Zogenix To Sell Zohydro ER Business To Pernix For $100 Mln. Plus Milestones

(RTTNews) - Pharmaceutical company Zogenix Inc (ZGNX) on Tuesday said it agreed to sell its Zohydro ER (hydrocodone bitartrate) business to Pernix Therapeutics (PTX) for $100 million plus regulatory and sales milestones up to $283.5 million. The deal is expected to close in April 2015.

Zogenix, which develops products for the treatment of central nervous system disorders, said the deal enables it to shift focus to its late-stage CNS clinical pipelines.

The sale of Zohydro ER (hydrocodone bitartrate) to Pernix cuts operating expenses, eliminates R&D expenses related to ongoing abuse-deterrent formulations, and enhances the financial strength with non-dilutive capital, Zogenix said.

As per the terms of the deal, Pernix will pay Zogenix $30 million in cash, $20 million in common stock and provide a $50 million short-term promissory note.

Zogenix is also eligible to receive $12.5 million upon approval of ZX007, a tablet formulation of extended-release hydrocodone with abuse-deterrent properties which is currently in development in collaboration with Altus Formulation.

In addition, Zogenix is eligible to receive cash payments of up to $271 million based on the achievement of pre-determined annual product sales milestones for Zohydro ER and ZX007. Pernix will also purchase a pre-defined amount of Zohydro ER product inventory.

The Zohydro ER New Drug Application and related investigational new drug applications will be transferred to Pernix immediately upon closing and Pernix will assume responsibility for Zogenix's royalty and manufacturing obligations to Daravita Ltd, an indirect wholly-owned subsidiary of Alkermes plc.

Upon closing, Pernix will also assume regulatory and financial responsibility for the ongoing efforts related to amending the Zohydro ER label to include abuse-deterrent claims and for the development of ZX007, with Zogenix providing assistance in the development of both programs under a Transitional Services Agreement for up to 18 months following closing.