Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On February 6, 2020, Collegium
Pharmaceutical, Inc., a Virginia corporation (the “Company”) entered into an Asset Purchase Agreement (the
“Purchase Agreement”) with Assertio Therapeutics, Inc., a Delaware corporation (f/k/a Depomed, Inc.)
(“Assertio”), pursuant to which the Company will acquire from Assertio certain of assets related to NUCYNTA®
franchise of pharmaceutical products (the “Products”) for an aggregate purchase price of $375,000,000 (the
“Purchase Price”), subject to certain closing and post-closing adjustments as described in the Purchase Agreement (the
“Transaction”). In connection with the Transaction, the Company will also assume certain contracts, liabilities
and obligations related to the Products.
The Company previously entered into a
Commercialization Agreement (as amended, the “Commercialization Agreement”) with Assertio, pursuant to which the
Company acquired the right to commercialize the Products in the United States in exchange for Assertio’s right to
receive, among other things, certain variable royalty payments associated with the commercialization of the Products. Upon
the closing of the transactions contemplated by the Purchase Agreement (the “Closing”), the Commercialization
Agreement will be terminated with the exception of certain provisions thereof which will survive pursuant to the terms of the
Purchase Agreement, and the Company’s payment obligations to Assertio thereunder will cease. Following the Closing, the
Company will pay royalties directly to Grünenthal GmbH at a rate of 14% of net sales of the Products; such royalty
payment obligation will replace the Company’s previous obligation to pay a royalty rate of 14% of net sales of the
Products to Grünenthal, subject to a guaranteed royalty of $34 million when net sales are between $180 million and $243
million.
The Purchase Agreement contains customary
representations, warranties and covenants, and indemnification provisions subject to specified limitations.
The Closing is expected to occur by February 14, 2020.
The Purchase Agreement provides for
certain termination rights for each of the parties. In the event that the Purchase Agreement is terminated because the
Company fails to consummate the Transaction due to a failure to obtain financing for the Purchase Price, the Company will
generally be required to pay Assertio a termination fee in an amount equal to $7,500,000. Additionally, in the event that the
Purchase Agreement is terminated because the Closing has not occurred on or before an “outside date” of March 13,
2020 due to the failure of certain conditions to have been satisfied or waived, the Company shall be entitled to receive a
termination fee in an amount equal to $7,500,000.
The foregoing description of the Purchase
Agreement does not purport to be complete and is qualified in its entirety by the full text of the Purchase Agreement, a copy of
which is attached hereto as Exhibit 10.1, and which is incorporated by reference herein.
Term Loan Financing
On February 6, 2020, in connection
with the execution of the Purchase Agreement, the Company entered into a Loan Agreement by and among the Company; its
subsidiary, Collegium Securities Corporation; BioPharma Credit PLC, as collateral agent and lender; and BioPharma Credit
Investments V (Master) LP, as lender (the “Loan Agreement”). The Loan Agreement provides for a $200 million
secured term loan (the “Term Loan”), the proceeds of which will be used to finance a portion of the Purchase
Price payable pursuant to the Purchase Agreement. Funding of the Term Loan is conditioned upon the consummation of the
Closing.
The Term Loan will mature on the 48 month
anniversary of the Closing and is guaranteed by the Company’s material domestic subsidiaries. The Term Loan is also secured
by substantially all of the assets of the Company and its material domestic subsidiaries. The Term Loan will bear interest at a
rate based upon LIBOR (subject to a LIBOR floor of 2.0%), plus a margin of 7.5% per annum. The Company is required to repay the
Term Loan by making equal quarterly payments of principal commencing on the 3-month anniversary of the Closing.
The Loan Agreement contains certain
covenants and obligations of the parties, including, without limitation, covenants that require the Company and its
subsidiaries to maintain $200 million in annual net sales and covenants that limit the Company’s ability to incur
additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary course of
business. Failure to comply with these covenants would constitute an event of default under the Loan Agreement,
notwithstanding the Company’s ability to meet its debt service obligations. The Loan Agreement also includes various
customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding
amounts under the Loan Agreement and execution upon the collateral securing obligations under the Loan Agreement.
The foregoing description of the Loan Agreement
does not purport to be complete and is qualified in its entirety by the full text of the Loan Agreement, a copy of which is attached
hereto as Exhibit 10.2, and which is incorporated by reference herein.
The representations, warranties, covenants
and other agreements set forth in the Purchase Agreement and in the Loan Agreement have been made only for the purposes of the
Purchase Agreement or Loan Agreement, as applicable, and solely for the benefit of the parties thereto and may be subject to limitations
agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to each such agreement instead of establishing these matters as facts. In addition, such representations
and warranties were made only as of the dates specified in each such agreement and information regarding the subject matter thereof
may change after the date thereof. Accordingly, the Purchase Agreement and the Loan Agreement are included with this filing only
to provide investors with information regarding their respective terms and not to provide investors with any other factual information
regarding the Products, the Company or its business as of the date thereof or as of any other date.