Zogenix (ZGNX)

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Sub $2 Biotech Stocks On The Move-Zogenix Excerpt
Bret Jensen,Apr. 16, 2015 3:29 PM ET
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Zogenix (NASDAQ:ZGNX). This small biopharma was primarily focused on developing therapies that address specific clinical needs for people living with CNS (Central Nervous System) and pain-related conditions that need innovative treatment alternatives to help them return to normal daily functioning.

The company's main product was Zohydro. This is a compound for chronic severe pain sufferers who have issues with other extended-release opioid medications such as OxyContin and hydrocodone (Vicodin).

This population is believed to be some 2.5 million just in the United States. After getting an extended abuse resistant version of Zohyrdro approved by the FDA earlier this year, the company made a momentous decision for the company.

Zogenix decided to sell the rights to Zohydro to Pernix Therapeutics Holdings (NASDAQ:PTX) recently. As part of the deal, Zogenix will transfer Zohydro sales team to Pernix. That will slash its employee count to 60 from 200 and reduce operational costs substantially. The company will receive $100 million in upfront payments for selling Zohyrdo to Pernix.

It could also earn more than $250 million more in milestone payments if Zohyrdo hits certain regulatory and sales goals. To put in perspective, the company has a current market capitalization of approximately $250 million.

Zogenix still has a few "shots on goal". The company has a proprietary once-monthly subcutaneous formulation of risperidone for the treatment of schizophrenia in phase II trials. Finally, it recently purchased a compound that could potentially be a treatment for Dravet syndrome that will soon start Phase III trials.

Zogenix had some $50 million in net cash on the books before the sale of Zohydro to Pernix. The stock currently sells for $1.60 a share after dipping to $1.20 a share on the overreaction of the sale. The five analysts that cover the stock have price targets ranging from $2.25 to $3.50 a share on ZGNX.





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