Brielmann
415-869-3950
Andy Brimmer and Averell Withers
212-355-4449