News 
Market Data 
Discover
Replies to post #1997 on Zogenix (ZGNX)
What happen here?
Zogenix To Sell Painkiller Business To Pernix Therapeutics*
BY NATALIE GROVER--Tue Mar 10, 2015 8:20pm EDT
Click For reuters.com PR
(Reuters) - Zogenix Inc (ZGNX.O) said on Tuesday it would sell its Zohydro business to Pernix Therapeutics Holdings Inc (PTX.O) in a deal that could be worth nearly $400 million, to cut costs and focus on two other drugs in its pipeline.
The deal was not expected, but it is not surprising, Oppenheimer & Co's Akiva Felt said in an interview, as Zogenix was feeling the heat of marketing its sole, controversial, drug on the market, and the company never really recovered from the negative press that accompanied the launch of the drug.
"They had to spend a lot of money selling a drug that was growing slowly under their launch; they couldn't afford to do that indefinitely."
Zohydro belongs to the opioid class of drugs, which includes not just powerful prescription painkillers, but also heroin. Since its launch in March 2014, more than 57,000 prescriptions have been written.
The active ingredient of the extended-release painkiller, hydrocodone, is the most commonly prescribed opioid in the United States. Zohydro had drawn widespread criticism as the United States grapples with a surge in opioid abuse.
The deal gives Pernix three extended release hydrocodone products, including an abuse-deterrent version and licenses to multiple patents designed to protect the franchise through 2030.
Zogenix, in turn, will receive a $100 million upfront payment and as much as $283.5 million in milestone payments, it said on Tuesday.
Zogenix Chief Executive Roger Hawley, in a conference call with analysts, said he did not want to reach the point of being forced to raise money, going forward, having dealt with a financial overhang long enough.
"One of the key reasons we made this difficult choice with Zohydro was to be in control of our own destiny"
Zogenix's stock was down about 10 percent in extended trade.
As part of the deal, expected to close in April, Zogenix will also transfer its sales team and other select employees to Pernix, reducing its employee count to 60 from 200.
The deal gives Zogenix capital to develop its remaining assets: brabafen, to treat Dravet syndrome, and relday, to fight schizophrenia. Zohydro will complement Pernix's existing central nervous system product line, while adding extra hands to its sales force.
Leerink Partners LLC acted as financial adviser and Latham & Watkins LLP acted as legal adviser to Zogenix. Jefferies LLC acted as financial adviser to Pernix, whose legal advisers were Lowenstein Sandler LLP and Goodwin Procter LLP.
At the end of January, the U.S. Food and Drug Administration approved an abuse-deterrent version of Zohydro.
