Zogenix, Inc. (Nasdaq:ZGNX), a pharmaceutical company developing and commercializing products for the treatment of central nervous system (CNS) disorders, announced today that it has closed the sale of its Zohydro®ER (hydrocodone bitartrate) business to a wholly-owned subsidiary of Pernix Therapeutics Holdings, Inc. (Nasdaq:PTX) for $80 million in cash, approximately 1.68 million shares of Pernixcommon stock, plus regulatory and sales milestones of up to $283.5 million.
The sale of Zohydro ER to Pernix significantly reduces operating expenses for Zogenix, eliminates all research and development expenses related to ongoing Zohydro ER abuse-deterrent formulations and further enhances the Company’s financial strength. With the upfront proceeds from this transaction, and without assuming future milestone payments related to Zohydro ER, the Company plans to use the capital to fund the current Relday clinical program to the end of Phase 2 meeting with the U.S. Food and Drug Administration, both the US and EU Phase 3 studies for ZX008 and the submission of the New Drug Application for ZX008 targeted for late 2016.
Roger Hawley, chief executive officer of Zogenix said, “Having secured initial proceeds from the sale of Zohydro ER, we will now focus on executing our strategy to develop and commercialize our CNS pipeline, including advancing our late-stage product candidate ZX008 for Dravet syndrome and Relday long-acting injectable for patients with schizophrenia.”
Dr. Stephen Farr, president of Zogenix added, “Our development team will also support Pernixin the ongoing development of abuse-deterrent formulations of extended release hydrocodone, including the innovative tablet formulation in collaboration with Altus Formulation. In addition to receiving a $12.5 million milestone payment upon potential regulatory approval of this product, all related expenses incurred by Zogenix will be reimbursed by Pernix.”
The transition of the Zogenix sales team and other select employees to Pernix is effective immediately. Approximately 60 employees will remain with Zogenix, which is sufficient to achieve clinical and regulatory milestones as well as market preparation for the introduction of its product candidates.
Terms of the agreement
Under the terms of the agreement, Pernix has paid Zogenix $80 million in cash, eliminating the need for a promissory note, and 1,682,086 shares of Pernix common stock, subject to a six-month lock-up. A total of $10 million of the upfront cash payment will be deposited into escrow to fund potential indemnification claims for a period of 12 months. Zogenix is also eligible to receive $12.5 million upon approval of ZX007, a tablet formulation of extended-release hydrocodone with abuse-deterrent properties, which is currently in development in collaboration with Altus Formulation. In addition, Zogenix is eligible to receive cash payments of up to $271 million based on the achievement of pre-determined annual product sales milestones for Zohydro ER and ZX007. Pernix will also purchase a pre-defined amount of Zohydro ER product inventory. (Original Source)
Shares of Zogenix opened today at $1.62 and are currently trading down at $1.5833. ZGNX has a 1-year high of $3.08 and a 1-year low of $1.07. The stock’s 50-day moving average is $1.48 and its 200-day moving average is $1.35.
On the ratings front, Zogenix has been the subject of a number of recent research reports. In a report issued on March 11, Brean Murray Carret analyst Difei Yang reiterated a Buy rating on ZGNX, with a price target of $2.50, which represents a potential upside of 54.3% from where the stock is currently trading. Separately, on the same day, William Blair’s Tim Lugo downgraded the stock to Hold .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Difei Yang and Tim Lugo have a total average return of 22.2% and -3.3% respectively. Yang has a success rate of 73.0% and is ranked #308 out of 3579 analysts, while Lugo has a success rate of 46.9% and is ranked #3120.
Zogenix Inc is a pharmaceutical company engaged in commercializing & developing therapies that address clinical needs for people living with pain-related and CNS disorders that needs treatment alternatives to help return to normal daily functioning.