Zogenix, Inc. to Cut 37% of Workers to Stretch Its Cash
6/5/2013 9:19:07 AM
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Zogenix Announces Initiatives to Reach Key Business Milestones
Zogenix, Inc. (Nasdaq:ZGNX), a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain, announced today initiatives to extend its cash runway to reach key business milestones that may occur over the remainder of the year. These milestones include the Company's efforts to gain U.S. Food and Drug Administration (FDA) approval for its New Drug Application (NDA) for Zohydro ERTM (hydrocodone bitartrate extended release capsules) for chronic pain, to secure a development partner for ReldayTM, a once-monthly injectable formulation of risperidone for schizophrenia, and to out-license the Company's proprietary DosePro needle-free delivery technology. The initiatives underway are expected to extend the Company's cash runway beyond the potential achievement of one or more of these milestones during the second half of 2013.
The Company's initiatives include:
* A reduction in the Company's workforce of 148 by a total of 55 full-time equivalent employees (approximately 37%) across all functional areas of the Company.
* Maintaining the Company's core commercial capabilities and ability to support the potential launch of Zohydro ER three to four months after potential approval by retaining 93 full-time equivalent employees, including 57 in sales and marketing. The expected timeline for FDA action on the Zohydro ER NDA is unchanged and remains sometime this summer.
* Cost control initiatives to further reduce operating expenses and capital expenditures.
* Increase focus on reaching SUMAVEL DosePro brand-level profitability, and to leverage the Zogenix sale force presence in neurology. The Company is making encouraging progress towards securing a second product to co-promote with a goal of beginning sometime this summer.
Roger L. Hawley, chief executive officer of Zogenix, stated, "We have not received any new updates from the FDA on the timing of their decision regarding the Zohydro ER NDA and remain confident in the Zohydro ER program. In addition, Zogenix has other upcoming value creating milestones that could occur in the second half of the year. We are implementing these initiatives to ensure we are in a position to benefit from these potential milestones while also continuing to support our existing commercial business and partners. Our approach includes a balance of expense reduction, a reduction in workforce, cost controls, and progress in business development efforts.
Mr. Hawley concluded, "The reduction to our workforce was an extremely difficult decision for our management team and our Board. I have great respect for all of our employees and thank them for the contribution they make every day for the patients we serve. I would like to thank all of our departing employees for their hard work, enthusiasm and dedication to our corporate mission. Planning for our future, we have preserved our core commercial capabilities while reducing the size of our team in light of the unfortunate FDA delay on Zohydro ER."
Zogenix expects to record most of the expense related to the reduction in force with a one-time charge of approximately $1.0 million in the second quarter 2013. To date, the Company has not raised any capital through its $25 million At The Market ("ATM") facility.
Zogenix, Inc. (Nasdaq:ZGNX), with offices in San Diego and Emeryville, California, is a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain. Zogenix's first commercial product, SUMAVEL® DosePro® (sumatriptan injection) Needle-free Delivery System, was launched in January 2010 for the acute treatment of migraine and cluster headache. Zogenix's lead investigational product candidate, Zohydro™ ER (hydrocodone bitartrate extended release capsules), is an oral, extended-release formulation of various strengths of hydrocodone, without acetaminophen, intended for administration every 12 hours for around the clock management of moderate to severe chronic pain. In May 2012, Zogenix submitted to the FDA a New Drug Application for Zohydro ER. Zogenix's second investigational product candidate, Relday™, is a proprietary, long-acting injectable formulation of risperidone for the treatment of schizophrenia; an investigational new drug application was submitted to the FDA in May 2012.
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" 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 potential extension of Zogenix's cash runway; the projected expense related to the reduction in workforce and the timing of the expense; other financial estimates and projections; the likelihood of achieving and benefitting from any key business milestones; and the business development opportunities available to Zogenix. 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 risk and uncertainties inherent in Zogenix's business, including, without limitation: Zogenix's ability to successfully implement, in the anticipated timeframes, the planned workforce reduction and other cost control initiatives; Zogenix's ability to attract and retain qualified personnel; the potential for Zohydro ER to receive regulatory approval on a timely basis or at all, including as a result of the delay in the PDUFA target action date for the Zohydro ER NDA and recent FDA determinations concerning abuse deterrent properties of existing opioid drugs; the potential for adverse safety findings relating to Zohydro ER or negative publicity concerning opioids in general to delay or prevent regulatory approval or commercialization; the potential for delays associated with any additional data required by the FDA to be submitted by Zogenix in support of the Zohydro ER NDA; the ability of Zogenix and its licensors to obtain, maintain and successfully enforce adequate patent and other intellectual property protection of its products and product candidates and the ability to operate its business without infringing the intellectual property rights of others; difficulties in identifying, negotiating and carrying out strategic transactions relating to Zohydro ER and Relday; the inherent risks of clinical development of Relday, including potential delays in enrollment and completion of clinical trials, and Zogenix's dependence on its existing collaboration with DURECT Corporation and potential new partners to develop Relday; and other risks described in the company's prior press releases and 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 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.
SUMAVEL®, DosePro®, ReldayTM and ZohydroTM ER are trademarks of Zogenix, Inc.
Zack Kubow | The Ruth Group
Caitlin Cox | The Ruth Group
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