Drugmaker Depomed plans to cut staff, move from Newark following new deal

NEWARK >> Newark-based pharmaceutical company Depomed said Monday it has agreed to sell the sales rights for its most popular drug and announced it will cut 40 percent of its staff and move its headquarters away from the East Bay.

In the deal, Depomed agreed to allow Massachusetts-based Collegium Pharmaceuticals to sell its Nucynta line of painkillers. In return, Depomed will receive an annual royalty payment from Collegium. For the first four years of the agreement, Depomed will receive a minimum royalty of $135 million per year. The royalty rate will be adjusted after its Nucynta patent expires, but Depomed believes that won’t happen until at least 2025, according to its press release.

Nucynta is by far Depomed’s most popular product, and relinquishing its sales will shake up the company’s core business model. In the first nine months of 2017, Nucynta generated $185.5 million of Depomed’s $285.7 million sales revenue.

As a result of the deal, Depomed said it is cutting $70 million in headcount and headquarters expenses. It will cut its staff to approximately 70 employees, and it plans to move its headquarters to somewhere in the Midwest or on the East Coast. The layoffs and headquarters move are expected to happen by mid-2018.

“As we are executing on our new strategy, we needed to right size the organization,” said Depomed CEO Arthur Higgins in the press release. “We are looking at locations that will provide us with improved access to top-tier pharmaceutical talent that will build Depomed into a leading specialty pharmaceutical company. I would like to sincerely thank all of the employees impacted by this restructuring for their dedicated and loyal service to Depomed.”

Depomed did not immediately respond to requests for comment.