On March 10, 2015, Zogenix, Inc. entered into an asset purchase agreement with Pernix Ireland Limited and Pernix Therapeutics Holdings, Inc., as guarantor, pursuant to which, and on the terms and subject to the conditions thereof, among other things, the Company agreed to sell its Zohydro ER business to the Buyers, including the registered patents and trademarks, certain contracts, the new drug application and other regulatory approvals, documentation and authorizations, the books and records, marketing materials and product data relating to Zohydro ER.
Under the terms of the Asset Purchase Agreement, the Buyers will pay the Company $30 million in cash upon closing of the transaction, $3 million of which will be deposited into escrow to fund potential indemnification claims for a period of 12 months. At the Closing, the Company will also receive $50 million in the form of a secured promissory note and $20 million in common stock consideration from Pernix (based on the $11.89 per share closing price of Pernix Therapeutic’s common stock on the trading day immediately preceding the execution date).
In addition to the upfront cash payment, the Company is eligible to receive additional cash payments of up to $283.5 million based on the achievement of pre-determined milestones, including a $12.5 million payment upon approval by the U.S. Food and Drug Administration of an abuse-deterrent extended-release hydrocodone tablet (currently in development in collaboration with Altus Formulation Inc.) and up to $271 million in potential sales milestones. Pursuant to the Asset Purchase Agreement, Pernix has agreed to use commercially reasonable efforts (as defined in the Asset Purchase Agreement) to meet such milestones. Furthermore, Pernix will assume responsibility for the Company’s obligations under the purchased contracts and regulatory approvals, as well as other liabilities associated with the Zohydro ER business arising after the Closing date. The Company will retain all liabilities associated with the Zohydro ER business arising prior to the Closing date.
