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Zogenix Provides Corporate Update and Reports First Quarter 2016 Financial Results
Company will host a conference call today at 4:30 p.m. EDT/1:30 p.m. PDT

EMERYVILLE, Calif., May 10, 2016 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2016.

Corporate Update

  • Initiated the first Phase 3 clinical trial of ZX008 in North America for the treatment of seizures in Dravet syndrome, a rare and debilitating form of epilepsy that begins in infancy.
     
  • Received Fast Track designation from the FDA for ZX008 in Dravet syndrome.
     
  • Presented updated data from the ongoing open-label clinical trial in Belgium demonstrating sustained effectiveness and cardiovascular-related safety, as well as high levels of sleep quality and quality of life, in the cohort of Dravet syndrome patients who began add-on treatment with ZX008 as early as 2010.
     
  • Completed the three months ended March 31, 2016, with $132.2 million in cash and cash equivalents. Zogenix’s expected cash runway extends through 2017.

“Zogenix remains focused on advancing our ZX008 Phase 3 program for Dravet syndrome, with the North American clinical trial having recently been initiated and our multi-national study expected to begin very shortly,” said Stephen J. Farr, Ph.D., President and CEO. “The most recent sustained efficacy and safety data generated from the open-label Belgian study continued to support our confidence in the potential of this new treatment. In addition, we believe the relatively high levels of sleep quality and quality of life reported in the most recent updated results reflect the seizure control in these patients.” 

First Quarter 2016 Financial Results Compared to First Quarter 2015 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 first quarter of 2016 was $9.2 million, consisting entirely of contract manufacturing revenue. This compared with total revenue of $4.6 million in the same quarter last year, which included $4.2 million of contract manufacturing revenue and $0.4 million of service and other product revenue. The increase in contract manufacturing revenue in the first quarter of 2016 was due primarily to an increase in expenses billed to Endo International Plc under the supply agreement between the two companies.
     
  • First quarter 2016 research and development expenses totaled $8.0 million, up from $5.2 million in the first quarter a year ago, as the Company continued preparations for its two Phase 3 studies for ZX008 and initiated the North American study.
     
  • First quarter 2016 selling, general and administrative expenses totaled $6.1 million, compared with $6.3 million in the first quarter a year ago.
     
  • Net loss from continuing operations for the first quarter of 2016 was $10.2 million, essentially unchanged from the same quarter a year ago.
     
  • Net loss from discontinued operations was $0.2 million for the first quarter of 2016, compared with a net loss of $12.7 million in the first quarter a year ago.
     
  • Total net loss for the first quarter of 2016 was $10.4 million, or $0.42 per share, compared with a net loss of $22.9 million, or $1.19 per share, for the first quarter a year ago. 
     
  • Cash and cash equivalents at March 31, 2016 totaled $132.2 million, as compared to $155.3 million at December 31, 2015.

2016 Financial Guidance

Zogenix is reiterating its previously provided 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.

Conference Call Details
Investors interested in participating in today’s live call can dial 888-576-4398 from the U.S. and international callers can dial 719-457-2727 and use conference ID: 6099104. A telephone replay will be available approximately two hours after the call and will run through May 24, 2016, by dialing 877-870-5176 from the U.S., or 858-384-5517 from international locations, and entering Replay Pin Number: 6099104. The conference call will be broadcast live and will be available for replay for 60 days at: http://public.viavid.com/index.php?id=119074 and on the IR section of the company’s website at: Zogenix IR.

About Zogenix
Zogenix, Inc. (Nasdaq:ZGNX) is a pharmaceutical company committed to developing and commercializing CNS therapies that address specific clinical needs for people living with orphan and other CNS disorders who need innovative treatment alternatives to improve their daily functioning.

For more information, visit www.zogenix.com.

Forward Looking Statements

Zogenix cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "indicates," "will," "intends," "potential," "suggests," "assuming," "designed" and similar expressions are intended to identify forward-looking statements. These statements are based on the company's current beliefs and expectations. These forward-looking statements include statements regarding: the Company’s financial guidance for the remainder of 2016; the Company's cash position related to operating expenses and planned development activities; the timing of the commencement and results of Phase 3 clinical studies for ZX008; Zogenix's strategy on advancing its novel pipeline in CNS disorders; and the expected timing of, and Zogenix's ability to achieve, key clinical milestones and regulatory meetings and submissions for Zogenix's development pipeline. The inclusion of forward-looking statements should not be regarded as a representation by Zogenix that any of its plans will be achieved. Actual results may differ from those set forth in this release due to the risks and uncertainties inherent in Zogenix's business, including, without limitation: the uncertainties associated with the clinical development and regulatory approval of product candidates such as ZX008 and Relday, including potential delays in enrollment and completion of clinical trials; the potential that earlier clinical trials may not be predictive of future results; Zogenix's reliance on third parties to conduct its clinical trials, enroll patients, manufacture its preclinical and clinical drug supplies and manufacture commercial supplies of its drug products, if approved; unexpected adverse side effects or inadequate therapeutic efficacy of ZX008 that could limit approval and/or commercialization, or that could result in recalls or product liability claims; Zogenix's ability to fully comply with numerous federal, state and local laws and regulatory requirements that apply to its product development activities; Zogenix could spend its available financial resources faster than it currently expects and may be unable to raise additional capital if and when needed, on acceptable terms or at all; and other risks described in Zogenix’s prior press releases as well as in public periodic filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Zogenix undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement. This caution is made under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.

DosePro® and Relday® are registered trademarks of Zogenix, Inc.
All other trademarks are of the associated companies.

Zogenix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
       
  Three Months Ended
  March 31,
    2016       2015  
   
Revenues:      
Contract manufacturing revenue $  9,206     $  4,181  
Service and other product revenue    -        433  
Total revenue    9,206        4,614  
Operating expense:      
Cost of contract manufacturing    7,804        3,923  
Royalty expense    71        72  
Research and development    7,987        5,150  
Selling, general & administrative    6,124        6,268  
Change in fair value of contingent consideration    1,300        (1,000 )
Total operating expense    23,286        14,413  
Loss from operations    (14,080 )      (9,799 )
Other income (expense):      
Interest expense, net    (598 )      (643 )
Change in fair value of warrant liabilities    4,527        410  
Other income (expense)    (7 )      (120 )
Total other income (expense)    3,922        (353 )
Net loss from continuing operations before income taxes   (10,158 )     (10,152 )
Income tax expense    (62 )      (13 )
Net loss from continuing operations    (10,220 )      (10,165 )
Net loss from discontinued operations, net of applicable tax    (169 )      (12,696 )
Net loss $  (10,389 )   $  (22,861 )
       
Net loss per share, basic and diluted $  (0.42 )   $  (1.19 )
       
Weighted average shares outstanding, basic and diluted   24,772       19,170  
       
       



Zogenix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
         
  March 31,   December 31,  
    2016       2015    
         
ASSETS        
Current assets:        
Cash and cash equivalents $  132,184     $  155,349    
Restricted cash    10,002        10,002    
Trade accounts receivable, net    4,904        1,396    
Inventory    9,459        12,030    
Prepaid expenses and other current assets    6,463        5,518    
Current assets of discontinued operations    41        208    
Total current assets    163,053        184,503    
Property and equipment, net    8,959        9,254    
Intangible assets    102,500        102,500    
Goodwill    6,234        6,234    
Other assets    5,861        3,331    
Total assets $  286,607     $  305,822    
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $  3,482     $  5,290    
Accrued expenses    6,183        8,328    
Common stock warrant liabilities    1,669        6,196    
Long-term debt, current portion    6,357        6,321    
Deferred revenue    661        945    
Current liabilities of discontinued operations    2,370        2,906    
Total current liabilities    20,722        29,986    
Long-term debt, less current portion    14,400        15,899    
Deferred revenue, less current portion    5,207        6,139    
Contingent purchase consideration    52,300        51,000    
Deferred income taxes    18,450        18,450    
Other long-term liabilities    1,669        1,588    
Stockholders’ equity    173,859        182,760    
Total liabilities and stockholders’ equity $  286,607     $  305,822    
         

 

CONTACT
Ann Rhoads
Chief Financial Officer
Zogenix, Inc.
858-436-9208
arhoads@zogenix.com

Andrew McDonald
Founding Partner
LifeSci Advisors, LLC
646-597-6987
 Andrew@LifeSciAdvisors.com

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Zogenix, Inc.