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Depomed gains rights to Nucynta from J&J

Posted on 16 January 2015

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Depomed has entered into a definitive agreement to acquire the U.S. rights to the NUCYNTA franchise from Janssen Pharmaceuticals 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, and NUCYNTA (tapentadol), an immediate release version of tapentadol, for management of moderate to severe acute pain in adults.

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NUCYNTA (tapentadol) oral solution is an approved oral form of tapentadol that has not been launched. The deal will make NUCYNTA the flagship asset in Depomed's growing portfolio of pain and neurology specialty pharmaceuticals.

Depomed will make a cash payment to Janssen of $1.05 billion.

In return, Depomed will assume the U.S. license and related royalty obligations for NUCYNTA to Grunenthal, the originator of tapentadol.

At signing, Depomed placed $500 million into an escrow account which will be released to Janssen upon closing of the transaction.

Depomed expects to raise the remaining capital to complete the transaction through a combination of debt, equity and equity-linked financing prior to closing, with the goal of limiting the dilution impact for existing shareholders.

The transaction has been unanimously approved by Depomed's board of directors.

The deal is expected to close in the second quarter of 2015, following termination or expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 and completion of financing and other customary closing conditions.

The transaction is expected to be immediately accretive and to significantly increase Depomed's product revenue, cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted earnings per share for 2015, 2016 and beyond.

Depomed intends to provide investors with guidance for the combined company promptly after the completion of the transaction.

Financial details of the agreement were not disclosed.

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