Depomed Sells Royalty & Milestone Payments In Type 2 Diabetes To PDL BioPharma

(RTTNews) - Depomed, Inc. (DEPO) announced it has sold its interests in royalty and milestone payments under license agreements in the Type 2 diabetes therapeutic area to PDL BioPharma, Inc. (PDLI) for $240.5 million. PDL will receive all royalty and milestone payments due under the agreements until it has received payments equal to two times the cash payment made to Depomed, after which all payments received will be shared evenly between PDL and Depomed. PDL also acquired certain rights to royalties and milestones on products currently in development by Boehringer Ingelheim and Janssen Pharmaceutica.

Depomed intends to use the sale proceeds to acquire products that will drive long-term growth and build on the company's commercial expertise in pain and neurology.

"Through this sale of our Type 2 diabetes milestone and royalty payments, we have generated a significant infusion of cash equal to approximately 55 percent of our market capitalization without issuing any equity or incurring any debt. We intend to focus our cash balance of over $300 million to fund future product acquisitions capable of driving growth into the next decade," Jim Schoeneck, President and CEO of Depomed, said.

Depomed believes that its current products, Gralise, Lazanda and Zipsor, will continue to drive product revenue growth. The company has retained its royalty and milestone interests in other collaborations, including agreements with Mallinckrodt for MNK 795 and MNK 155, with Janssen for Nucynta ER and with Ironwood.