Depomed acquires U.S. rights to NUCYNTA franchise from Janssen Pharmaceuticals

Depomed, Inc. (NASDAQ: DEPO) today announced that it has closed the acquisition of the U.S. rights to the NUCYNTA franchise from Janssen Pharmaceuticals, Inc. for $1.05 billion. The NUCYNTA franchise includes: NUCYNTA® ER (tapentadol) extended release tablets indicated for the management of pain, including neuropathic pain associated with diabetic peripheral neuropathy (DPN), severe enough to require daily, around-the-clock, long-term opioid treatment; NUCYNTA® (tapentadol), an immediate release version of tapentadol, for management of moderate to severe acute pain in adults; and NUCYNTA (tapentadol) oral solution, an approved oral form of tapentadol that has not been launched. NUCYNTA is now the flagship asset in Depomed's growing portfolio of pain and neurology specialty pharmaceuticals. Full product labelling including Boxed Warnings for NUCYNTA ER and NUCYNTA is available at

Transition Highlights

  • Depomed will begin shipping NUCYNTA the week of April 6, reflecting a price adjustment made after closing the deal
  • Quintiles, the contract sales organization that promoted the NUCYNTA franchise for Janssen, will continue to support these products for Depomed from now until re-launch in June
  • Depomed expects its expanded sales force supporting NUCYNTA, Gralise, Cambia and Zipsor to be fully deployed at re-launch
  • Depomed will introduce new product positioning and marketing support focusing on the uniqueness of the molecule and its dual mechanism of action (MOA)
  • The $575 million loan to complete financing of the transaction closed as expected, with no dilution to shareholders
  • The company plans to update 2015 guidance inclusive of NUCYNTA sales as part of the first quarter financial report in May

"With the closing of the NUCYNTA transaction, the transformation of Depomed into a leader in the pain and central nervous system market is now complete. We closed the deal ahead of our original schedule and will re-launch NUCYNTA with Depomed's expanded sales and marketing resources in June," said Jim Schoeneck, President and Chief Executive Officer of Depomed. "The structure of the flexible loan agreement to complete the related financing avoided any dilution to our shareholders, provides an ability to prepay, and provides the opportunity to continue to pursue the acquisition of additional assets that fit within our strategy."

Transaction Details

Depomed paid Janssen $1.05 billion in cash at closing. Depomed assumed the U.S. license and related royalty obligations for NUCYNTA to Grunenthal, the originator of tapentadol. At signing in January, Depomed placed $500 million into an escrow account which was released to Janssen upon closing of the transaction. In addition, Depomed used the net proceeds of the $575 million loan committed by Deerfield and Pharmakon Advisors in March 2015 to fund the balance of the purchase price.

New Product Positioning, Sales Coverage have Potential to Accelerate Growth

Depomed intends to re-launch NUCYNTA and NUCYNTA ER in June with an enhanced focus on the molecule's unique dual mechanism of action, and on NUCYNTA ER's approved indications based on studies in both nociceptive and neuropathic pain states. NUCYNTA ER is the only opioid FDA-approved for both chronic pain and neuropathic pain associated with diabetic peripheral neuropathy (DPN). NUCYNTA ER has not been fully launched for the DPN indication and Depomed believes the product's clinical benefits may not be fully appreciated in the US.

Depomed has also indicated that it expects NUCYNTA to benefit from synergies with the company's expanded commercial infrastructure. Depomed's current sales force overlaps approximately 70% of the NUCYNTA prescriber base, allowing the company to capitalize on well-established relationships with key prescribers. The expanded sales force for NUCYNTA of over 250 representatives, is over 3 times the size of the prior sales effort and will cover an even higher percentage of the prescribers.

NUCYNTA Performance, Impact of Acquisition

The NUCYNTA brands generated U.S. net sales of approximately $44 million in the fourth quarter of 2014 (unaudited) and $172 million for the year ended December 2014. NUCYNTA has composition of matter patent protection to August 2022, a potential pediatric extension into 2023 and additional patents beyond that timeframe.

Depomed expects the acquisition to be immediately accretive to non-GAAP EPS in 2015 and to provide significant growth in net sales, EBITDA, non-GAAP earnings and cash flow in future years. Return on invested capital is estimated to exceed cost of capital by 2016.


Morgan Stanley & Co. LLC acted as financial advisor to Depomed on the transaction. Baker Botts L.L.P. acted as legal advisor to Depomed.


Depomed, Inc.


The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
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