Depomed To Buy Janssen's Nucynta U.S. License For $1.05 Bln.

(RTTNews) - Janssen Pharmaceuticals Inc., a unit of Johnson & Johnson (JNJ), Thursday said it has agreed to sell its U.S. license rights for pain drug Nucynta to Depomed Inc. (DEPO) for $1.05 billion in cash. Shares of Depomed gained about five percent on the news in the after-hours trade.

Janssen revealed that the divestiture as a strategic decision designed to focus efforts on growth priorities. The deal is expected to close in the second quarter, subject to customary closing conditions and completion of financing.

Janssen currently licenses the commercialization rights to Nucynta franchise from Grunenthal GmbH. Meanwhile, the company will retain license rights in Canada, Japan, and a number of other countries outside the U.S.

Depomed said the deal will improve its position as a leading pain and neurology focused specialty pharmaceutical company. The company expects the acquisition to have a significant impact on revenues and to be immediately accretive on earnings.

Depomed expects the deal to increase its 2014 proforma net product revenues by about 2.5 times compared to prior sales guidance of $232 million to $242 million.

The Nucynta franchise generated U.S. sales of about $166 million for the 12 months ended September 2014. Nucynta franchise includes Nucynta ER extended release tablets indicated for the management of pain, including neuropathic pain associated with diabetic peripheral neuropathy and Nucynta, an immediate release version of tapentadol, for management of moderate to severe acute pain in adults. Nucynta oral solution is an approved oral form of tapentadol that has not been launched.

DEPO closed Thursday's trading at $17.65, down $0.40 or 2.22%, on the Nasdaq. The stock, however, gained $1.15 or 6.52% in the after-hours trade.