Welcome to the DepoMed first quarter 2009 financial conference call. Just a quick note that today's conference is being recorded. With that, I would like to turn things over to Mr. Matt Gosling.

Good afternoon. This is Matt Gosling with DepoMed's Investor Relations Department. With me today are Carl Pelzel, President and Chief Executive Officer of DepoMed; Tammy Cameron, Vice President, Finance; and Dr. Mike Sweeney, Vice President, Research and Development. At the close of market today, we issued our financial results for the first quarter ended March 31, 2009. They can be accessed from our company website at www.depomed.com. Before we begin, I would like to remind you that during this call we will be making forward-looking statements related to various aspects of our business, including statements related to clinical development, financial matters, and commercialization of our marketed products. Actual results may differ materially from the results described. We encourage you to review the risk factors in our most recent annual report on Form 10-K. I will now turn the call over to Carl Pelzel.

Good afternoon and thank you for joining us for DepoMed's first quarter earnings call. I’d like to start our call today by thanking all the clinical investigators, patients, and DepoMed employees involved in our Serada phase III clinical trial program in menopausal hot flashes. It was just over a year ago that we learned of the results of our phase II study for Serada, our investigational extended release formulation of gabapentin for hot flashes. The phase III program is now fully enrolled, and we look forward to reporting topline results in the fourth quarter of this year. We feel the rapid enrollment in the phase II and phase III trial confirms the significant unmet need that exists for a non-hormonal treatment for hot flashes. Let me emphasize that we ended the first quarter of 2009 in a strong cash position with $94.1 million. Our substantial cash runway is the result of rigorously managing our expenses and leveraging our technology and portfolio to generate additional cash. Expenses in the first quarter were higher than in the third or fourth quarters of 2008 due to the fact that we had all three of our phase III trials enrolling in all geographies. This was anticipated and does not change our full year expense guidance for 2009. 2009 is a critical execution year for us. I will now review our progress to date toward achieving our goals. First on the clinical development front, we remain on track to report topline data later this year from all of our phase III clinical trials. Our Breeze 1 and Breeze 2 studies are fully enrolled, and our DM1796 study in PHN is on track to complete enrollment by August of this year. We are well on the way to completing our phase I study of DM1992 in…

Our major clinical goal in 2009 is to complete clinical development of both DM-1796 in PHN and Serada in menopausal hot flashes. For DM-1796, we remain on track to complete enrollment in our phase III clinical trial in PHN by the end of August 2009 and to announce topline results in the fourth quarter of this year. Assuming positive trial data, we expect to file the NDN in first quarter of 2010. We feel confident with out design based on some important learnings incorporated from our previous PHN trial that narrowly missed its primary endpoint. Those are, first, that we increase the power of our new trial by increasing the number of patients from the previous 407 to 450 patients, and reduce the number of treatment arms previously from three to the current two. Our new trial is powered to detect a 0.4 difference on the Likert Pain Scale with a p-value of 0.05 or less. Secondly, we have diversified the study’s geographic exposure by enrolling patients in Russia and Argentina in addition to the US. We believe that we are seeing more gabapentin-naïve patients outside the US with a high disease burden, which could be an advantage in terms of reaching statistical significance and may mitigate the effect of the awkward trend in placebo arms in neuropathic pain studies that several companies have seen over the past several years. Third, we’ve adjusted the eligibility criteria by requiring patients to have recovered from shingles for at least 6 months prior to the enrollment in our new trial while the cutoff was only three months in our previous trial. Our post hoc analysis of the previous trial showed that patients whose shingles rash had cleared for at least 3 months but less than 6 months prior to entry increased the overall efficacy observed in the placebo arm much more than they did in the active treatment arms. As for Serada, as Carl mentioned we completed enrollment of both Breeze 1 and Breeze 2 trials and expect to announce topline results for both of them simultaneously in the fourth quarter this year. Again, as with DM-1796, assuming positive trial data, we’d expect to file the NDA in the first quarter of 2010. We’re encouraged by the level of interest in the non-hormonal alternative treatment for menopausal hot flashes that we noticed during the recruitment of patients. We felt the rapid enrollment in this study confirms that there is a significant unmet need existing in the marketplace and look forward to the results later on this year. We also continue to invest in our early stage pipeline. We’ve initiated a phase I trial of DM-1992 in Parkinson’s patients in February following positive results of preclinical dog studies which were supported by the Michael J. Fox Foundation. We expect to report results this year for the phase I Parkinson study.

Thank you, Mike. Let me turn the call over to our Vice President of Finance, Tammy Cameron, so she can take us through our financial results for the first quarter.

Revenue for the three months ended March 31, 2009, was $9.9 million compared to $5.7 million for the three months ended March 31, 2008. The increase was driven by higher product sales and higher license revenue year over year. Product sales were $6.8 million in Q1 2009 versus $5.2 million in Q1 2008 and consisted largely of Glumetza product sales. The increase in product sales year over year was primarily due to price increases and sales of the 1000-mg formulation of Glumetza which we introduced in the middle of 2008. License revenue was $2.6 million in Q1 2009 versus $363,000 in Q1 2008. The increase in license revenue year over year was mainly driven by amortization of the $25 million upfront payment we received from Solvay in February 2009. We’re recognizing the $25 million upfront payment ratably over 4 years which is the estimated length of the time we have significant obligations under the arrangement. Operating expenses for the three months ended March 31, 2009, were $19 million, compared to $12.6 million for the three months ended March 31, 2008. The increase in operating expenses was primarily attributable to $4.5 million in promotion fee expense related to the company’s promotion agreement for Glumetza with Santarus. We began promotion of Glumetza in October 2008. We also had an increase in expenses associated with our ongoing phase III trial for Serada. Stock-based compensation expense was $700,000 for the three months ended March 31, 2009, as compared to $600,000 for the three months ended March 31, 2008. Net loss for the three months ended March 31, 2009, was $10.2 million, or $0.20 per share, compared to net loss of $7.3 million, or $0.16 per share for the three months ended March 31, 2008. Cash, cash equivalents, and marketable securities were $94.1 million as of March 31, 2009, compared to $82.1 million as of December 31, 2008. For 2009, we’d like to reaffirm our expense guidance provided in March. We expect SG&A expenses to be in the range of $18 to $20 million excluding any promotion fees paid to Santaru, which run through our income statement as a selling expense. We expect 2009 R&D expenses to be in the range of $34 to $37 million. Of that amount, approximately $19 million are related to external costs for our ongoing phase III study. So we expect our total 2009 R&D and SG&A expenses to be $52 to $57 million. We expect to end 2009 with $57 to $62 million in cash, which will include approximately $6.3 million debt. However, in order to be as conservative as possible, this cash number does not assume any success in monetizing non-core assets or any success related to milestones from existing deals in our operating plans. This is the worst-case scenario budgeting and therefore deal-related milestones, increases in Glumetza sales, and business development deals will all be upsize to this cash picture. Let me turn the call back to Carl to wrap up.

We believe that we’re well positioned in the current and future macroeconomic environment due to our strong cash position of $94.1 million at the end of the first quarter and ability to generate additional cash flow. We believe that our cash position is sufficient to sustain our operations in this challenging environment and that we could have multiple late-stage milestone events this year as well as commercial product opportunities that could propel to profitability. Our strategic objective is to build a valuable portfolio of multiple products over the next few years targeting a specialty field such as women’s health, so that the revenue stream of those products could drive us to profitability through a combination of partnerships and proprietary commercial capabilities. Our recent market research regarding the hot flash opportunity of Serada supports our assumptions about market potential and product profitability. Physicians and patients are eagerly looking for an alternative which is a non-hormonal treatment for hot flashes. With that, we’d like to open up the call to questions.

(Operator instructions) We will go first to Scott Henry with Roth Capital. Scott Henry – Roth Capital: I think everything is pretty straight forward this quarter. Obviously a lot of things to watch in the second half of the year, but a couple of minor questions. Glumetza roughly $6.6 million, is that a good number relative to scripts or is there stocking in either direction on that product?

We haven’t had any active stocking this year. What we have seen in fact is that the pipeline has shrunk a little bit, so wholesales traditionally were keeping 3 to 4 weeks of stock. It’s down to about 2, not really critical, those fluctuations often happen in the market place, but it’s not the result of anything that we’ve done. So no stocking efforts on our part. Scott Henry – Roth Capital: Carl, just a bigger picture question. Anything new on Solvay? Obviously people looking at that business for purchase. Any thoughts how that could impact DepoMed?

I guess the one thing to mention is that there are no provisions in the contract—change of control provision—that could change the obligations that Solvay or an acquirer might have, so if another words, if Solvay is acquired, the acquirer would have the same sales, marketing performance obligations that are currently in the contract, so over and above that, I’d just have to refer folks to Solvay for comment. Scott Henry – Roth Capital: As we look out for the rest of the year, maybe if you could just review the calendar as far as potential announcements in terms of what order would you expect things to happen as well as with Covidien and the Parkinson program in addition to the obvious big two programs.

I would expect that we’d be able to announce the first Covidien formulation some point in the near future. We would then be announcing the results of the Parkinson’s program in the third quarter, and then in the fourth quarter, the big events occur. That’s when we announce the results of the PHN and the Breeze 1 and Breeze 2 trial, and then interspersed in there could be additional business development deals that we haven’t talked about publicly, but might include some of the divestiture of non-core assets that we have alluded to. Scott Hendry – Roth Capital: When I look at it, it seems to me that the chances would heavily favor getting the hot flashes data before the PHN because hot flashes has completed enrollment. PHN won’t even complete till late August. I know you guys have said that they both happen around the same time, but is it reasonable to think that hot flashes should occur first?

Scott’s not exactly clear. Mike Sweeney and his team have recently put in some actions to accelerate PHN enrolment, and Argentina is now up and running, so had you asked here around three months ago, I might have said, yes, but frankly they’re pretty much neck and neck at the moment.

Your next question comes from the line of John Borzilleri with GRT Capital. John Borzilleri – GRT Capital: Carl, I wanted to see if after a few more days you had any more thoughts about the failure of XenoPort’s relevance or lack thereof to Depo. I was looking at a little bit of the details, and I think we discussed this, but in the trial they reported, it was a diabetic peripheral neuropathy trial that failed, and it had three doses of their drug’s placebo and Lyrica, so it had five arms, only 84 patients per arm, and their primary endpoint was mean 24 average pain intensity score. I’m not even really sure what that is. You don’t have a diabetic trial underway right now, right?

That’s correct John. John Borzilleri – GRT Capital: Can you just talk a little bit about how you look at their failure, and what it may or may not mean?

A couple of comments before I turn it over to Mike Sweeney, and one is obviously the best people to answer this question are the folks at XenoPort, but I’ll hitchhike on two things that they mentioned. Number one and one that you did, the numbers are small, so it’s a phase II trial. The number of patients per arm is very small, and I think that is relevant to us because as Mike Sweeney indicated one of the changes we made to our second PHN trial was specifically to reduce the number of arms and increase the number patients per arm such that we increase the likelihood of showing a difference, so numbers matter, number one. Number two, in their press release, they indicated that one issue they may have bumped up against was the fact that they conducted the trial in the US, and it’s difficult to find naïve patients in the US with a broad availability of gabapentin and Lyrica, and again Mike Sweeney modified our second trial to include patients in Russia and Argentina where you can get patients who haven’t previously been through a course of Lyrica or gabapentin, so while I really comment on XenoPort’s trial, that’s for them to do, I think it does focus some attention on some of the positive changes that we’ve made to our trial.

The point we need to emphasize is that we took this into account in the design of our study in that we have a phase III study. We have 225 patients per group as opposed to depending on the randomization round about 62, around about 120 per group for XenoPort. In addition, we’ve also had patients who have had stable disease for six months. We have anticipated that the placebo responses increasing as the literature suggests, and as such we have powered for 0.4 units over placebo with a large number of patients with 90% power, so we are confident that our study is adequately power designed and is a phase III study as opposed to the XenoPort which was a well-designed phase II study. John Borzilleri – GRT Capital: You also went from 14 weeks to 10 weeks in the phase III, right?

No. We’ve always been 10 weeks. Our first phase III was 10 weeks, our second phase III was 10 weeks. John Borzilleri – GRT Capital: We’ve got no information from XenoPort about their dropout rates, right?

I’m not aware that. You’d really have to ask them about that John. John Borzilleri – GRT Capital: Your trial, one of the selling points is that you seem to have a very good safety profile. Is there any update at all on patient retention in the trial?

I can’t comment on that at this stage. It’s an ongoing study.

Your next question comes from the line of John Gordon with Deltec Asset Management. John Gordon – Deltec Asset Management: I can’t remember exactly what phrasing you used with respect to Covidien, but I thought I heard you say that there was at least a possibility of significant, if that’s the right adjective, payments that might come due at some point in 2010 and let’s assuume it’s the latter half of 2010, and I guess I would have thought that since we are only at the very initial stages of what you’re doing with Covidien as mysterious as it is that the prospect of actually getting meaningful bucks even on December 31, 2010, wouldn’t that be great, so maybe I misinterpreted the adjective you used, but could you just explain how we can go from more or less nascent little activity to something that might actually have some meaningful cash distributions by the end of 2010?

Yes. I wish I could be completely open on this John. Obviously, we have to determine what we are going to say about these with Covidien, and these four products will be competing in a highly competitive area, so they’re a little reluctant to give an awful lot of detail. The reason for the phraseology around my comment is based on the fact that we anticipate the first milestone to occur this year, and that will be a modest milestone, but then as Covidien takes on the development of these products, the milestones will be more significant as time goes on, so what really what I was trying to communicate was that you shouldn’t look at the first milestone as an indicator of the magnitude of the milestones that’ll follow and that they will get richer as time goes on, and I think as we already said on a different call that each of the four products carries with it up to $16 million in milestones per product, so if we as planned turn over two formulations to them this year, and those two products begin the development process that we can see richer milestones than the initial one coming from both of them as time progresses. I’m not able to shed an awful lot of light, but hopefully I explained why my comments were structured the way they were. John Gordon – Deltec Asset Management: But you did use an adjective that was the least anonymous with significant.

You’ve got me in a corner, yes. John Gordon – Deltec Asset Management: When you were talking about the potential, I think you said sales but maybe it was offloading of non-core assets, I don’t know whether GERD hit that category or not. I’d be interested to have any comment you might provide on that, but I guess the second more fundamental question is since you’re talking about selling or offloading, it sounds as though you are literally passing it on to somebody else and you walk off into the sunset hopefully a little richer as opposed to staying in some capacity as a partner or having some continuing interest, so I’m just trying to figure out what exactly is happening first of all, but secondly how do you determine what is something you actually are going to hunt around for a partner for so you keep some residual interest and how do you define what’s just for sale at a given price?

I didn’t mean to use the word offload, hope I didn’t, but the non-core assets I’m referring to are the Parkinson’s program, the GERD program, and ProQuin, and as you might imagine those are very different. ProQuin, we are looking to sell that product. GERD is non-core because we don’t anticipate promoting that product at any point ourselves to a women’s health audience, but we would expect ongoing revenue to come back to DepoMed subsequent to any deal, and the same will be true for Parkinson’s disease, so based on that, we might want to lump the Parkinson’s program and GERD into one basket that says we want to partner these, we want some initial upfront payments, and we want an ongoing royalty stream, and ProQuin, we are going to have to see what the deal might look like. I could envision selling the compound outright. I could also envision an upfront with some continuing royalty, so since we are in discussions, that’s something we’ll just have to see evolve. John Gordon – Deltec Asset Management: With respect to Parkinson’s and GERD, particularly since the drug delivery mechanism is integral to what you’re doing, you would anticipate that if you are successful in “selling” your interest, you’d keep some residual royalty opportunity?

Yes.

(Operator Instructions). To this point, Mr. Gosling no one else has signaled with any questions.