Zogenix, Inc. (NASDAQ:ZGNX), a pharmaceutical company developing therapies for the treatment of central nervous system (CNS) disorders, today provided a corporate update and announced financial results for the fourth quarter and year ended December 31, 2015.

Corporate Update

  • Investigational New Drug (IND) Application for the Phase 3 program for ZX008 for the treatment of Dravet syndrome, a rare and debilitating form of epilepsy that begins in infancy, accepted by the U.S. Food and Drug Administration (FDA).
  • Initiated the first Phase 3 clinical trial of ZX008 in the U.S.
  • Recently received first national approvals towards commencing the second Phase 3 clinical trial for ZX008 in Europe.
  • Received Fast Track designation from the FDA for ZX008 in Dravet syndrome.
  • Announced new data demonstrating sustained effectiveness and cardiovascular-related safety in a new cohort of 7 Dravet syndrome patients who began add-on treatment with ZX008 at various starting points between 2010 and 2014.
  • Completed the year ended December 31, 2015, with $155.3 million in cash and cash equivalents.  Zogenix’s expected cash runway extends through 2017.

“With the ZX008 Phase 3 program for Dravet syndrome now underway, and a solid cash position that should take the Company through 2017, Zogenix is in an extremely strong operating position,” said Stephen J. Farr, Ph.D., President and CEO.  “As we look forward to the remainder of 2016, we have a number of exciting milestones, including the initiation of the European portion of the ZX008 Phase 3 program in Dravet syndrome shortly, and targeting the availability of top-line data from the first phase 3 study by year-end.  In addition, we will continue to look to expand the use of ZX008 into additional pediatric orphan refractory epilepsy conditions.  To this end, we anticipate the commencement of an Investigator Initiated Study of ZX008 in Lennox Gastaut in the first quarter, with data expected in the fourth quarter of 2016.”

Fourth Quarter 2015 Financial Results Compared to Fourth 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 fourth quarter of 2015 was $6.1 million, and reflected $5.3 million of contract manufacturing revenue and $0.8 million of service and other product revenue.  This compared with total revenue of $9.9 million in the same quarter last year, which included $8.9 million of contract manufacturing revenue and $1.0 million of service and other product revenue.  The decrease in contract manufacturing revenue in the fourth quarter of 2015 was due to the timing of shipments of Sumavel®DosePro® to Endo International Plc under the supply agreement between the two companies.
  • Fourth quarter 2015 research and development expenses totaled $8.6 million, up from $3.3 million in the fourth quarter a year ago, as the Company continued preparations for its two Phase 3 studies for ZX008.
  • Fourth quarter 2015 selling, general and administrative expenses totaled $6.8 million, compared with$5.8 million in the fourth quarter a year ago.
  • Net loss from continuing operations for the fourth quarter of 2015 was $11.9 million, compared with $9.6 million in the same quarter a year ago.
  • Net income from discontinued operations was $3.0 million for the fourth quarter of 2015, compared with a net loss of $10.9 million in the fourth quarter a year ago, and reflects revenues recorded from Zohydro prescriptions and final allocation of income taxes between continuing and discontinued operations.
  • Total net loss for the fourth quarter of 2015 was $8.8 million, or $0.36 per share, compared with a net loss of $20.5 million, or $1.09 per share, for the fourth quarter a year ago.

Year Ended December 31, 2015 Financial Results Compared to Year Ended December 31, 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 year ended December 31, 2015 was $27.2 million, and reflected $24.4 million of contract manufacturing revenue and $2.8 million of service and other product revenue. This compared with total revenue of $28.9 million in the same period last year, which included $15.4 million of contract manufacturing revenue and $13.6 million of net product and service revenue.  The increase in contract manufacturing revenue and decrease in net product revenue in the year ended December 31, 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 year ended December 31, 2015 totaled $27.9 million, up from $11.9 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 expenses for the year ended December 31, 2015 totaled $26.3 million, compared with $34.6 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 year ended December 31, 2015 was $41.7 million, compared with net income from continuing operations of $61.5 million in the same period a year ago, which includes the pre-tax gain on the sale of Sumavel DosePro.
  • Net income from discontinued operations for the year ended December 31, 2015 was $67.8 million, compared to a net loss of $52.9 million in the year ago period.  Income from discontinued operations in 2015 includes a gain on the sale of the Zohydro business of $75.4 million, net of applicable tax expense.
  • Total net income for the year ended December 31, 2015 was $26.1 million, or $1.22 per share, compared with net income of $8.6 million, or $0.48 per share, for the year ended December 31, 2014.
  • Cash and cash equivalents at December 31, 2015 totaled $155.3 million.

2016 Financial Guidance

Below is the Company’s financial guidance for the full year 2016.

  • Research and development expenses are expected to be $54-59 million, reflecting initiation and ramp-up of ZX008 clinical studies;
  • Selling, general and administrative expenses are expected to be $25-27 million; and
  • Contract manufacturing revenue from the supply of Sumavel DosePro to Endo is expected at a low single-digit markup over cost of contract manufacturing. (Original Source)

Shares of Zogenix closed today at $9.21, down $0.74 or -7.44%. ZGNX has a 1-year high of $21.65 and a 1-year low of $7.90. The stock’s 50-day moving average is $9.92 and its 200-day moving average is $13.24.

On the ratings front, Zogenix has been the subject of a number of recent research reports. In a report issued on December 15, Brean Murray Carret analyst Difei Yang reiterated a Buy rating on ZGNX, with a price target of $28, which represents a potential upside of 180.0% from where the stock is currently trading. Separately, on November 13, Oppenheimer’s Akiva Felt assigned a Buy rating to 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, Difei Yang and Akiva Felt have a total average return of -19.1% and -2.1% respectively. Yang has a success rate of 26.0% and is ranked #3669 out of 3694 analysts, while Felt has a success rate of 32.2% and is ranked #3162.

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.