Pernix Therapeutics Holdings said today that, through a subsidiary, it plans to acquire the Zohydro® ER (hydrocodone bitartrate) pain drug franchise, in a deal that could generate up to $383.5 million for seller Zogenix.
The deal includes three extended release hydrocodone products—including the already-marketed Zohydro ER; the recently-approved Zohydro ER with BeadTek™; and a third Zohydro drug now in development, known as ZX007 or the Altus formulation—as well as licenses to multiple patents designed to protect the franchise through 2030.
Pernix said the deal would enable the company to catapult itself into leadership in the opioid pain segment, and would be an excellent strategic fit with its existing CNS focus, providing what it termed immediate sales synergies in a previously untapped market segment for insomnia treatment Silenor® (doxepin).
“Approximately two-thirds of patients experiencing chronic pain report having poor or unrefreshing sleep. Silenor, the only non-scheduled, non-addictive prescription medication for insomnia, provides a valuable option for patients already taking a scheduled medication for pain relief,” Pernix chairman and CEO Doug Drysdale said in a statement.
“The acquisition of Zohydro is a major step forward in our strategy to expand our commercial reach into complementary, underserved therapeutic areas, and we expect it to create significant value for our shareholders,” Drysdale added.
He said Pernix will double the size of its specialty sales force by hiring from Zogenix its 100 Zohydro ER field sales and key commercial support staffers at the closing of the deal, expected to take place next month, subject to customary closing conditions.
Pernix agreed to pay Zogenix $100 million upfront, including a minimum of $30 million in cash and $20 million in Pernix common stock (based on the closing price on March 9). For the remainder of the upfront money, Pernix agreed to issue to Zogenix a six-month, $50 million promissory note that will accrue interest at a rate of LIBOR + 3%, as well as purchase Zohydro ER inventory.
Pernix also agreed to pay up to $283.5 million tied to achieving regulatory and commercial milestones—including a $12.5 million milestone payment upon approval of ZX007 abuse-deterrent extended-release hydrocodone tablet; and up to $271 million in potential sales milestones.
Zohydro ER, launched in March 2014, has generated more than 57,000 total prescriptions to date, Pernix said. That includes the 18,956 reported by Zohydro today for the fourth quarter of 2014, up 25% compared to the third quarter.
As of December 2014, Pernix said, Zohydro ER had an annual net sales run rate of $23 million and prescriptions grew 15% over the previous month. Zogenix reported Zohydro ER gross factory sales to wholesalers of $9.2 million during the fourth quarter, and $27.3 million for full-year 2014.
Zohydro ER with BeadTek™, approved by the FDA on January 30, is expected to launch in April 2015. Zohydro ER with BeadTek™ is designed to achieve abuse deterrent properties. Studies supporting a sNDA filing in the second half of 2015, to add abuse deterrent label claims, are in process.
Pernix also said it will work with Zogenix to continue the development of ZX007, another abuse deterrent tablet formulation of hydrocodone ER that has patent protection through 2030. An NDA submission for ZX007 is expected to be filed in mid-2016.
Upon closing, Zogenix will transfer to Pernix the NDA for Zohydro ER and related investigational NDAs, while Pernix also agreed to assume responsibility for the Zogenix royalty and manufacturing obligations to Daravita. 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 both programs through a Transitional Services Agreement stretching up to 18 months following closing.