Zogenix Buys Brabant Pharma - Quick Facts

(RTTNews) - Zogenix Inc. (ZGNX) announced that it acquired Brabant Pharma, a privately-held U.K.-based pharmaceutical company for $20 million in cash and $15 million in stock plus potential future milestone and royalty payments.

The acquisition includes worldwide development and commercialization rights to Brabafen, low-dose fenfluramine, for the treatment of Dravet syndrome, a rare and catastrophic form of intractable epilepsy that begins in infancy.

Brabafen has recently received orphan drug designation in Europe and the U.S. for the treatment of Dravet syndrome.

"With the addition of this potential breakthrough product candidate, Brabafen, to our development programs for two abuse deterrent formulations of extended-release hydrocodone and Relday, we believe Zogenix is poised to reach key clinical studies results and regulatory submissions every year from 2015 through 2018," said Stephen Farr, Ph.D., president of Zogenix. Dr. Farr continued.

In addition to the $35 million acquisition cost in cash and Zogenix stock (11.995 million shares to be registered), the terms of the purchase agreement includes $50 million in potential regulatory milestone payments and up to $45 million in royalty payments on Brabafen sales. The first milestone payment is not anticipated until late 2016 upon submission of the New Drug Application for Brabafen.

Zogenix also signed a non-binding term sheet which, subject to the negotiation and execution of definitive documentation, is anticipated to provide a $20 million term loan plus an additional $4 million in a revolving line of credit. This potential financing is expected to help fund research and development expenses for Brabafen and Relday, and the launch, if approved, of an abuse deterrent formulation of Zohydro ER.

Expenses related to the Phase 3 clinical programs for Brabafen are estimated at $10 million, with an additional $5 million in post-approval clinical expenses. The Company ended the third quarter of 2014 with approximately $50 million in cash plus an additional $8.5 million remaining in escrow from the sale of Sumavel DosePro earlier this year.

The company anticipates combined selling, general and administrative expenses and research and development expenses, including expenses related to the acquisition, for the second half of the year 2014 to be $50 million to $55 million, towards the low end of the full-year guidance range previously provided.