Depomed Inc (NASDAQ:DEPO) has finalized a definitive Commercialization Deal with Collegium Pharmaceutical, Inc. Under the terms of the deal, Collegium will commercialize NUCYNTA® Extended Release as well as NUCYNTA® Immediate Release. In lieu for commercialization of NUCYNTA, the company will get a royalty fees on all NUCYNTA revenues depending on certain net sales limits.
The details
As long as the deal is in force, for the initial four years, Depomed will get a minimum royalty of $135 million annually. After fourth year, the royalty mechanism will be the same, however, there will be no minimum limit. The royalty fees will be adjusted after patent expiry; which company believes will not happen until at least late 2025. As an outcome of this deal, Depomed will remove its pain salesforce and stop all brand expenses on NUCYNTA, thereby lowering SG&A expenses by around $70 million on an annual basis.
Arthur Higgins, the CEO and President of Depomed, expressed that provided the dynamics in the opioid segment, they concluded that an extensive portfolio of products would effectively compete and fulfill the needs of physicians, payors and patients. After assessing several alternatives, they concluded that Collegium marks as an ideal commercial associate for NUCYNTA given their firm focus on pain management.
It also need to focus on the synergistic fit between the Collegium portfolio and NUCYNTA franchise. Strategically, this deal boosts the growth of NUCYNTA, enables new investment into Depomed’s Specialty and Neurology businesses, and transforms company into a leaner, more agile specialty pharmaceutical firm set for growth.
Financially, the company is now well positioned to attain its objectives of margin improvement and EBITDA growth in line with, or better than, peers. Michael Heffernan, the CEO and President of Collegium, expressed that they are thrilled to be associating with Depomed in this mutually beneficial and truly compelling deal.
