Analysis of Business Deal: Collegium Pharma acquired of U.S. Rights to Nucynta Franchise for $375M

Collegium Pharmaceutical, a specialty pharmaceutical company, has entered into a definitive agreement to acquire the U.S. rights to the Nucynta Franchise from Assertio Therapeutics, Inc. for $375.0 million in cash. Collegium expects that this acquisition will improve annual EBITDA and operating cash flows by more than $100 million.

Transaction deal: 

• Collegium will make a cash payment to Assertio of $375.0 million, less royalties paid to Assertio in 2020, and subject to certain other adjustments.
• Collegium will assume the U.S. license for the Nucynta Franchise, and will no longer be required to pay royalties to Assertio.
• Collegium has secured debt financing commitments of $325.0 million that, together with cash on hand, will be used to fund the purchase price payable to Assertio.
• Collegium will continue to pay Grunenthal GmbH a flat 14% royalty on net sales of the Nucynta Franchise, but will no longer be required to pay a supplemental royalty on sales greater than $180.0 million.
• The transaction is expected to be immediately accretive and to significantly increase Collegium’s profitability and operating cash flows.
• The deal is expected to close on February 14, 2020, subject to satisfaction of customary closing conditions.

The Nucynta Franchise

• The Nucynta Franchise, which includes both an extended-release and an immediate release formulation of tapentadol, is supported by patents which expires in mid-June 2025, with the potential for a six-month pediatric extension.
• Importantly, Collegium assumes no liability, including litigation-related liability, related to the manufacture, sale or promotion of the Nucynta Franchise prior to Collegium’s licensing of the U.S. commercialization rights on January 9, 2018.

Revenue Update:

• Xtampza ER revenues are expected in the range of $150.0 million to $160.0 million.
• Nucynta Franchise revenues are expected in the range of $170.0 million to $180.0 million.
• Total operating expenses are expected in the range of $130.0 million to $140.0 million.

About Collegium Pharmaceutical, Inc.

Collegium is a specialty pharmaceutical company committed to being the leader in responsible pain management. Collegium’s headquarters are located in Stoughton, Massachusetts.

About Xtampza ER

Xtampza® ER is Collegium’s first product utilizing the DETERx technology platform. Xtampza ER is an abuse-deterrent, extended-release, oral formulation of oxycodone approved by the FDA for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.

About Nucynta ER

Nucynta® ER is an extended-release formulation of tapentadol. Tapentadol is a centrally acting synthetic analgesic. Nucynta ER is approved by the FDA for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. Nucynta ER is also approved by the FDA for neuropathic pain associated with diabetic peripheral neuropathy severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.

About Nucynta

Nucynta® is an immediate release formulation of tapentadol indicated for the management of acute pain severe enough to require an opioid analgesic. Tapentadol is a centrally acting synthetic analgesic.