Depomed Announces NUCYNTA® Commercialization Agreement with Collegium Pharmaceutical
December 04 2017 - 4:30PM
- Transaction is Immediately Accretive and
Improves 2018 EBITDA Outlook -
Depomed, Inc (NASDAQ:DEPO) today announced that it has signed a
definitive Commercialization Agreement (“Agreement”) with Collegium
Pharmaceutical, Inc. (“Collegium”). Under the terms of the
agreement, Collegium will commercialize both NUCYNTA® Extended
Release and NUCYNTA® Immediate Release (“NUCYNTA”). In
exchange for Collegium’s commercialization of NUCYNTA, Depomed will
receive a royalty rate on all NUCYNTA revenues based on certain net
sales thresholds. As long as the agreement is in force, for
the first four years, Depomed will receive a minimum royalty of
$135 million per year. After year four, the royalty mechanism
remains the same but without a minimum. The royalty rate will
be adjusted post patent expiry, which Depomed believes will not
occur until at least late 2025. As a result of this transaction,
Depomed will eliminate its pain salesforce and cease all brand
spending on NUCYNTA, thereby reducing SG&A expenses by
approximately $70 million dollars on an annual basis.
“Given the dynamics in the opioid market, we concluded that a
broader portfolio of products would more effectively compete and
meet the needs of patients, physicians and payors,” said Arthur
Higgins, President and CEO of Depomed. “After evaluating multiple
options, we came to the conclusion that Collegium is an ideal
commercial partner for NUCYNTA given their company focus on pain
management and the synergistic fit between our NUCYNTA franchise
and the Collegium portfolio. Strategically, this transaction
supports the growth of NUCYNTA, allows for new investment into our
Neurology and Specialty businesses, and transforms Depomed into a
leaner, more nimble specialty pharmaceutical company poised for
growth. Financially, Depomed is now well positioned to
achieve our goals of EBITDA growth and margin improvement in line
with, or better than, our peers.”
“We are excited to be partnering with Depomed in this truly
compelling and mutually beneficial agreement,” said Michael
Heffernan, President and CEO of Collegium. “We view NUCYNTA® as a
best-in-class immediate-release product, and see NUCYNTA® ER and
XTAMPZA® ER as complementary products. We believe that this
portfolio of products will expand the continuum of care for pain
patients, and establish Collegium as a leader in the pain
management market.”
Depomed and Collegium will work together closely to ensure a
smooth transition of the NUCYNTA commercialization activities.
Completion of the transaction is subject to customary conditions,
including antitrust clearance in the U.S. The transaction is
expected to close in early January 2018.
Relocation of Corporate Headquarters
In light of today’s agreement with Collegium, we have made the
decision to align our headquarters staff, office size and location
with our new business model. The Company plans to relocate
its corporate headquarters from Newark, California sometime in
mid-2018 and is currently evaluating potential Midwest and East
Coast locations. In line with this relocation, the Company
will reduce its staff by 40% to approximately 70 employees and
headquarters office space requirement by 50%. Depomed expects to
save approximately $10 million annually as a result of the
headquarters restructuring and relocation.
Mr. Higgins continued, “As we are executing on our new strategy,
we needed to right size the organization. Taking these steps, in
terms of headcount reductions and office relocation, will provide
additional financial and strategic benefits. We are looking at
locations that will provide us with improved access to top-tier
pharmaceutical talent that will build Depomed into a leading
specialty pharmaceutical company. I would like to sincerely thank
all of the employees impacted by this restructuring for their
dedicated and loyal service to Depomed.”
Conference Calls and Webcast Details
Depomed and Collegium will each conduct a conference call and
webcast tomorrow morning Tuesday December 5, 2017 to discuss
today’s announcement. Details for each event are listed below.
Collegium: 8:30am ET/ 5:30am PT
Collegium will host a conference call and live audio webcast
beginning at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time).
To access the conference call, please dial (888) 698-6931 (U.S.) or
(805) 905-2993 (International) and refer to Conference ID:
668-9689. An audio webcast will be accessible from the
Investor Relations section of the Company’s website:
http://www.collegiumpharma.com/. An archived webcast will be
available on the Company’s website approximately two hours after
the event.
Depomed: 10:30am ET/ 7:30am PT
Depomed will host a conference call and live audio webcast
beginning at 10:30 a.m. Eastern Time (7:30 a.m. Pacific Time).
Participants can access the call by dialing (844) 830-5791 (United
States) or (213) 660-0615 (International) referencing Conference ID
7248528. Participants can access the webcast from the Depomed
website: http://investor.depomedinc.com/. Please access the
website 15 minutes prior to the start of the call to download and
install any necessary audio software. A replay of the webcast will
be located under the Investor Relations section of Depomed's
website approximately two hours after the conclusion of the live
call and will be available for three months.
Stifel is serving as the financial advisor to Depomed. Gibson,
Dunn & Crutcher LLP and Wilson Sonsini Goodrich & Rosati
are serving as legal advisors to Depomed.
About Depomed
Depomed is a leading specialty pharmaceutical company focused on
enhancing the lives of the patients, families, physicians,
providers and payors we serve through commercializing innovative
products for pain and neurology related disorders. Depomed markets
five medicines with areas of focus that include mild to severe
acute pain, moderate to severe chronic pain, neuropathic pain and
migraine. Depomed is headquartered in Newark, California. To learn
more about Depomed, visit www.depomed.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995. The statements that are not historical facts
contained in this release are forward-looking statements that
involve risks and uncertainties including, but not limited to,
those related to the commercialization of NUCYNTA ER and NUCYNTA,
the impact of this transaction on Depomed's financial outlook for
2018 and other risks detailed in the Company's Securities and
Exchange Commission filings, including the Company's most recent
Annual Report on Form 10-K and most recent Quarterly Report on Form
10-Q. The inclusion of forward-looking statements should not
be regarded as a representation that any of the Company's plans or
objectives will be achieved. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to
publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
INVESTOR AND MEDIA CONTACT:
Christopher Keenan VP, Investor Relations and Corporate
Communications 510-744-8000 ckeenan@depomed.com
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