Depomed to Acquire U.S. Rights to NUCYNTA® (tapentadol), NUCYNTA® ER (tapentadol) extended release tablets and NUCYNTA® (tapentadol) Oral Solution from Janssen Pharmaceuticals, Inc. for $1.05 billion

Conference call today at 5:00 p.m. EST
- Transformative acquisition enhances Depomed's position as a leading pain and neurology focused specialty pharmaceutical company
- Adds significant revenue and immediate earnings impact upon expected second quarter closing; increases Depomed 2014 pro forma net product revenues by approximately 2.5 times compared to recent company guidance
- Expected to be immediately accretive to non-GAAP EPS in 2015, with significant growth in net sales, EBITDA, non-GAAP earnings and cash flow beyond that timeframe
- Strong fundamental returns - return on invested capital estimated to exceed cost of capital by 2016
- Directly leverages Depomed's existing infrastructure and expertise with pain specialists, neurologists and primary care physicians
- Intellectual property provides lengthy period of market exclusivity

NEWARK, Calif., Jan. 15, 2015 -- Depomed, Inc. (DEPO) today announced that it has entered into a definitive agreement to acquire the U.S. rights to the NUCYNTA franchise from Janssen Pharmaceuticals, Inc. for $1.05 billion. The NUCYNTA franchise includes NUCYNTA^® ER (tapentadol) extended release tablets indicated for the management of pain, including neuropathic pain associated with diabetic peripheral neuropathy (DPN), severe enough to require daily, around-the-clock, long-term opioid treatment, and NUCYNTA^® (tapentadol), an immediate release version of tapentadol, for management of moderate to severe acute pain in adults. NUCYNTA (tapentadol) oral solution is an approved oral form of tapentadol that has not been launched. The deal will make NUCYNTA the flagship asset in Depomed's growing portfolio of pain and neurology specialty pharmaceuticals. Please refer to the summary descriptions below for more information on NUCYNTA and NUCYNTA ER.  Full product labelling including Boxed Warnings for NUCYNTA ER and NUCYNTA is available at www.Nucynta.com.

"We believe that NUCYNTA is an ideal strategic fit for Depomed – a rare opportunity to add a proprietary, differentiated drug with a lengthy period of exclusivity that fits precisely into our therapeutic focus," said Jim Schoeneck, President and Chief Executive Officer of Depomed. "NUCYNTA meets all of our criteria for product acquisition that we have laid out over the past two years.  The NUCYNTA franchise generated U.S. net sales of approximately $166 million for the 12 months ended September 2014. NUCYNTA has composition of matter patent protection to August 2022, a potential pediatric extension into 2023, and additional patents that could extend beyond that timeframe.  Finally, the synergies between NUCYNTA and our existing pain and neurology call points create a number of opportunities to grow not only the NUCYNTA franchise, but to enhance the growth of our current business as well."

Transaction Details

Depomed will make a cash payment to Janssen of $1.05 billion.  In return, Depomed will assume the U.S. license and related royalty obligations for NUCYNTA to Grunenthal, the originator of tapentadol. 

At signing, Depomed placed $500 million into an escrow account which will be released to Janssen upon closing of the transaction.

Depomed expects to raise the remaining capital to complete the transaction through a combination of debt, equity and equity-linked financing prior to closing, with the goal of limiting the dilution impact for existing shareholders.

The transaction has been unanimously approved by Depomed's board of directors.

The deal is expected to close in the second quarter of 2015, following termination or expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 and completion of financing and other customary closing conditions.

The transaction is expected to be immediately accretive and to significantly increase Depomed's product revenue, cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted earnings per share for 2015, 2016 and beyond.  Depomed intends to provide investors with guidance for the combined company promptly after the completion of the transaction.

Operational Plan - Depomed's Pain and Neurology Expertise has Potential to Accelerate NUCYNTA's Growth

Depomed intends to re-launch NUCYNTA and NUCYNTA ER with a focus on its dual mechanism of action (MOA).  NUCYNTA ER is the only opioid FDA-approved for both chronic pain and DPN.

Depomed expects to support NUCYNTA and NUCYNTA ER with an expanded sales force of over 250 representatives.

The sales force targets for Depomed's current products overlap approximately 70% of the NUCYNTA prescriber base, allowing Depomed to capitalize on well-established relationships with key prescribers; the expanded sales force will cover an even higher percentage of the prescribers.

NUCYNTA was approved in the US in November 2008, and NUCYNTA ER was approved in the US in August 2011. 

Advisors

Morgan Stanley & Co. LLC acted as financial advisor to Depomed on the transaction.  Baker Botts L.L.P. acted as legal advisor to Depomed.

Conference Call

Depomed will host a conference call today, Thursday, January 15, beginning at 5:00 p.m. EST (2:00 p.m. PST) to discuss the transaction. Participants can access the call by dialing 877-317-6789 (United States) or 412-317-6789 (international). The conference call will also be available via a live webcast on the investor relations section of Depomed's website at http://www.depomed.com.   Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website for three months.

About Depomed
Depomed is a specialty pharmaceutical company that commercializes products for pain and CNS disorders.  Gralise® (gabapentin) is a once-daily treatment approved for the management of postherpetic neuralgia. CAMBIA® (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug indicated for acute treatment of migraine attacks with or without aura in adults (18 years of age or older). Zipsor® (diclofenac potassium) Liquid Filled Capsules is a non-steroidal anti-inflammatory drug indicated for relief of mild to moderate acute pain in adults.  Lazanda® (fentanyl) Nasal Spray is an intranasal fentanyl drug used to manage breakthrough pain in adults (18 years of age or older) who are already routinely taking other opioid pain medicines around-the-clock for cancer pain. Gralise and various partner product candidates are formulated with Depomed's proven, proprietary Acuform® drug delivery technology. Additional information about Depomed may be found at www.depomed.com.

About Tapentadol, NUCYNTA^® ER and NUCYNTA^®
Tapentadol is a centrally-acting synthetic analgesic. The exact mechanism of action is unknown. The tapentadol molecule is classified as Schedule II of the Controlled Substances Act.

NUCYNTA^® ER is an oral analgesic indicated for:

• the management of moderate to severe chronic pain in adults when a continuous, around-the-clock opioid analgesic is needed for an extended period of time.
• neuropathic pain associated with diabetic peripheral neuropathy (DPN) in adults severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.

Limitations of Use
Reserve NUCYNTA ER for use in patients for whom alternative treatment options are ineffective, not tolerated, or would be otherwise inadequate to provide sufficient management of pain. NUCYNTA ER is not indicated as an as-needed analgesic.

NUCYNTA^® ER IMPORTANT SAFETY INFORMATION
BOXED WARNING: ADDICTION, ABUSE, AND MISUSE; LIFE-THREATENING RESPIRATORY DEPRESSION; ACCIDENTAL INGESTION; NEONATAL OPIOID WITHDRAWAL SYNDROME; and INTERACTION WITH ALCOHOL

Contraindications
Significant respiratory depression; acute or severe bronchial asthma or hypercarbia in an unmonitored setting or in the absence of resuscitative equipment; known or suspected paralytic ileus; hypersensitivity (e.g., anaphylaxis, angioedema) to tapentadol or to any other ingredients of the product; concurrent use of monoamine oxidase inhibitors (MAOIs) or use within the last 14 days.

WARNINGS and PRECAUTIONS
Interactions With Central Nervous System Depressants: Concomitant use may cause profound sedation, respiratory depression, and death. If co-administration is required, consider dose reduction of one or both drugs because of additive pharmacological effects.
Elderly, Cachectic, or Debilitated Patients and those with chronic pulmonary disease: Monitor closely because of increased risk for life-threatening depression.
Hypotensive Effect: Monitor during dose initiation and titration.
Patients With Head Injury or Increased Intracranial Pressure: Monitor for sedation and respiratory depression.  
Seizures: Use with caution in patients with a history of seizures.
Serotonin Syndrome: Potentially life-threatening condition could result from concomitant administration of drugs with serotonergic activity.
Adverse Reactions: In clinical studies, the most common (>10%) adverse reactions were nausea, constipation, vomiting, dizziness, somnolence, and headache.
Select Postmarketing Adverse Reactions: Anaphylaxis, angioedema, and anaphylactic shock have been reported very rarely with ingredients contained in NUCYNTA^® ER. Advise patients how to recognize such reactions and when to seek medical attention. Panic attack has also been reported.

Please see full Prescribing Information, including Boxed WARNINGS, for NUCYNTA^® ER for further details.

NUCYNTA IMPORTANT SAFETY INFORMATION
Contraindications
Same as above section for NUCYNTA ER.

WARNINGS and PRECAUTIONS
Misuse, Abuse and Diversion: NUCYNTA is a Schedule II controlled substance with abuse liability similar to other opiods; monitor patients closely for signs of misuse, abuse and addiction. 
Elderly, Cachectic, or Debilitated Patients and Patients with Chronic Pulmonary Disease: Monitor closely because of increased risk of respiratory depression.
Interactions With Central Nervous System (CNS) Depressants and Illicit Drugs:  Consider dose reduction of one or both drugs because of additive effects.
Hypotensive Effect: Monitor for signs of hypotension. 
Patients With Head Injury or Increased Intracranial Pressure: Monitor for sedation and respiratory depression.
Seizures: Use with caution in patients with a history of seizures.
Serotonin Syndrome Risk: Potentially life-threatening condition could result from concomitant serotonergic administration. 
Withdrawal: Withdrawal symptoms may occur if NUCYNTA is discontinued abruptly.
Impaired mental/physical abilities Caution may be used with potentially hazardous activities.
Adverse Reactions: In clinical studies, the most common (>10%) adverse reactions were nausea, dizziness, vomiting, and somnolence
Please see full Prescribing Information for NUCYNTA^® for further details

Forward Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties including, but not limited to, those related to the Company's anticipated consummation of the acquisition of the NUCYNTA® franchise in the United States, the timing, financing and benefits thereof, the company's post-acquisition strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential and other statements that are not historical facts.  Other risks are detailed in the company's Securities and Exchange Commission filings, including the company's Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014.  The inclusion of forward-looking statements should not be regarded as a representation that any of the company's plans or objectives will be achieved. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

INVESTOR CONTACT:
August J. Moretti
Depomed, Inc.
510-744-8000
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MEDIA CONTACT:
Jason Spark
Canale Communications for Depomed
619-849-6005
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