Depomed Secures $575 Million Debt Facility From Deerfield and Pharmakon to Finance the Closing of NUCYNTA® Acquisition

Mar 12, 2015, 16:05 ET from Depomed, Inc.

NEWARK, Calif., March 12, 2015 /PRNewswire/ -- Depomed, Inc. (NASDAQ: DEPO) today announced that it has entered into a definitive agreement with Deerfield and Pharmakon Advisors, LP to borrow $575 million.  The proceeds of the loan will be used to fund the acquisition of the U.S. rights to the NUCYNTA franchise from Janssen Pharmaceuticals, Inc. which Depomed announced on January 15, 2015.  Upon signing the acquisition agreement in January, Depomed placed $500 million into escrow.  The escrowed amount and the proceeds of this loan will satisfy the $1.05 billion acquisition price and fees related to the transactions.

"We are excited to partner with Deerfield and Pharmakon, two of the premier investors that provide growth capital for pharmaceutical firms like Depomed.  This facility allows Depomed to close the NUCYNTA transaction without dilution to our shareholders while allowing us flexibility as we continue to look for assets to further grow our business," said Jim Schoeneck, President and Chief Executive Officer of Depomed.  "We said in January when we announced the acquisition that minimizing dilution to our shareholders was a primary goal and we more than met that goal.  In addition, the loan will allow full prepayment after 2 years and earlier under certain circumstances, providing an opportunity to further optimize our capital structure."

The loan will have a term of seven years, will be secured by Depomed's assets and will bear interest at the rate of 9.75% over three month LIBOR, with a floor of 1% and subject to certain caps. The loan can be prepaid under certain conditions and at Depomed's discretion any time after the second anniversary. $100 million of the facility may be paid down after one year.  The loan financing and the acquisition of NUCYTNA are subject to customary closing conditions, including HSR review.  Depomed now expects the loan financing and the acquisition to close in April 2015. 

The NUCYNTA franchise includes NUCYNTA® ER (extended release tablets) 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® (IR), an immediate release version of NUCYNTA, for management of moderate to severe acute pain in adults. The acquisition will make NUCYNTA the flagship asset in Depomed's growing portfolio of pain and neurology specialty pharmaceuticals.

About Depomed

Depomed is a specialty pharmaceutical company that commercializes products for pain and neurology related disorders.  Gralise® (gabapentin) is a once-daily treatment approved for the management of postherpetic neuralgia. CAMBIA® (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug indicated for acute treatment of migraine attacks with or without aura in adults (18 years of age or older). Zipsor® (diclofenac potassium) Liquid Filled Capsules is a non-steroidal anti-inflammatory drug indicated for relief of mild to moderate acute pain in adults.  Lazanda® (fentanyl) Nasal Spray is an intranasal fentanyl drug used to manage breakthrough pain in adults (18 years of age or older) who are already routinely taking other opioid pain medicines around-the-clock for cancer pain. Gralise and various partner product candidates are formulated with Depomed's proven, proprietary Acuform® drug delivery technology.  Depomed has announced the acquisition of the U.S. rights to the NUCYNTA franchise from Janssen Pharmaceuticals, Inc. which is expected to close in the second quarter of 2015. 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. Additional information about Depomed may be found at www.depomed.com.

About Deerfield

Deerfield is an investment management firm committed to advancing healthcare through investment, information and philanthropy.  For more information, please visit www.deerfield.com.

About Pharmakon Advisors

Investment funds managed by Pharmakon Advisors have raised over $1 billion to provide financing to commercial stage companies in the biotech, specialty pharma, diagnostic and medical device industries. Pharmakon Advisors' management team has a long and successful track record of structuring and investing in secured financings to life sciences companies. To date, Pharmakon Advisors has structured and executed fourteen financings.

Forward Looking Statements 

"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 Company's anticipated consummation of the financing and the acquisition of the NUCYNTA® franchise in the United States, the timing and benefits thereof, the company's post-acquisition strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential and other statements that are not historical facts.  Other risks are detailed in the company's Securities and Exchange Commission filings, including the company's Annual Report on Form 10-K for the year ended December 31, 2014.  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 CONTACT: August J. Moretti Depomed, Inc. 510-744-8000 amoretti@depomed.com

MEDIA CONTACT: Jason Spark Canale Communications for Depomed 619-849-6005 jason@canalecomm.com

 

SOURCE Depomed, Inc.



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