A New York hedge fund that earlier this year flipped the board of Depomed Inc. and installed a new CEO to boost the company’s value said Monday that it will cut 40 percent of its staff and move the drug company’s headquarters out of California.
The move is necessary, Depomed (NASDAQ: DEPO) said in a Securities and Exchange Commission filing, because it is turning over sales of its best-selling pain drug, Nucynta, to Collegium Pharmaceutical Inc. and won’t need as large of a workforce or as much space at its Newark headquarters.
The Collegium deal, which the companies said is expected to close next month, means Depomed will receive royalties of at least $135 million a year for four years. Meanwhile, it will save $80 million on an annualized basis with the job cuts and by relocating by mid-2018.
The moves help Depomed focus resources on its neurology and specialty drug businesses and largely out of the market of pain-killing opioid drugs. Companies have come under fire, including investigations by Congress and states’ attorneys general, for sales and marketing methods that some lawmakers believe fueled the opioid drug epidemic.
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