Good afternoon. And welcome to the DepoMed Third Quarter Financial Results and Business Update Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to August Moretti, Chief Financial Officer. Please go ahead.

Thank you, Operator. Good afternoon. And welcome to our third quarter financial results and business update conference call. With me today are Jim Schoeneck, President and Chief Executive Officer of DepoMed; Matt Gosling, Senior Vice President and General Counsel; Dr. Mike Sweeney, Chief Medical Officer; and Jack Anders, Senior Director of Finance. Before we get started, I would like to remind you that the matters discussed on this call contain forward-looking statements that involve risks and uncertainties, including those relating to the commercial launches of Gralise and Zipsor, the efforts of Santarus to commercial Glumetza, the filing and acceptance of a new drug application for Serada, the completion of our Phase 2 clinical trial of DM-1992, litigation against the FDA relating to Orphan Drug exclusivity for Gralise, our projected revenue and expenses and the ability of DepoMed to support operations based on existing cash resources. Actual results may differ materially from the results predicted and recorded results should not be considered an indication of future performance. These and other risk factors are more fully discussed in our quarterly report on Form 10-Q that we filed with the SEC earlier today, most particularly under the caption Risk Factors. DepoMed disclaims any obligation to update or revise any forward-looking statement made on this call as a result of new information or future developments. As a reminder, Depomed’s policy is to only provide financial guidance and guidance on corporate goals for the current fiscal year and to provide, update or reconfirm its guidance only by issuing a press release or filing updated guidance with the SEC in a publicly-accessible document or providing or updating guidance on a publicly-accessible conference call or webcast investor presentation. Financial guidance relating to current cash, cash equivalents and investments is based upon balances as of September 30, 2012. All other guidance, including guidance relating to the company’s expected expense levels is as of today, November 5, 2012. I’ll now turn the call over to Jim Schoeneck.

Thanks, Augie, and thank to you for joining us on the call today. DepoMed continues to make substantial progress since our last call. Today, I will summarize the developments in our business. Then I will turn the call back to Augie to discuss our quarterly financial results. After that we’ll open the call to questions. To summarize, we’ve had a number of positive developments during the third quarter. Our Gralise launch continues to build nicely. Zipsor was re-launched after our acquisition of the product and Glumetza royalties continue to increase. Our NDA for Serada was formally accepted for filing in October and the FDA gave us a tentative date of March 4, 2013 for an advisory committee meeting to consider the application for Serada. And now let me give you more details on these developments. We continue to see increasing released weekly prescriptions and increasing number of prescribing physicians. During the third quarter, we recognized revenue on a prescription basis. As we monitor and analyze the Gralise business, we expect to change to revenue recognition on a sell in basis at some point in the future perhaps as early as fourth quarter. Gralise sales for the quarter were $4.8 million. We reported over 37,000 total prescriptions in the quarter, a 28% increase over second quarter. In the week ended October 26th, we hit a new all time weekly prescription high of 3,400 -- 3,543 prescriptions. Please note, we expect prescriptions to temporarily go down in the week of November 2nd, due to the devastating effects of Superstorm Sandy. More than 8,500 healthcare providers have written prescriptions for Gralise since the launch and the majority of those prescriptions have been written by pain specialists and neurologists. The important developments with our sales force in the third quarter. In September, we converted…

Thank you, Jim. I would now like to summarize the financial information that is included in the Form 10-Q for the quarter ended September 30, 2012, that we filed today with the SEC. I’d like to be clear at the outset that year-to-year comparisons of 2012 and 2011 results are complex. In the first nine month of 2011, we’ve recognized over $100 million related to our release agreement with Abbott and the termination of that agreement. We received $88 million in cash, consisting of a $48 million milestone payment, recognized as revenue and a $40 million payment received in connection with the termination of the agreement which was recorded as a reduction in expense. In addition, we also recognized $12.6 million in license revenue related to the Abbott agreement. Also, results for the nine months of 2012 reflect the effect of the restructuring of the Santarus agreement in August 2011, and a full nine months of sales and marketing expense related to Gralise. Jim provided a summary of the revenue and expense related to the Santarus agreement in the first three quarters of 2011, in contrast of the royalties received in the first three quarters of 2012. Also, Q3 2012 includes $10 million in revenue resulting from the upfront payment from Janssen relating to the Nucynta ER agreement. With that in mind, here’s a summary of the third quarter. Total revenue for third quarter of 2012 was $33.3 million, compared to $16.5 million for the third quarter of 2011. The increase in revenue is primarily a result of the $9.7 million of product sales for Gralise and Zipsor, and the recognition of $10 million upfront payment from Janssen relating to Nucynta ER as revenue in Q3, 2012. We began selling Gralise in October, 2011, and recognized revenue during the quarter…

Thanks Augie. In summary, we believe that we are making substantial progress for the objective of becoming a significant player in especially pharmaceuticals. We believe that we are establishing Gralise, as a potential standard-of-care for postherpetic neuralgia with over 8,500 physicians already prescribing the product. We’re enhancing our managed care coverage and patent position on Gralise, have added our -- to our marketed products with the addition of Zipsor and have filed the NDA for Serada. In addition, we’ve broadened our portfolio development agreements with the NUCYNTA ER agreement with Janssen. We are growing product revenues reporting $22 million in recurring revenue in the third quarter from Gralise, Zipsor, Glumetza, JANUMET XR and NUCYNTA ER. In the future, our six development agreements provide the potential for substantial milestones and royalties, plus we believe that Serada could provide a substantial upside. Our balance sheet continues to be a strength for the company. We are actively seeking to acquire in license or co-promote market or late stage differentiate assets that we can leverage with our sales force and it can help us meet short and longer term financial goals. We look forward to updating you on our progress throughout the year and we want to thank you for your continued support. I would now like to open the call for questions.

(Operator Instructions) Our first question comes from Scott Henry at Roth Capital.

Good afternoon, guys. Just a couple of questions. I guess for starters, Zipsor, it’s the first quarter, we’ve seen your report sales. How should we think about that 4.9 million as a quarterly run rate? I mean is that a demand number? Should we think about that number? It looked a little higher than I would have expected.

Scott, I think we had good demand on the product. As you know, the scripts have been down a little bit on Zipsor as we’re re-launching. There was about a 60-day period where there was no one selling and I think a bit of tail-off in the promotion at the end of Xanodyne’s time with it. So, I think at the point, we’re probably at about a run rate. We may see it dip just down a little bit in fourth quarter and that I’d expect it to start back up as the full force of our promotion so as to impact the prescriptions.

Okay. And if I recall -- correct me if I’m wrong, you have not had any Paragraph IV challenges on that product at this point in time, correct?

That’s correct, Scott.

Okay. Great. Shifting over to Gralise, the prescriptions have been moving up nicely. Do you still feel -- I believe you had soft guidance out there that you thought it could be at a run rate of $100 million exiting 2013, which would be a pretty strong showing. I’m just kind of curious if you still think that number is doable?

Yeah, Scott. We actually had backlog for this. We got into fall conferences and would see the $100 million run rate now hitting in 2014 rather than by the end of ‘13.

Okay. Thank you for that clarity. And as well any comments on when we look at the royalties, you’ve got the JANUMET XR and Nucynta royalties. It looks like there were about 600,000 in the quarter? I mean, is that a number that we should see grow or is there any kind of bolus in there from stocking or anything?

No bolus in that number. That’s all based on demand and pull-through and then the reorders behind it. So, I would expect just as the prescriptions are continuing to grow on the products. So we would continue to see that number grow.

Okay. And did you give guidance on cash at the end of the year? I may have missed that.

Yeah. Scott, we’ve had guidance throughout the year and our guidance now is between $75 million and $80 million at the end of the year.

Okay. And then I guess without getting into guidance, I guess a question Augie, when you look out at the numbers and you look at 2013, is it feasible that the company could switch into a continuing operations profitability company on a quarterly basis in the back half of 2013? I mean, do you think that’s around the time when you might start returning to profit? Is that a reasonable assessment?

Scott, a couple of caveats, one, we’re in the process of budgeting for next year and our cycle is that we would present that budget to the Board in kind of the December timeframe. So the budgeting is still incomplete. And as we look at next year, again, the results are highly dependent upon continued growth in Gralise and Zipsors contribution obviously will be very important next year, as well as the Santarus’ royalty. Having said all that, we think that we can be cash flow positive in the second half of next year.

Okay. That’s a great color on it. I guess, my final question, on Glumetza, if I look at the revenue per script number, it was very strong this quarter. If I recall, it was a little weak last quarter. Is this sort of normal variance there or is there any stocking that’s impacting it?

In Q3, we saw the full effects of the price increase that they took at the end of Q2. I think, from a stocking perspective, it was slightly north of prescriptions but nothing to really specifically talk about.

Okay. All right. Thank you for taking the questions.

Thanks, Scott.

Thank you, Scott.

Our next question comes from Jason Napodano at Zacks.

Good afternoon, everyone.

Hey, Jason.

Good afternoon, Jason.

So it looks like there could be a potential uptick in Gralise revenues in the fourth quarter due to the managed care wins and some of the flex reps kicking in. But I’d like to ask about the potential change in recognition. Can you give us a sense in the potential -- of the potential magnitude there? How much Gralise inventory is in the channel right now?

With regards to -- we have a deferred revenue balance of about $4.5 million. When we decide to do the flip, we’ll likely have to take additional reserves, which would bring down that number from $4.5 million. In terms of rough ballpark, I think, if you look about 50% of that, that’s probably within the range of what you suspect from a flex perspective.

Okay. And just as far as Zipsor, what’s the recognition on Zipsor, is that the same as Gralise or you recognizing a shift?

It is different from Gralise. It is recognized at the time of shipment.

Okay. Let me move on to 1992. Can you give us a sense of the plans there with 1992, if the data are positive, I know there is potential competing products out there under development, one of them is under FDA review? But give us a sense of the partner ability of that drug and what’s your plans might be, if the data are positive, but if maybe some competitors get to the market before you?

Jason, I’ll let Mike jump in with some additional comments. But in general, I think until we see that data I rather not speculate on that piece of it and where we may go with it. But, certainly, we’re very aware of the competitor product that’s currently under review. So, I mean, with that, Mike, anything you would add?

No. The analysis is going very well. The data has been clean and we see no problem with reporting results in the next couple of weeks.

Okay. What just kind a follow-up on that. I mean, besides 1992, obviously you’ve a got Serada which is under review? But with respect to the R&D effort really, where the R&D effort is really focusing right now or say by plans to focus in 2013? It seems like unless you acquire a late stage asset Phase 3 or Phase 2, or Phase 3 asset that most of the R&D effort right now is either on collaborative programs or very early stage stuff? Can you give us a sense of kind of from a long-term perspective where you see the R&D going and kind of what’s your thoughts on, I mean you’re looking for commercial assets, are you kind of shifting focus more towards the commercial company rather than a research and development type company?

I think, Jason, really around a balance there. I think, our focus in R&D really the big one for next year is the -- is Serada, with the advisory committee meeting coming up in March and then hopefully a subsequent approval by the PDUFA date. I think that’s really job one. I think in terms of the rest of it depending where the DM-1992 results come out, then we’ll be making decisions on where to go there. And then I think your point is on target, which is, beyond that we’ve got some things that may be earlier, but really would look at the acquisition side to bring in other things that are either potential things for us to develop or far enough along in development that would take them forward through registration and then to commercial. Mike, anything?

Yeah. That’s it. Jim just said, looking through the balance portfolio in R&D over the next year with a focus on getting Serada over the line.

Okay. And just to kind of build on that with respect to going out and acquiring, whether it’s acquiring commercial products or something that you would need to extend R&D on. When you look at your cash position and your guidance of $75 million to $80 million of cash at the end of the year and you look at what commercial products are costing nowadays, I mean the Zipsor deal was very stood deal in my opinion. But how many Zipsors are there out there and when you look at your cash position, can you give us a sense of that cash cushion that you’d like to have versus some of the deals that you’re looking at right now?

Jason, this is Augie. I think, again, from our perspective, at the end of the year we hit our guidance on cash. We had cash to run the business as it’s presently constituted and the two big items for us are Serada. If it gets approved, how is it commercialized and we are analyzing a whole range of opportunities across the spectrum, one end point of which is we commercialize it directly ourselves and the other is that we out license it. If we were to commercialize Serada ourselves, it’s going to require significant amount of cash.

I would just join there, Augie. It could a hybrid where we keep a market for ourselves and bring a partner in for another market on Serada.

Right. The other issue with respect to our, the strength in the balance sheet has to do with, where we are on licensing and acquisition activities. We continue to look at a range of opportunities and a range of sized opportunities. We are not in due diligence with anyone today and we are nowhere near a term sheet today. But it is something that is an important aspect of our strategy going forward. We would like to find at least one more product in the pain space or in adjacent areas that would make sense for our existing sales force. And it’s hard to predict, what the contours of that would be and exactly how much cash it might require. So, I’m not sure, I really answered your questions, other than just kind of drop out the perimeter of the issues from our perspective.

Yeah. Jason also we do think we’ve got good flexibility the fact that we’ve got no encumbrances on the balance sheet, the fact that we have got the royalty streams. So I think even beyond just purely thinking about equity, we’re having cash in the bank, we’ve got some other things that we could monetize to help with any acquisition.

That’s it, guys. That’s helpful. Thank you.

(Operator Instructions) And our next question comes from Jason Butler at JMP Securities.

Hi. This is actually [Chris Raydans] again for Jason. Just going back to 1992, I was wondering, if you could give us some of the details of the Phase 2 trial in Parkinson’s. I’m wondering how you define a positive outcome, is it simply a statistical significance or is a certain level of response you’d view as clinically meaningful? Thank you.

It’s a typical Phase 2 study. It is an open-label in which the patients are total operate two to three that we have them continue the background medication openly levodopa. And running to study, we take off the levodopa the night beforehand having previously asked them to fill in diaries whether they are off and on for the three days before that. We then give them either a regime with immediate release levodopa, which we stabilize over six days and then do efficacy on the last three for a 1992 bid regimen, which is the same thing, we stabilize over six days and then we access efficacy over the last three days. We then switch the patients back to the existing medication for a week and then repeat the other way around. So it’s a cross-over study in 34 patients. Obviously, with any study using the primary end point is the first definition of success. The second definition of success is just to look at overall in the context of Parkinson’s literature. And then two we actually -- the thing about the Phase 2 study is that it allows you to explore lots of different, its unlike a Phase 1 not as -- lots of different analysis, so populations et cetera to see which population was likely to benefit most from the drug and we will be doing all of that.

Great. Thank you.

If any other questions from you guys or on behalf of Jason?

We’re all set.

Okay. I’d like to thank everyone for their time and attention this afternoon. And I look forward to continuing the progress that we’ve made for a strong end of the year for DepoMed. So thank you for joining us.