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What: Shares of DepoMed (NASDAQ:DEPO), a specialty pharmaceutical company focused on developing therapies to treat central nervous system disorders, popped by as much as 13% after announcing plans to acquire migraine medicine Cambia from Nautilus Neurosciences.
So what: Under the terms of the deal, DepoMed will pay Nautilus $48.7 million to acquire the U.S. rights to the drug and could be on the line for an addition $5 million based on whether annual net sales milestones are met. According to DepoMed's press release, Cambia is the only non-steroidal anti-inflammatory drug approved for the indication of treating migraines, with drug itself seeing revenue grow in excess of 30% last quarter.
Now what: It's not often that Wall Street rewards an acquisition, but the move by DepoMed to add a rapidly growing drug that'll be protected from generic competition for another 10 years to its product portfolio appears to make a lot of sense. The next step, obviously, is to see DepoMed make strides toward turning a profit in 2014. Until I see that black ink, though, I'd rather just be a casual observer from the sidelines.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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