Boston, MA 04/24/2014 (wallstreetpr) – Zogenix, Inc. (NASDAQ:ZGNX) continues to surge in early morning trading after announcing it is selling its SUMAVEL DosePro Needle-free Delivery system for $105 million to Endo International Plc. The transaction will involve $85 million in cash and a milestone payment totaling $20 million.
The sell will allow the company to have a greater level of focus on Zohydro and accord it enough capital to be used for the development of Zohydro ER while also advancing pipeline products in CNS disorders. Zogenix, Inc. (NASDAQ:ZGNX) CEO has stated the company will try to enhance development and building of pain business going forward.
The agreement will allow SUMAVEL receive the much needed resources to reach more prescribers while also according the much needed help to migraine patients. Launched in January 2010, SUMAVEL DosePro has reached over 270,000 total prescriptions having distributed over 2 million units in 2013. Its net sales for 2013 clocked in at $31.7 million.
Terms of the Sale
Terns of sale involve Endo paying Zogenix $85 million in cash upon closure of the deal; a portion will be deposited to fund any indemnification claims for the next 12 months. Zogenix will also be eligible to receive an additional $20 million if SUMAVEL achieves predetermined sales and manufacturing milestones within the agreed time.
Zogenix, Inc. (NASDAQ:ZGNX) is also entitled to continue manufacturing SUMAVEL DosePro under a supply agreement of which upon closure of the deal, Endo will purchase any finished goods and inventory as well as manufacturing operations.
The two companies expect the transaction to close in the second quarter of the year after satisfaction of closing conditions. Zogenix plans to use about $40 million of the acquisition fees to eliminate its debt obligation with HealthCare Royalty Partners. The remaining amount will be used to bolster the company’s operating capital while also supporting commercial activities.
Endo will obtain worldwide rights of SUMAVEL DosePro new drug application with Zogenix maintaining ownership of DosePro Needle-Free Delivery system technology, as well as all manufacturing assets. Zogenix, Inc. (NASDAQ:ZGNX) plans to use the assets to leverage its technology in a wide range of product opportunities. Endo on the other hand will be entitled to Zogenix royalty obligation to Aradigm.
