DEPOMED INC
POS AM, 1998-11-05
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH
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<PAGE>
 
    As filed with the Securities and Exchange Commission on November 5, 1998
                                                      Registration No. 333-25445

================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                         POST-EFFECTIVE AMENDMENT NO. 1
                                       TO
                                   FORM SB-2
                       REGISTRATION STATEMENT ON FORM S-3
                                     UNDER
                           THE SECURITIES ACT OF 1933

                                 DEPOMED, INC.
             (Exact name of registrant as specified in its charter)

         CALIFORNIA                                     94-3229046
(State or other jurisdiction of                (I.R.S. employer identification
incorporation or organization)                            number)

       366 LAKESIDE DRIVE, FOSTER CITY, CALIFORNIA 94404, (650) 513-0990
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                              JOHN W. FARA, Ph.D.
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                 DEPOMED, INC.
                              366 LAKESIDE DRIVE
                         FOSTER CITY, CALIFORNIA 94404
                                (650) 513-0990
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)


                                  Copies to:

                           STEPHEN C. FERRUOLO, ESQ.
                        Heller Ehrman White & McAuliffe
                             525 University Avenue
                          Palo Alto, California 94301
                            (650) 324-7000 (phone)
                             (650) 324-0638 (fax)

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.


If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[_]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box.[_]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.[_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[_]


THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A 
registration statement relating to these securities has been filed with the 
Securities and Exchange Commission. These securities may not be sold nor may 
offers to buy be accepted prior to the time the registration statement becomes 
effective. This prospectus shall not constitute an offer to sell or the 
solicitation of an offer to buy nor shall there be any sale of these securities 
in any State in which such offer, solicitation or sale would be unlawful prior 
to registration or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++


     PROSPECTUS (Subject to Completion) Dated November 5, 1998

                                 DEPOMED, INC.
                   1,435,834 Shares of Common Stock Issuable
                           Upon Exercise of Warrants

              117,917 Representative's Warrants to Purchase Units
       Consisting of One Share of Common Stock and One Redeemable Warrant

                       117,917 Shares of Common Stock and
               117,917 Redeemable Common Stock Purchase Warrants


                            _______________________

  This prospectus relates to the offer by DepoMed, Inc., a California
corporation, of 1,435,834 shares of its common stock, no par value.  1,200,000
of the shares of common stock are issuable upon exercise of publicly-traded
redeemable common stock purchase warrants ("redeemable warrants") issued in the
company's initial public offering completed November 10, 1997 (the "IPO").
117,917 of the shares are issuable upon exercise of representative's warrants
(which we will refer to in this prospectus as "representative's warrants") to
purchase units consisting of one share of common stock and one redeemable
warrant.  The company issued the representative's warrants to the underwriter of
the IPO and certain affiliates of the underwriter in connection with the IPO.
The remaining 117,917 of the shares are issuable upon exercise of the redeemable
warrants issuable upon exercise of the representative's warrants.

  This prospectus also relates to the resale by certain of the company's
security holders of 117,917 representative's warrants,  the 117,917 shares of
common stock and the 117,917 redeemable common stock purchase warrants included
in the units which are issuable upon exercise of the representative's warrants.
See "Selling Security Holders."

  On November 4, 1998, DepoMed had 6,463,438 shares of its common stock and
1,200,000 redeemable warrants issued and outstanding.  Our common stock trades
on the Nasdaq SmallCap Market under the symbol "DPMD" and our redeemable
warrants trade on the Nasdaq SmallCap Market under the symbol "DPMDW".  On
November 4, 1998, the last reported sale price of the common stock on the Nasdaq
SmallCap Market was $9.38 per share and the last reported sale price of the
redeemable warrants was $3.75 per warrant.

  Beginning on page 4, we have listed several "RISK FACTORS" which you should
consider.  You should read the entire prospectus carefully before you make your
investment decision.

                            _______________________

  The Securities and Exchange Commission and state regulatory authorities have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete.  Any representation to the contrary is a criminal
offense.

                            ________________________

                The Date of this Prospectus is November __, 1998
<PAGE>
 
  You should rely only on the information contained in this prospectus.  We have
not authorized anyone to provide you with information different from that
contained in this prospectus.  The securities offered hereby are being offered
in jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of the
securities.

   In this prospectus, the "company," the "Registrant," "DepoMed," "we," "us,"
                        and "our" refer to DepoMed, Inc.

                      WHERE YOU CAN FIND MORE INFORMATION

  We file annual, quarterly, and current reports, proxy statements, and other
documents with the Securities and Exchange Commission (the "SEC").  You may read
and copy any document we file at the SEC's public reference room at Judiciary
Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.  You
should call 1-800-SEC-0330 for more information on the public reference room.
The SEC maintains an internet site at http://www.sec.gov where certain
information regarding issuers (including DepoMed) may be found.

  This prospectus is part of a registration statement that we filed with the SEC
(Registration No. 333-25445).  The registration statement contains more
information than this prospectus regarding DepoMed and its securities, including
certain exhibits and schedules.  You can get a copy of the registration
statement from the SEC at the address listed above or from its internet site.

                      DOCUMENTS INCORPORATED BY REFERENCE

  The SEC allows us to "incorporate" into this prospectus information we file
with the SEC in other documents.  This means that we can disclose important
information to you by referring to other documents that contain that
information.  The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus.  We incorporate by reference the documents listed below, except to
the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
we terminate the offering of these securities.


<TABLE>
<CAPTION>
                SEC Filing
          (File No. 001-13111                                     Period/Filing Date
          -------------------                                     ------------------         
<S>                                                      <C>
Annual Report on Form 10-KSB                             Year ended December 31, 1997
Quarterly Reports on Form 10-QSB                         Quarter ended March 31, 1998
                                                         Quarter ended June 30, 1998
                                                         Quarter ended September 30, 1998
Registration Statement on Form 8-A describing the        Filed on October 27, 1997
 common stock
</TABLE>


You may request a copy of these documents, at no cost, by writing to:

                    DepoMed, Inc.
                    366 Lakeside Drive
                    Foster City, California 94404
                    Attention: Investor Relation Department
                    Telephone:   (650) 513-0990.

                                       2
<PAGE>
 
                          FORWARD-LOOKING INFORMATION
                                        
  Statements made in this prospectus or in the documents incorporated by
reference herein that are not statements of historical fact are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").  A number of risks and uncertainties,
including those discussed under the caption "Risk Factors" below and the
documents incorporated by reference herein could affect such forward-looking
statements and could cause actual results to differ materially from the
statements made.

                               ABOUT THE COMPANY

  We are a development stage company engaged in the development of new and
proprietary oral drug delivery technologies.  We have developed two types of
oral drug delivery systems, the Gastric Retention System and the Reduced
Irritation System (the "DepoMed Systems").  The Gastric Retention System is
designed to be retained in the stomach for an extended period of time while it
delivers the incorporated drug or drugs, and the Reduced Irritation System is
designed to reduce the gastrointestinal irritation that is a side effect of many
orally administered drugs.  In addition, the DepoMed Systems are designed to
provide continuous, controlled delivery of an incorporated drug.

                                       3
<PAGE>
 
                                  RISK FACTORS

  You should consider carefully the following risk factors, along with the other
information contained or incorporated by reference in this prospectus, in
deciding whether to invest in our securities.  These factors, among others, may
cause actual results, events or performance to differ materially from those
expressed in any forward-looking statements we made in this prospectus.

  Early Stage of Development; Limited Revenues.  We are at an early stage of
development.  Accordingly, our business is subject to all of the business risks
associated with a new enterprise, including:

     .  uncertainties regarding product development;
     .  lack of collaborative partnering relationships;
     .  lack of revenue and uncertainty regarding future revenues;
     .  limited financial and personnel resources; and
     .  lack of established credit facilities.
 
  At September 30, 1998, we had an accumulated deficit of approximately $4.0
million. As we expand our research and development efforts, we anticipate that
we will continue to incur substantial operating losses for at least the next
several years. Therefore, we expect our cumulative losses to increase. To date,
we have had no revenues from product sales and only minimal revenues from our
collaborative research and development arrangements and feasibility studies. Our
success will depend on commercial sales of products that generate significant
revenues for us. We may not be able to achieve commercial sales of any revenue-
generating products.

  Product Development Risks.  Our research and development programs are at an
early stage. Pharmaceutical companies cannot incorporate the DepoMed Systems
into pharmaceutical products until we or our collaborative partners complete
substantial additional research and development on the DepoMed Systems.  Even if
we or our collaborative partners develop the DepoMed Systems, they or products
using them:

     .  may not be offered for commercial sale; or
     .  may prove to have undesirable or unintended side effects that prevent or
        limit their commercial use.

  Before we or others make commercial sales of  products using the DepoMed
Systems, we or our collaborative partners must:

     .  conduct clinical tests showing that these products are safe and
        effective; and
     .  obtain regulatory approval.
 
  This process involves substantial financial investment.  Successful commercial
sales of any of these products requires:

     .  market acceptance;
     .  cost-effective commercial scale production; and
     .  reimbursement under private or governmental health plans.
 
  We will have to curtail, redirect or eliminate our product development
programs if we or our collaborative partners find that:

     .  the DepoMed Systems prove to have unintended or undesirable side
        effects; or
     .  products which appear promising in preclinical studies do not
        demonstrate effectiveness in larger-scale clinical trials.

  These events could have a material adverse effect on the company.

  Need For Substantial Additional Funds.  We anticipate that our existing
capital resources will permit us to meet our capital and operational
requirements through at least the end of 1999.  However, we base this
expectation on our current operating plan which can change as a result of many
factors.  Accordingly, we could require additional funding sooner than
anticipated. Our cash needs may also vary materially from our current
expectations because of numerous factors, including:

     .  results of research and development;

                                       4
<PAGE>
 
     .  relationships with current and potential collaborative partners;
     .  changes in the focus and direction of our research and development
        programs;
     .  technological advances; and
     .  results of clinical testing, requirements of the United States Food and
        Drug Administration (the "FDA") and comparable foreign regulatory
        agencies.

  We will need substantial funds of our own or from third parties to:
     .  conduct research and development programs;
     .  conduct preclinical and clinical testing; and
     .  manufacture (or have manufactured) and market (or have marketed)
        potential products using the DepoMed Systems.
 
  Our existing capital resources will not be sufficient for us to operate until
we generate revenues sufficient to support our operations.  We have limited
credit facilities and no other committed source of capital.  We will have to
raise additional funds to continue our development programs.  We may not be able
to raise such additional capital on favorable terms, or at all.  If the company
raises additional capital by selling its equity or convertible debt securities,
the issuance of such securities could result in dilution to our shareholders.
If adequate funds are not available the company may have to:

     .  curtail operations significantly; or
     .  obtain funds through entering into collaboration agreements on
        unattractive terms.
 
  If we are not able to raise capital, we will be materially adversely effected.

  Dependence on and Need for Collaborative Partners. We have generated all of
our revenues through collaborative arrangements with pharmaceutical and
biotechnology companies.  Our strategy for research, development, clinical
testing, manufacturing and commercial sale of products using the DepoMed Systems
requires that we maintain our current collaborative arrangements and enter into
additional collaborative arrangements.  The success of collaborative
arrangements requires that the company's present and future collaborative
partners:

     .  perform their obligations as expected; and
     .  devote sufficient resources to the development, clinical testing and
        marketing of products developed under collaborations.

  The company's collaborative partners may not continue to:

     .  fund their particular projects;
     .  perform their agreed-to obligations; or
     .  choose to develop or make commercial sales of products using the DepoMed
        Systems.
 
  For example, Bristol-Myers Squibb Company ("BMS") holds an option to license
the DepoMed Gastric Retention System for its product.  The option expires in
April 1999.  BMS has no obligation to exercise its option and may choose not to
exercise its option.  In 1997, GalaGen Inc. ("GalaGen") chose not to enter into
a product development agreement with the company even though the results of a
feasibility study demonstrated the effectiveness of the Gastric Retention System
in protecting GalaGen's incorporated product.

  Further, the company may not be able to enter into future collaborative
arrangements on acceptable terms.  The following events could have a material
adverse effect on the company:

     .  any parallel development by a collaborative partner of competitive
        technologies or products;
     .  arrangements with collaborative partners that limit or preclude the
        company from developing products or technologies;
     .  premature termination of an agreement; or
     .  failure by a collaborative partner to devote sufficient resources to the
        development or commercial sales of products using the DepoMed Systems.

  Collaborative agreements are generally complex and may contain provisions
which give rise to 

                                       5
<PAGE>
 
disputes regarding the relative rights and obligations of the parties. Any such
dispute could delay collaborative research, development or commercialization of
potential products, or could lead to lengthy, expensive litigation or
arbitration.

  Fluctuations in Operating Results.  The following factors will affect our
quarterly operating results  and may result in a material adverse effect on the
price of our common stock and redeemable warrants:

     .  variations in revenues obtained from collaborative agreements, including
        milestones, royalties, license fees and other contract revenues;
     .  the timing of any future product introductions by us or our
        collaborative partners;
     .  market acceptance of the DepoMed Systems;
     .  regulatory actions;
     .  adoption of new technologies;
     .  the introduction of new products by our competitors;
     .  manufacturing costs and capabilities;
     .  changes in government funding; and
     .  third-party reimbursement policies.

  Competition.  Competition in pharmaceutical products and drug delivery systems
is intense.  We expect competition to increase.  Competing technologies or
products developed in the future may prove superior either generally or in
particular market segments to the DepoMed Systems or products using the DepoMed
Systems.  These developments would make the DepoMed Systems or products using
them noncompetitive or obsolete.

  All of our principal competitors have substantially greater financial,
marketing, personnel and research and development resources than us.  In
addition, many of our potential collaborative partners have devoted, and
continue to devote, significant resources to the development of their own drug
delivery systems and technologies.

  Government Regulation. Numerous governmental authorities in the United States
and other countries regulate our research and development activities and those
of our collaborative partners .  Governmental approval is required of all
potential pharmaceutical products using the DepoMed Systems and the manufacture
and marketing of products using the DepoMed Systems prior to the commercial use
of those products.  The regulatory process will take several years and require
substantial funds.  If products using the DepoMed Systems do not receive the
required regulatory approvals or if such approvals are delayed, the company's
business would be materially adversely affected.  The requisite regulatory
approvals may not be obtained without lengthy delays, if at all.

  In the United States, the FDA rigorously regulates pharmaceutical products,
including any drugs using the DepoMed Systems.  If a company fails to comply
with applicable requirements, the FDA or the courts may impose sanctions.  These
sanctions may include civil penalties, criminal prosecution of the company or
its officers and employees, injunctions, product seizure or detention, product
recalls, total or partial suspension of production.  The FDA may withdraw
approved applications or refuse to approve pending new drug applications,
premarket approval applications, or supplements to approved applications.

  The company generally must conduct preclinical testing on laboratory animals
of new pharmaceutical products prior to commencement of clinical studies
involving humans.  These studies evaluate the potential efficacy and safety of
the product.  The company then submits the results of these studies to the FDA
as part of an investigational new drug application ("IND"), which must become
effective before beginning clinical testing in humans.

  Typically, human clinical evaluation involves a time-consuming and costly
three-phase process:

     .  In Phase I, the company conducts clinical trials with a small number of
        subjects to determine a drug's early safety profile and its
        pharmacokinetic pattern.

     .  In Phase II, the company conducts clinical trials with groups of
        patients afflicted with a specific disease in order to determine
        preliminary effectiveness optimal dosages and further evidence of
        safety.

     .  In Phase III, the company conducts large-scale, multi-center,
        comparative trials with patients afflicted with a target disease in
        order to provide 

                                       6
<PAGE>
 
        enough data to demonstrate the effectiveness and safety required by the
        FDA prior to commercialization.

  The FDA closely monitors the progress of each phase of clinical testing.  The
FDA may, at its discretion, re-evaluate, alter, suspend or terminate testing
based upon the data accumulated to that point and the FDA's assessment of the
risk/benefit ratio to patients.

  The results of the preclinical and clinical testing are submitted to the FDA
in the form of a new drug application (an "NDA") for approval prior to
commercialization. In responding to an NDA, the FDA may grant marketing
approval, request additional information or deny the application.  Failure to
receive approval for any products using the DepoMed Systems would have a
material adverse effect on the company.

  Various FDA regulations apply to over-the-counter products that comply with
monographs issued by the FDA.  These regulations include:

     .  current good manufacturing practices ("cGMP") requirements;
     .  general and specific over-the-counter labeling requirements (including
        warning statements);
     .  advertising restrictions; and
     .  requirements regarding the safety and suitability of inactive
        ingredients.

  In addition, the FDA may inspect over-the-counter products and manufacturing
facilities.  A failure to comply with applicable regulatory requirements may
lead to administrative or judicially imposed penalties. If an over-the-counter
product differs from the terms of a monograph, it will, in most cases, require
FDA approval of an NDA for the product to be marketed.

  Foreign regulatory approval of a product must also be obtained prior to
marketing the product internationally. Foreign approval procedures vary from
country to country. The time required for approval may delay or prevent
marketing in certain countries. In certain instances the company or its
collaborative partners may seek approval to market and sell certain products
outside of the United States before submitting an application for United States
approval to the FDA. The clinical testing requirements and the time required to
obtain foreign regulatory approvals may differ from that required for FDA
approval. Although there is now a centralized European Union ("EU") approval
mechanism in place, each EU country may nonetheless impose its own procedures
and requirements. Many of these procedures and requirements are time-consuming
and expensive. Some EU countries require price approval as part of the
regulatory process. These constraints can cause substantial delays in obtaining
required approval from both the FDA and foreign regulatory authorities after the
relevant applications are filed, and approval in any single country may not
meaningfully indicate that another country will approve the product.

  Manufacturing, Marketing and Sales.  We do not have and do not intend to
establish in the foreseeable future internal manufacturing, marketing or sales
capabilities.  Rather, we intend to use the facilities of our collaborative
partners or those of contract manufacturers to manufacture products using the
DepoMed Systems.  Our dependence on third parties for the manufacture of
products using the DepoMed Systems may adversely affect our ability to develop
and deliver such products on a timely and competitive basis.  There may not be
sufficient manufacturing capacity available to the company when, if ever, it is
ready to seek commercial sales of products using the DepoMed Systems.  In
addition, we expect to rely on our collaborative partners or to develop
distributor arrangements to market and sell products using the DepoMed Systems.
The company may not be able to enter into manufacturing, marketing or sales
agreements on reasonable commercial terms, or at all, with third parties.
Failure to do so would have a material adverse effect on the company.

  Applicable cGMP requirements and other rules and regulations prescribed by
foreign regulatory authorities will apply to the manufacture of products using
the DepoMed Systems.  The company will depend on the manufacturers of products
using the DepoMed Systems to comply with cGMP and applicable foreign standards.
Any failure by a manufacturer of products using the DepoMed Systems to maintain
cGMP or comply with applicable foreign standards could delay or prevent their
commercial sale.  This could have a material adverse effect on the company.

                                       7
<PAGE>
 
  Patents and Proprietary Rights.  Our success will depend in part on our
ability to obtain and maintain patent protection for our technologies and to
preserve our trade secrets.  Our policy is to file patent applications in the
United States and foreign jurisdictions.  We currently hold two issued United
States and two pending United States patent applications.  We have applied for
patents in numerous foreign countries.  Some of those countries have granted our
applications and other applications are still pending.  Our patent applications
may not be approved and any issued patents may not provide competitive
advantages for the DepoMed Systems or our technologies.

  With respect to already issued patents and any patents which may issue from
our applications, there can be no assurance that claims allowed will be
sufficient to protect our technologies.  The United States maintains patent
applications in secrecy until a patent issues.  As a result, the company cannot
be certain that others have not filed patent applications for technology covered
by our pending applications or that the company was the first to file patent
applications for such technology.  Competitors may have filed applications for,
or may have received patents and may obtain additional patents and proprietary
rights relating to, compounds or processes that may block our patent rights or
permit the competitors to compete without infringing the patent rights of the
company.

  In addition:

     .  any patents issued to the company may be challenged, invalidated or
        circumvented; or
     .  the rights granted under the patents issued to the company may not
        provide proprietary protection or commercial advantage to the company.

  We also rely on trade secrets and proprietary know-how.  We seek to protect
that information, in part, through entering into confidentiality agreements with
employees, consultants, collaborative partners and others before such persons or
entities have access to our proprietary trade secrets and know-how.  These
confidentiality agreements may not be effective in certain cases, due to, among
other things, the lack of an adequate remedy for breach of an agreement or a
finding that an agreement is unenforceable.  In addition, our trade secrets may
otherwise become known or be independently developed by competitors.

  Our ability to develop our technologies and to make commercial sales of
products using our technologies also depends on not infringing others' patents.
We are not aware of any claim of patent infringement against us.  However, if
claims concerning patents and proprietary technologies arise and are determined
adversely to the company, the claims could have a material adverse effect on the
company.  Extensive litigation regarding patent and other intellectual property
rights is common in the pharmaceutical industry.  We may need to engage in
litigation to enforce any patents issued or licensed to the company or to
determine the scope and validity of third-party proprietary rights.  There can
be no assurance that our issued or licensed patents would be held valid by a
court of competent jurisdiction.  Whether or not the outcome of litigation is
favorable to the company, the diversion of our financial and managerial
resources to such litigation could have a material adverse effect on the
company.  We may also be required to participate in interference proceedings
declared by the United States Patent and Trademark Office for the purpose of
determining the priority of inventions in connection with the patent
applications of the company or other parties.  Adverse determinations in
litigation or interference proceedings could require the company to seek
licenses (which may not be available on commercially reasonable terms) or
subject the company to significant liabilities to third parties.  These events
could have a material adverse effect on the company.

  Relationships of Advisors with other Entities.  Two groups (the Policy
Advisory Board and Development Advisory Board) advise the company on business
and scientific issues and future opportunities.  Certain members of our Policy
Advisory Board and Development Advisory Board work full-time for academic or
research institutions.  Others act as consultants to other companies.  In
addition, except for work performed specifically for and at the direction of the
company, any inventions or processes discovered by such persons will be their
own intellectual property or that of their institutions or other companies.
Further, invention assignment agreements signed by such persons in connection
with their relationships with the company may be 

                                       8
<PAGE>
 
subject to the rights of their primary employers or other third parties with
whom they have consulting relationships. If the company desires access to
inventions which are not its property, the company will have to obtain licenses
to such inventions from these institutions or companies. The company may not be
able to obtain these licenses on commercially reasonable terms.

  Healthcare Reform; Uncertain Availability of Healthcare Reimbursement.  The
healthcare industry is changing rapidly as the public, government, medical
professionals, third-party payors and the pharmaceutical industry examine ways
to contain or reduce the cost of health care.  Changes in the healthcare
industry could impact our business, particularly to the extent that the company
develops the DepoMed Systems for use in prescription drug applications.

  Certain foreign governments regulate pricing or profitability of prescription
pharmaceuticals sold in their countries.  There have been a number of federal
and state proposals to implement similar government control in the United
States, particularly with respect to Medicare payments.  The company expects
that these proposals will continue to be advanced.  In addition, downward
pressure on pharmaceutical pricing in the United States has increased due to an
enhanced emphasis on managed care.  The company expects this pressure to
continue to increase.  The company cannot predict whether any such legislative
or regulatory proposals will be adopted or the effect such proposals or managed
care efforts may have on its business.  However, the announcement of such
proposals or efforts could have a material adverse effect on the company's
ability to raise capital.  Further, the adoption of such proposals or efforts
would have a material adverse effect on the company and any prospective
collaborative partners.

  Sales of products using the DepoMed Systems in domestic and foreign markets
will depend in part on the availability of reimbursement from third-party
payors, such as government health administration authorities and private health
insurers.  Third-party payors are increasingly challenging the price and cost-
effectiveness of prescription pharmaceutical products.  Significant uncertainty
exists as to the reimbursement status of newly approved healthcare products.
Accordingly, products using the DepoMed Systems may not be eligible for third-
party reimbursement at price levels sufficient for us or our collaborative
partners to realize appropriate returns on our investments in the DepoMed
Systems.

  Product Liability.  Our business involves exposure to potential product
liability risks that are inherent in the production and manufacture of
pharmaceutical products.  Any such claims could have a material adverse effect
on the company.  We do not currently have any product liability insurance.
Although the company has applied for product liability insurance, there can be
no assurance that:

     .  the company will be able to obtain or maintain product liability
        insurance on acceptable terms;
     .  the company will be able to secure increased coverage as the
        commercialization of the DepoMed Systems proceeds; or
     .  any insurance will provide adequate protection against potential
        liabilities.

  Year 2000. Year 2000 ("Y2K") exposure is the result of computer programs using
two instead of four digits to represent the year.  These computer programs may
erroneously interpret dates beyond the year 1999, which could cause system
failures or other computer errors, leading to disruptions in operations.

  We have begun to develop a three-phase program to limit or eliminate Y2K
exposures.  Phase I is to identify those systems, applications and third-party
relationships from which we have exposure to Y2K disruptions in operations.
Phase II is the development and implementation of action plans to achieve Y2K
compliance in all areas prior to the end of 1999.  Also included in Phase II is
the development of contingency plans which would be implemented should Y2K
compliance not be achieved in order to minimize disruptions in operations.
Phase III is the final testing or equivalent certification of testing of each
major area of exposure to ensure compliance.  We have not yet completed any of
these phases.  We expect to complete all three phases by the end of 1999, though
we may not be successful in doing so.

  We have identified three major areas which are critical for successful Y2K
compliance: Area 1, which includes financial, research and development and
administrative informational systems 

                                       9
<PAGE>
 
applications reliant on system software; Area 2, which includes research,
development and quality applications reliant on computer programs embedded in
microprocessors; and Area 3, which includes third-party relationships which may
be affected by Area 1 and 2 exposures which exist in other companies.

  With respect to Area 1, we are in the process of conducting an internal review
and contacting all software suppliers to determine major areas of Y2K exposure.
In research, development and quality applications (Area 2), we are working with
equipment manufacturers to identify our exposures.  With respect to Area 3, we
plan to evaluate our reliance on third parties in order to determine whether
their Y2K compliance will adequately assure our uninterrupted operations.
However, we may not complete these evalutions in time to limit or elimate our
Y2K exposure.

  We have yet to complete Phase I or Phase II of our Y2K program with respect to
all three of the major areas.  We rely on systems, applications and third-party
relationships which, if not Y2K compliant prior to the end of 1999, could have a
material adverse impact on the company.  In addition, we may not complete Phase
II contingency planning in time to determine what action we would take in any of
the areas should Y2K compliance not be achievable in time.

  Though we have not identified any costs related to replacement or remediation
and testing of our Area 1 computer information systems, those costs may be
significant.  In addition, because we have not completed our Phase I and Phase
II evaluations, we have no basis for estimating the potential cost of our Y2K
compliance programs.  However, those costs may also be significant.

                                       10
<PAGE>
 
                            SELLING SECURITY HOLDERS



  The following table sets forth the names of the selling security holders, the
number of shares of common stock beneficially owned by each selling security
holder as of November 4, 1998 and the number of shares of common stock that may
be offered pursuant to this prospectus.  The table assumes the exercise of the
representative's warrants and the redeemable warrants included in the units
issuable upon exercise of the representative's warrants. This information is
based upon information provided by the selling security holders.

  None of the selling security holders has had a material relationship with the
company within the past three years, except as indicated below.

<TABLE>
<CAPTION>
                                           Number of Shares of                                       Number of Shares of 
                                               Common Stock                     Number of Shares of     Common Stock
                                          Beneficially Owned                       Common Stock      Beneficially Owned 
                                         Prior to Offering (1)     Percent           to be Sold      After Offering          Percent
                                         ---------------------     -------      -------------------  -------------------     -------
<S>                                      <C>                       <C>          <C>                  <C>                     <C>  
Selling Security Holder
- ----------------------------------

National Securities Corporation
 (2)..............................             226,402(3)            3.4%             226,402                 -                 - 
                                    
Stephen Rothstein (4).............               4,716(5)             *                 4,716                 -                 - 

Gary Rosenberg (4)................               4,716(5)             *                 4,716                 -                 - 

TOTALS                                         235,834               3.5              235,834                 -                 - 
                                               =======               ===              ======= 
</TABLE>
______________________
*    Less than one percent
(1)  Applicable percentage of ownership is based on 6,463,438 shares of common
     stock outstanding as of November 4, 1998.
(2)  Acted as the underwriter of the IPO.
(3)  Consists of 113,201 shares issuable upon exercise of representative's
     warrants and 113,201 shares issuable upon exercise of redeemable warrants
     issuable upon exercise of the representative's warrants.
(4)  Affiliated with National Securities Corporation
(5)  Consists of 2,358 shares issuable upon exercise of representative's
     warrants and 2,358 shares issuable upon exercise of redeemable warrants
     issuable upon exercise of representative's warrants.

  We have agreed to bear certain expenses (other than broker discounts and
commissions, if any) in connection with the registration statement.


                              PLAN OF DISTRIBUTION

  The securities offered hereby by the company are being offered directly by the
company pursuant to the terms of the redeemable warrants and the
representative's warrants.  All or a portion of the securities offered hereby by
the selling security holders may be delivered and/or sold in transactions from
time to time on the over-the-counter market, on the Nasdaq SmallCap Market (or
any other exchange on which the securities may be listed), in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time, at prices related to such prevailing prices or at
negotiated prices and/or may also be used to cover any short positions
previously established.  The selling security holders may effect such
transactions by selling to or through one or more broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the selling security holders.  The selling
security holders and any broker-dealers that participate in the distribution may

                                       11
<PAGE>
 
under certain circumstances be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by such broker-dealers and any
profits realized on the resale of securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act.  The selling
security holders may agree to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act.  In addition, the
company has agreed to indemnify the selling security holders with respect to the
securities offered hereby against certain liabilities, including, without
limitation, certain liabilities under the Securities Act, or, if such indemnity
is unavailable, to contribute toward amounts required to be paid in respect of
such liabilities.  No underwriter is being utilized in connection with this
offering.

  Any broker-dealer participating in such transactions as agent may receive
commissions from the selling security holders (and, if they act as agent for the
purchaser of such securities, from such purchaser).  Broker-dealers  may agree
with the selling security holders to sell a specified number of securities at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the selling security holders, to purchase as principal
any unsold securities at the price required to fulfill the broker-dealer
commitment to the selling security holders.  Broker-dealers who acquire
securities as principal may thereafter resell such securities from time to time
in transactions (which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such securities commissions computed as described above.

  Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale of securities may not simultaneously
engage in market making activities with respect to the common stock of the
company for a period of two business days prior to the commencement of such
distribution.  In addition and without limiting the foregoing, the selling
security holders will be subject to applicable provisions of the Exchange Act,
and the rules and regulations thereunder, including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales the
company's securities by the selling security holders.

  The selling security holders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them.  The securities
offered hereby are being registered pursuant to contractual obligations of the
company, and the company has paid the expenses of the preparation of this
prospectus.  We have not made any underwriting arrangements with respect to the
sale of securities offered hereby.


                                USE OF PROCEEDS

  We plan to use the net proceeds received, if any, from the issuance of common
stock issuable upon exercise of the representative's warrants and the redeemable
warrants for research and development and for general corporate purposes and
working capital.  We will not receive any of the proceeds from the sale of
securities offered by the selling security holders.


                                 LEGAL MATTERS

  The validity of the securities offered hereby will be passed upon for us by
Heller Ehrman White & McAuliffe, Palo Alto, California, counsel to the company.
Julian N. Stern, the Secretary of the company, is the owner of 83,333 shares of
common stock and is the sole stockholder and employee of a professional
corporation that is a partner of Heller Ehrman White & McAuliffe.

                                       12
<PAGE>
 
                                    EXPERTS

  The financial statements of DepoMed, Inc. which appear in its Annual Report
(Form 10-KSB) for the year ended December 31, 1997 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon and
included therein and incorporated herein by reference.  Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

                                       13
<PAGE>
 
                                    PART II
                                        
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

  The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered.  All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee.

      Legal fees and expenses............................     $ 6,000
      Accounting fees and expenses.......................       1,000
      Miscellaneous......................................       3,000
                                                              -------
      Total..............................................     $10,000
                                                                                
ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

  The registrant has the power to indemnify its directors and officers against
liability for certain acts pursuant to Sections 204(a) and 317 of the California
Corporations Code. Article IV of the registrant's Amended and Restated Articles
of Incorporation provides as follows:

"The liability of the directors of this corporation for monetary damages shall
be eliminated to the fullest extent permissible under California law.  This
corporation is also authorized, to the fullest extent permissible under
California law, to indemnify its agents (as defined in Section 317 of  the
California Corporations Code), whether by by-law, agreement or otherwise, for
breach of duty to this corporation and its shareholders in excess of that
expressly permitted by Section 371 and to advance defense expenses to its agents
in connection with such matters as they are incurred, subject to the limits on
such excess indemnification set forth in Section 204 of the California
Corporations Code. If, after the effective date of this Article, California law
is amended in a manner which permits a corporation to limit the monetary or
other liability of its directors or to authorize indemnification of, or
advancement of such defense expenses to, its directors or other persons, in any
such case to a greater extent than is permitted on such effective date, the
references in this Article to "California law" shall to that extent be deemed to
refer to California law as so amended."

  Section 29 of the company's Bylaws, as amended, provides as follows:

  "29.  Indemnification of Directors and Officers.

  (a) Indemnification.  To the fullest extent permissible under California law,
the corporation shall indemnify its directors and officers against all expenses,
judgments, fines, settlement and other amounts actually and reasonably incurred
by them in connection with any proceeding, including an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer, trustee, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise
(including service with respect to employee benefit plans).  To the fullest
extent permissible under California law, expenses incurred by a director or
officer seeking indemnification under this By-law in defending any proceeding
shall be advanced by the corporation as they are incurred upon receipt by the
corporation of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that the director or
officer is not entitled to be indemnified by the corporation for those expenses.
If, after the effective date of this By-law, California law is amended in a
manner which permits the corporation to authorize indemnification of or
advancement of expenses to its directors or officers, in any such case to a
greater extent than is permitted on such effective date, the references in this
By-law to "California law" shall to that extent be deemed to refer to California
law as so amended.  The rights granted by this By-law are contractual in nature
and, as such, may not be altered with respect to any present or former director
or officer without the written consent of that person.
<PAGE>
 
  (b) Procedure.  Upon written request to the Board of Directors by a person
seeking indemnification under this By-law, the Board shall promptly determine in
accordance with Section 317(e) of the California Corporations Code whether the
applicable standard of conduct has been met and, if so, the Board shall
authorize indemnification.  If the Board cannot authorize indemnification
because the number of directors who are parties to the proceeding with respect
to which indemnification is sought prevents the formation of a quorum of
directors who are not parties to the proceeding, then, upon written request by
the person seeking indemnification, independent legal counsel (by means of a
written opinion obtained at the corporation's expense) or the corporation's
shareholders shall determine whether the applicable standard of conduct has been
met and, if so, shall authorize indemnification.

  (c) Definitions.  The term "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative.  The term "expenses" includes, without limitation, attorney's
fees and any expenses of establishing a right to indemnification."

  We have obtained insurance to indemnify our officers and directors for
liability incurred in serving the company up to a maximum amount of $5,000,000,
including the costs of defense with respect to any such alleged activity.


ITEM 16.  EXHIBITS
- -------   --------

  Exhibit     Description
  -------     -----------------------------------------------------------
 
    5.1*      Opinion of Heller Ehrman White & McAuliffe
 
   23.1*      Consent of Heller Ehrman White & McAuliffe
 
   23.2       Consent of Ernst & Young LLP, Independent Auditors
 
   24.1*      Power of Attorney
 __________
 *  Previously filed

ITEM 17.  UNDERTAKINGS
- -------   ------------

          A.    The undersigned registrant hereby undertakes:

                (1)   To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;

                      (i)    To include any prospectus required by Section
          10(a)(3) of the Securities Act of 1933;

                      (ii)   To reflect in the prospectus any facts or events
          arising after the effective date of the registration statement (or the
          most recent post-effective amendment thereof) which, individually or
          in the aggregate, represent a fundamental change in the information
          set forth in the registration statement;

                      (iii)  To include any material information with respect to
          the plan of distribution not previously disclosed in the registration
          statement or any material change to such information in the
          registration statement;

provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.

                                     II-2
<PAGE>
 
                (2)  That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

                (3)  To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

          B.    The undersigned registrant hereby undertakes that, for purposes
of determining liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

          C.    Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                     II-3
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Foster City, State of California, on November 5,
1998.

                                    DEPOMED, INC.

                                    /s/ John F. Hamilton
                                    --------------------
                                    John F. Hamilton
                                    Vice President - Finance and Chief Financial
                                    Officer

     Pursuant to the requirements of the Securities Act of 1933, this Post-
effective Amendment No. 1 to the Registration Statement on Form SB-2 has been
signed below by the following persons in the capacities and on the dates
indicated:

<TABLE>
<CAPTION>
               Signature                                 Title                           Date
               ---------                                 -----                           ----          
<S>                                       <C>                                   <C>
                  *                       President, Chief Executive Officer      November 5 , 1998
- ----------------------------------------
             John W. Fara                 and Director (Principal Executive
                                          Officer)
 
                  *                       Chairman of the Board and Chief         November 5 , 1998
- -----------------------------------------
           John W. Shell, Ph.D.           Scientific Officer
 
           /s/ John F. Hamilton           Vice President-Finance  and Chief        November 5, 1998
- -----------------------------------------
           John F. Hamilton               Financial Officer (Principal
           Attorney-in-Fact               Financial and Accounting Officer)
 
                  *                       Vice President Operations, Director      November 5, 1998
- -----------------------------------------
            John N. Shell

                  *                       Director                                November 5 , 1998
- -----------------------------------------
           G. Steven Burrill
                                          
          /s/ W. Leigh Thompson           Director                                November 5 , 1998
- -----------------------------------------
      W. Leigh Thompson, M.D., Ph.D. 
 
          /s/ John F. Hamilton 
- -----------------------------------------
          *John F. Hamilton 
          (Attorney-in-Fact) 
</TABLE>

                                     II-4
<PAGE>
 
                                 DEPOMED, INC.

                               Index to Exhibits
                               -----------------



   Exhibit No.             Description
   -----------             --------------------------------------------------
      5.1*                 Opinion of Heller Ehrman White & McAuliffe
     23.1*                 Consent of Heller Ehrman White & McAuliffe
     23.2                  Consent of Ernst & Young LLP, Independent Auditors
     24.1*                 Power of Attorney

 ________________
 *  Previously filed

<PAGE>
 
                                                                    EXHIBIT 23.2
                                                                                
               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
                                        
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference therein of our report dated February 27, 1998, with
respect to the financial statements included in its Annual Report (Form 10-K)
for the year ended December 31, 1997, filed with the Securities and Exchange
Commission, in the Post-Effective Amendment No. 1 to the Registration Statement
(Form SB-2 No. 333-25445) and related Prospectus of DepoMed, Inc. for the
registration of 1,435,834 shares of its common stock, 117,917 representative's
warrants to purchase units consisting of one share of common stock and one
redeemable warrant and 117,917 redeemable common stock purchase warrants.

                                 /s/ Ernst & Young LLP

Palo Alto, California
November 4, 1998


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