Depomed sells royalty, milestone interests in Type 2 diabetes drugs for $240.5 million

NEWARK, Calif. — Drug maker Depomed has sold its interests in royalty and milestone payments for several Type 2 diabetes drugs to PDL BioPharma, Depomed said.

The drug maker announced that it had sold its interest in the Type 2 diabetes therapeutic area to PDL for $240.5 million, which it plans to use to acquire rights to products it said would drive long-term growth and build on its expertise in pain and neurology.

The interests include payments accruing from and after Oct. 1 from Santarus, for Glumetza (metformin hydrochloride extended-release tablets) in the United States; from Merck for Janumet XR (sitagliptin and metformin hydrochloride extended-release); from Johnson & Johnson for potential future milestones and sales of Invokana (canagliflozin) and extended-release metformin; from Boehringer Ingelheim for potential future milestones and sales of experimental drugs; and from LG and Valeant for sales of extended-release metformin in Korea and Canada, respectively.

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

Schoeneck said he expected such current Depomed products as the restless legs syndrome drug Gralise (gabapentin), the pain drug Lazanda (fentanyl nasal spray) and the actinic keratosis drug Zipsor (diclofenac potassium) to drive sales growth, and the company has retained its royalty and milestone interests in other collaborations, including agreements with Mallinckrodt, Ironwood and Johnson & Johnson.