[This report has been updated to correct figures for Depomed's earlier 2014 product sales guidance to investors.]
Johnson & Johnson’s Janssen Pharmaceuticals said it will sell its U.S. license rights and related royalty obligations for the Nucynta® (tapentadol) opioid pain drug franchise to Depomed for $1.05 billion.
The deal covers Nucynta tablets, Nucynta extended-release tablets, and the yet-to-be-released Nucynta oral solution, all of which Janssen has licensed from Grünenthal Group since 2003. Janssen said in a statement it will retain Nucynta rights in Canada, Japan, and “a number of” other countries outside the U.S. Janssen said it sold off its U.S. Nucynta rights in order to shift resources to higher-priority areas.
Depomed—which will assume Janssen’s payment of royalties to Grünenthal—said in a separate statement that the Nucynta franchise will become its flagship asset in its growing portfolio of pain and neurology specialty pharmaceuticals.
Depomed plans to re-launch Nucynta and Nucynta ER—the only FDA-approved opioid indicated for both chronic pain and DPN—and said it expected to support both products through an expanded sales force of more than 250 representatives.
The larger sales force, Depomed says, will allow it to capitalize on well-established relationships with key prescribers and cover an even higher percentage of prescribers than the current sales force targets for Nucynta products of approximately 70%.
“We believe that Nucynta is an ideal strategic fit for Depomed—a rare opportunity to add a proprietary, differentiated drug with a lengthy period of exclusivity that fits precisely into our therapeutic focus,” said Jim Schoeneck, Depomed’s president and CEO. “Nucynta meets all of our criteria for product acquisition that we have laid out over the past two years.
Schoeneck spelled out those criteria most recently on the company’s November 5, 2014, third-quarter earnings conference call with analysts:
- Growth products in pain and other nervous system disorders and adjacencies.
- Products with annual revenues between $20 million and $200 million, or assets that have already gone through Phase III trials and can produce revenue within 18 months.
- Assets with lengthy periods of exclusivity and peak sales still ahead.
“The synergies between Nucynta and our existing pain and neurology call points create a number of opportunities to grow not only the Nucynta franchise, but to enhance the growth of our current business as well,” Schoeneck added.
The Nucynta franchise becomes Depomed’s fifth marketed product, with sales that exceed the other four combined—Cambia (diclofenac potassium for oral solution) for migraine attacks; postherpetic neuralgia treatment Gralise (gabapentin) tablets; Lazanda (fentanyl nasal spray) for breakthrough pain in adults with cancer (18 years of age and older) who routinely take other opioids round-the-clock for cancer pain; and mild-to-moderate acute pain drug Zipsor (diclofenac potassium).
The Nucynta franchise generated U.S. net sales of approximately $166 million for the 12 months ending September 2014. Depomed expects that to grow for several more years, since Nucynta has composition of matter patent protection to August 2022, a potential pediatric extension into 2023, and additional patents that could extend beyond that timeframe.
Depomed said the deal will enable it to raise its pro forma net product revenue guidance by about 2.5 times over its previous 2014 product sales guidance to investors of between $113 million and $117 million.
Nucynta is indicated for management of moderate-to-severe acute pain in adults, and Nucynta ER, for management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The extended-release formulation is also indicated for managing neuropathic pain associated with diabetic peripheral neuropathy (DPN) in adults severe enough to require daily, around-the-clock, long-term opioid treatment, and for which alternative treatment options are inadequate.
Nucynta was approved in the U.S. in November 2008, while Nucynta ER won FDA approval in August 2011.
Depomed’s board of directors Janssen said the deal is expected to close in the second quarter, subject to termination or expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, completion of financing, and other customary closing conditions.
Once the companies entered into their agreement, Depomed said, it placed $500 million into an escrow account, which will be released to Janssen upon closing of the deal. Depomed expects to raise the remaining capital through a combination of debt, equity and equity-linked financing, with the goal of limiting the impact of stock dilution for existing shareholders.
