Zogenix, Inc. (NASDAQ:ZGNX), a pharmaceutical company developing and commercializing products for the treatment of central nervous system (CNS) disorders, provided a corporate update, and announced financial results for the first quarter ended March 31, 2015.
- Appointed Stephen J. Farr, Ph.D., previously serving as the Company’s President, as the new Chief Executive Officer of Zogenix. Dr. Farr will also continue to serve as the President of Zogenix and will remain a member of the Company’s Board of Directors. Roger Hawley, the previous CEO of Zogenix, will remain on the Board of Directors.
- Successfully completed the sale of the Zohydro® ER pain franchise to Pernix Therapeuticsfor $80 million in cash, approximately 1.68 million shares of Pernix common stock, and potential regulatory and sales milestones that could total up to $283.5 million. This asset sale enables the Company to solely focus on its CNS clinical pipeline, substantially reduces its operating expenses and significantly strengthens the balance sheet.
- The Company remains on track to commence its Phase 3 program for ZX008 in the third quarter of 2015. ZX008 is a low-dose formulation of fenfluramine, which has the potential to be a transformational treatment for Dravet syndrome, a rare and debilitating form of epilepsy that begins in infancy. Significant progress has been made on activities to initiate the clinical program, including a new synthetic manufacturing route for fenfluramine, the development of a new oral liquid formulation suitable for a pediatric population, and the selection of clinical and commercial suppliers of the drug substance and drug product.
- Commenced dosing in patients enrolled in the Company’s Relday™ Phase 1b, multi-dose, clinical study. Relday is a proprietary, subcutaneously injected, once-monthly formulation of risperidone designed to provide potentially significant improvements over current long-acting injection treatments for schizophrenia. Results from this study are expected in the third quarter of 2015.
- Appointed Renee Tannenbaum, Pharm.D., currently Head of Global Customer Excellence ofAbbVie, Inc., to the Zogenix Board of Directors.
“As we move forward with the continued clinical development of our CNS-focused pipeline, we are in a strong operating position,” said Stephen J. Farr, Ph.D., President and CEO. “We are now fully funded through multiple key inflection points, including the Phase 3 studies for ZX008 in the U.S. and Europe, the ZX008 New Drug Application (NDA) and Marketing Authorization application (MAA) submissions, which are anticipated in late 2016, and the end of Phase 2 meeting with the FDA for Relday.”
First Quarter 2015 Financial Results Compared to First Quarter 2014 Financial Results
As a result of the sale of the Zohydro ER business, all Zohydro ER revenue and expenses have been excluded from continuing operations for all periods herein and reported as discontinued operations. All prior period information has been recast to conform to this presentation.
- Total revenue for the first quarter of 2015 was $4.6 million, and reflected zero net product revenues (due to the sale of Zohydro ER, completed in April 2015), $4.2 million of contract manufacturing revenue and $0.4 million of service and other product revenue (comprised primarily of co-promotion fees earned for Migranal® sales under the Company’s agreement with Valeant Pharmaceuticals). This compared with total revenue of $7.4 million in the same quarter last year, which included $6.5 million of net product revenue and $0.9 million of services and other revenue. The increase in contract manufacturing revenue and decrease in net product revenue in the 2015 first quarter was due to the sale of the Sumavel® DosePro® business to Endo International Plc in May 2014 and subsequent performance under the related supply agreement.
- First quarter 2015 research and development expenses totaled $5.2 million, up from $2.5 million in the first quarter a year ago as the Company continued preparations for its two Phase 3 studies for ZX008, and a multi-dose clinical study for Relday, which commenced inFebruary 2015.
- First quarter 2015 selling, general and administrative expense totaled $6.3 million, compared with $12.5 million in the first quarter a year ago. The Company incurred selling expenses for Sumavel DosePro prior to its sale in May 2014.
- Net loss from continuing operations was approximately $10.2 million, compared with $5.0 million in the same quarter a year ago. Total net loss, including discontinued operations, for the first quarter of 2015 was $22.9 million, or $0.15 per basic share and fully diluted, compared with $20.9 million, or $0.15 per basic share and $0.20 fully diluted, for the first quarter a year ago.
- Cash and cash equivalents at March 31, 2015 totaled $21.3 million, which did not reflect the cash proceeds of $70.0 million (net of $10.0 million placed in escrow) received subsequent to quarter’s end related to the April 2015 sale of Zohydro ER to Pernix.
- The Company anticipates its current financial resources will provide sufficient cash to fund operations through several significant milestones, which include the U.S. and Europe Phase 3 studies for ZX008, a targeted NDA submission in the U.S. and MAA submission in Europefor ZX008, and the end of Phase 2 meeting for Relday.
2015 Financial Guidance
Below is the Company’s financial guidance for the remainder of 2015, reflecting continuing operations following the sale of Zohydro ER.
- Research and development expenses are expected to be $25.0 million to $28.0 million for the second through fourth quarters of 2015, reflecting the initiation of ZX008 clinical studies and the recent commencement of the Relday multi-dose clinical study.
- General and administrative expenses are expected to be $21.0 million to $23.0 million for the second through fourth quarters of 2015.
- Contract manufacturing revenue from the supply of Sumavel DosePro to Endo will continue at a low single-digit markup over cost of contract manufacturing.
Additionally, the pre-tax net gain on sale of Zohydro ER of approximately $90.0 million, less costs of discontinued operations, will be recorded as discontinued operations in the second quarter of 2015. The Company does not expect gain or loss from discontinued operations to be significant in the third or fourth quarters of 2015. (Original Source)
Shares of Zogenix closed today at $1.385, down $0.015 or 1.07%. ZGNX has a 1-year high of $2.42 and a 1-year low of $1.07. The stock’s 50-day moving average is $1.47 and its 200-day moving average is $1.37.
On the ratings front, Zogenix has been the subject of a number of recent research reports. In a report issued on April 29, Brean Murray Carret analyst Difei Yang maintained a Buy rating on ZGNX, with a price target of $2.50, which implies an upside of 77.3% from current levels. Separately, on March 11, 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 13.7% and -8.8% respectively. Yang has a success rate of 65.9% and is ranked #511 out of 3596 analysts, while Lugo has a success rate of 39.4% and is ranked #3450.
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.