DepoMed Inc. announced Monday afternoon that it will allow Collegium Pharmaceutical Inc. to handle sales of its most lucrative product, the Nucynta line of painkillers, and slash its workforce. DepoMed said that it would take royalties as Collegium markets and sells Nucynta, and eliminate its painkiller salesforce and any brand advertising for the product. The company plans to lay off 40% of its workforce, about 70 employees, and move its headquarters out of Newark, California, to a state on the East Coast or in the Midwest. “Taking these steps, in terms of headcount reductions and office relocation, will provide additional financial and strategic benefits,” DepoMed Chief Executive Arthur Higgins,who took the reins of the company earlier this year after an activist-investor battle, said in a prepared statement. DepoMed will receive a minimum royalty of $135 million a year while cutting $70 million in annual expenses, the company said. Through nine months of this year, DepoMed has reported $183.3 million in Nucynta sales, more than half of its $286.3 million in total revenue. DepoMed and Collegium shares were both halted in late trading ahead of the announcement at 4:25 p.m. Eastern time and were expected to begin trading again at 5 p.m. Eastern time.
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