Company Update (NASDAQ:ZGNX): Zogenix, Inc. Provides Corporate Update and Reports Third Quarter 2015 Financial Results


Zogenix, Inc. (NASDAQ:ZGNX), a pharmaceutical company developing therapies for the treatment of central nervous system (CNS) disorders, provided a corporate update, and announced financial results for the third quarter ended September 30, 2015.

Corporate Update

  • Continued preparations for the Phase 3 program for ZX008, which is expected to begin in the fourth quarter of 2015 for the treatment of Dravet syndrome, a rare and debilitating form of epilepsy that begins in infancy. Key recent activities include:
  • Submitted Investigational New Drug (IND) Application to the U.S. Food and Drug Administration (FDA)
  • Initiated pre-study qualification visits in 11 countries with 34 study sites selected for participation in the Phase 3 studies
  • Convened International Pediatric Cardiovascular Advisory Board

Reported positive top-line pharmacokinetic results from a Phase 1b multi-dose clinical trial of Relday, a proprietary, once-monthly subcutaneous investigational formulation of risperidone for the treatment of schizophrenia. Zogenix has retained Locust Walk Partners of Cambridge, MA, a transaction advisory firm for life sciences companies, to provide transaction advisory and support services for Relday.  Efforts to secure a global strategic development and commercialization partner for Relday are ongoing.

  • Closed public equity offering resulting in approximately $92 million in net proceeds.
  • Completed the nine-months ended September 30, 2015, with $162.7 million in cash and cash equivalents. Zogenix’s expected cash runway now extends through 2017.
  • Participated in the Wells Fargo 2015 Healthcare Conference and the Leerink Partners 4thAnnual Rare Disease Roundtable.

“Over the past few months, we have made significant progress towards initiation of the Phase 3 program for ZX008 in the treatment of uncontrolled seizures in children with Dravet syndrome. While we are engaged in an ongoing information exchange with FDA to establish normal/abnormal values for interpretation of echocardiograms to be collected during the Phase 3 program, we continue to expect the U.S. pivotal efficacy and safety trial will proceed later this year,” said Stephen J. Farr, Ph.D., President and CEO. “We also continue to move ahead with Relday, having recently announced positive top-line pharmacokinetic results from a Phase 1b multi-dose clinical trial, and are actively seeking a global strategic development and commercialization partner for this program, which would represent another value creating event for Zogenix and the Company’s shareholders.”

Third Quarter 2015 Financial Results Compared to Third 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 third quarter of 2015 was $9.1 million, and reflected $8.9 million of contract manufacturing revenue and $0.3 million of service and other product revenue. This compared with total revenue of $4.9 million in the same quarter last year, which included$4.2 million of contract manufacturing revenue and $0.7 million of service and other product revenue. The increase in contract manufacturing revenue in the 2015 third quarter was due to an increase in shipments of Sumavel® DosePro® to Endo International Plc under the supply agreement between the two companies.
  • Third quarter 2015 research and development expenses totaled $7.9 million, up from $2.9 million in the third quarter a year ago, as the Company continued preparations for its two Phase 3 studies for ZX008, and completed its multi-dose clinical study for Relday.
  • Third quarter 2015 selling, general and administrative expense totaled $5.7 million, compared with $7.2 million in the third quarter a year ago.
  • Net loss from continuing operations for the third quarter of 2015 was $13.0 million, compared with $1.5 million in the same quarter a year ago.
  • Net loss from discontinued operations was $1.6 million for the third quarter of 2015, compared with a net loss of $11.4 million in the third quarter a year ago, which reflected the operating loss related to the Zohydro business.
  • Total net loss for the third quarter of 2015 was $14.6 million, or $0.65 per basic share and fully diluted, compared with a net loss of $12.8 million, or $0.73 per basic share and fully diluted, for the third quarter a year ago.

Nine-Months Ended September 30, 2015 Financial Results Compared to Nine-Months Ended September 30, 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 nine-months ended September 30, 2015 was $21.1 million, and reflected $19.0 million of contract manufacturing revenue and $2.1 million of service and other product revenue. This compared with total revenue of $19.0 million in the same period last year, which included $6.5 million of contract manufacturing revenue and $12.5 million of net product and service revenue. The increase in contract manufacturing revenue and decrease in net product revenue in the 2015 nine-months ended September 30, 2015 was due to the sale of Sumavel DosePro to Endo International Plc in May 2014 and subsequent performance under the supply agreement between the two companies.
  • Research and development expenses for the nine-months ended September 30, 2015totaled $19.3 million, up from $8.6 million in the year ago period, as the Company continued preparations for its two Phase 3 studies for ZX008, and the multi-dose clinical study for Relday.
  • Selling, general and administrative expense for the nine-months ended September 30, 2015totaled $19.5 million, compared with $28.9 million in the year ago period. The Company incurred selling expenses for Sumavel DosePro prior to its sale in May 2014.
  • Net loss from continuing operations for the nine-months ended September 30, 2015 was$29.8 million, compared with net income from continuing operations of $71.1 million in the same period a year ago, which includes the gain on the sale of Sumavel DosePro.
  • Net income from discontinued operations for the nine-months ended September 30, 2015was $64.8 million, compared to a loss of $42.0 million in the year ago period.  Income from discontinued operations in 2015 includes a gain on the sale of the Zohydro business of$73.1 million net of applicable tax expense.
  • Total net income for the nine-months ended September 30, 2015 was $35.0 million, or $1.72per basic share and fully diluted, compared with net income of $29.1 million, or $1.66 per basic share and $0.17 fully diluted, for the nine-months ended September 30, 2014.
  • Cash and cash equivalents at September 30, 2015 totaled $162.7 million, which includes the net proceeds of $92.0 million received from the public offering that closed on August 5, 2015.

2015 Financial Guidance

Below is the Company’s financial guidance for the remainder of 2015, which reflects spending towards the low end of the annual guidance ranges previously provided.

  • Research and development expenses are expected to be $10 to $12 million for the fourth quarter of 2015, reflecting the initiation of ZX008 clinical studies.
  • Selling, general and administrative expenses are expected to be $7 to $8 million for the fourth quarter of 2015.
  • Contract manufacturing revenue from the supply of Sumavel DosePro to Endo is expected at a low single-digit markup over cost of contract manufacturing.

Additionally, the Company does not expect gain or loss from discontinued operations to be significant in the fourth quarter of 2015. (Original Source)

Shares of Zogenix closed today at $11.91, down $0.88 or 6.88%. ZGNX has a 1-year high of $21.65 and a 1-year low of $8.64. The stock’s 50-day moving average is $13.04 and its 200-day moving average is $14.93.

On the ratings front, Zogenix has been the subject of a number of recent research reports. In a report issued on October 21, William Blair analyst Tim Lugo reiterated a Hold rating on ZGNX. Separately, on the same day, Oppenheimer’s Akiva Felt reiterated a Buy rating on the stock and has a price target of $23.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Tim Lugo and Akiva Felt have a total average return of -7.6% and 20.5% respectively. Lugo has a success rate of 37.7% and is ranked #3599 out of 3829 analysts, while Felt has a success rate of 54.1% and is ranked #96.

Overall, one research analyst has assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $23.00 which is 81.0% above where the stock opened today.

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.