Why This Acquisition Could Be Huge for Collegium Pharma

Health and Healthcare

Published: February 7, 2020 11:20 am

Collegium Pharmaceutical Inc. (NASDAQ: COLL) shares popped on Friday after the firm announced that it will acquire the U.S. rights to the Nucynta franchise from Assertio Therapeutics. The deal is expected to close on February 14, subject to customary closing conditions.

According to the 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.

The transaction is expected to be immediately accretive and to significantly increase Collegium’s profitability and operating cash flows.

For the 2020 full year, Nucynta franchise revenues are expected to be in the range of $170 million to $180 million.

The Nucynta franchise is supported by patents with expiries in mid-June 2025, with the potential for a six-month pediatric extension. The FDA has approved tapentadol 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.

Joe Ciaffoni, president and CEO, commented:

Acquiring the full U.S. rights to the Nucynta Franchise is financially transformative for Collegium. We expect the acquisition to improve annual EBITDA and operating cash flows by more than $100 million. The transaction is supported by a financing structure that allows for rapid de-leveraging and enables us to pursue future business development transactions.

Shares of Collegium traded up about 17% Friday at $23.78, in a 52-week range of $10.01 to $24.72. The consensus price target is $29.57.

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