UPDATE 1-Depomed posts surprise Q3 profit

Mon Nov 1, 2010 5:12pm EDT

* Q3 EPS $0.04 vs est loss/shr $0.02

* Q3 revenue $20.1 mln in line with est

Nov 1 (Reuters) - Depomed Inc (DEPO.O) posted a surprise quarterly profit, helped by an upfront license fee from Merck & Co (MRK.N) and milestone revenue from two products.

For the third quarter, the specialty pharmaceutical company reported net income of $1.9 million, or 4 cents a share, compared with $1.4 million, or 3 cents a share, a year earlier. Revenue fell 13 percent to $20.1 million.

Analysts on average expected a loss of 2 cents a share, on revenue of $20.1 million, according to Thomson Reuters I/B/E/S.

The company recorded $6 million from milestones and received an upfront license fee of $10 million from Merck.

Operating expenses fell 22 percent to $15.7 million.

Depomed shares, which have risen 49 percent since the company posted its second-quarter results in August, closed at $4.94 on Monday on Nasdaq. (Reporting by Shravya Jain in Bangalore; Editing by Vinu Pilakkott)

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