Zogenix Announces Sale of SUMAVEL DosePro Migraine Therapy to Endo International for $85M, Up to $20M Milestone Payments
Zogenix, Inc. (Nasdaq: ZGNX), a pharmaceutical company developing and commercializing products for the treatment of pain-related and central nervous system (CNS) disorders, announced today that it has entered a definitive agreement to sell its SUMAVEL® DosePro® Needle-free Delivery System (sumatriptan injection) migraine therapy business to Endo International plc (Nasdaq: ENDP) for $85 million in cash and milestone payments of up to $20 million.
Roger Hawley, Chief Executive Officer of Zogenix, said, "This agreement allows the Company to have a greater level of focus on the launch of Zohydro™ ER and provides capital to continue the development of two abuse deterrent formulations of Zohydro ER and advance its novel pipeline in CNS disorders, including product opportunities which leverage our DosePro technology. We will now focus the full efforts and energy of the entire commercial and business development teams on building the pain business."
Mr. Hawley added, "We believe this agreement represents a positive opportunity for both companies. Endo is well positioned to immediately serve SUMAVEL DosePro prescribers and patients. The agreement allows SUMAVEL DosePro to receive the resources it deserves to reach more prescribers and help more migraine patients. We believe the selection of Endo, with their strong experience and reputation in this market, is in the best interest of the migraine community."
SUMAVEL DosePro was launched in January 2010, reaching over 270,000 total prescriptions with more than 2 million units distributed by the end of 2013.1 SUMAVEL DosePro net sales for 2013 were $31.7 million.
Under terms of the agreement, Endo will pay Zogenix $85 million in cash to acquire the SUMAVEL DosePro business upon closing of the deal, a portion of which will be deposited into escrow to fund potential indemnification claims for a period of 12 months. In addition to the upfront cash payment, Zogenix is eligible to receive additional cash payments of up to $20 million based on the achievement of pre-determined sales and manufacturing milestones. Zogenix will continue to manufacture SUMAVEL DosePro under a supply agreement. Upon closing, Endo will purchase the finished goods inventory and support the manufacturing operations with a working capital loan. The transaction is expected to close during the second quarter of 2014, after customary closing conditions have been met.
The SUMAVEL DosePro New Drug Application will be transferred to Endo, who will obtain worldwide rights to the product. Zogenix will maintain ownership of the DosePro Needle-Free Delivery System technology and all manufacturing assets upon which SUMAVEL DosePro is based as well as retain responsibility for the entire DosePro manufacturing supply chain. For Zogenix, these assets are essential because of its plans to leverage the technology for other product opportunities. Endo will assume responsibility for Zogenix's royalty obligation to Aradigm on sales of SUMAVEL DosePro.
Ann Rhoads, Chief Financial Officer of Zogenix, commented, "Approximately $40 million of the proceeds will be used to eliminate our debt obligation with HealthCare Royalty Partners. More importantly, the remainder will add a significant amount of capital to support our commercial activities and expand our pipeline."
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