UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2015
ZOGENIX, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-34962 | 20-5300780 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
12400 High Bluff Drive, Suite 650, San Diego, CA | 92130 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (858) 259-1165
(Former Name or Former Address, if Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 | Entry Into a Material Definitive Agreement |
On March 10, 2015, Zogenix, Inc. (the Company or Zogenix) entered into an asset purchase agreement (Asset Purchase Agreement) with Pernix Ireland Limited (Pernix Limited) and Pernix Therapeutics Holdings, Inc., as guarantor (Pernix Therapeutics and, together with Pernix Limited, Pernix or the Buyers), pursuant to which, and on the terms and subject to the conditions thereof, among other things, the Company agreed to sell its Zohydro ER business to the Buyers, including the registered patents and trademarks, certain contracts, the new drug application and other regulatory approvals, documentation and authorizations, the books and records, marketing materials and product data relating to Zohydro ER.
Under the terms of the Asset Purchase Agreement, the Buyers will pay the Company $30 million in cash upon closing (the Closing) of the transaction, $3 million of which will be deposited into escrow to fund potential indemnification claims for a period of 12 months (Escrow Period). At the Closing, the Company will also receive $50 million in the form of a secured promissory note (the Note) and $20 million in common stock consideration from Pernix (based on the $11.89 per share closing price of Pernix Therapeutics common stock on the trading day immediately preceding the execution date). The Note will mature four months after the Closing, which maturity date may be extended in Pernixs sole discretion by up to an additional two months and, in the event of certain intellectual property matters, by up to an additional four months, for an aggregate extension of the maturity date to ten months from closing. The Note is subject to customary events of default, including cross-defaults to certain defaults under Pernixs debt facilities, and will be secured by substantially all of the purchased assets. Upon repayment of the Note, $7 million of the $50 million payable thereunder will be deposited into the escrow to fund potential indemnification claims through the Escrow Period. In addition, the Company has agreed to indemnify Pernix for certain intellectual property matters up to an aggregate amount of $5 million.
In addition to the upfront cash payment, the Company is eligible to receive additional cash payments of up to $283.5 million based on the achievement of pre-determined milestones, including a $12.5 million payment upon approval by the U.S. Food and Drug Administration of an abuse-deterrent extended-release hydrocodone tablet (currently in development in collaboration with Altus Formulation Inc.) and up to $271 million in potential sales milestones. Pursuant to the Asset Purchase Agreement, Pernix has agreed to use commercially reasonable efforts (as defined in the Asset Purchase Agreement) to meet such milestones. Furthermore, Pernix will assume responsibility for the Companys obligations under the purchased contracts and regulatory approvals, as well as other liabilities associated with the Zohydro ER business arising after the Closing date. The Company will retain all liabilities associated with the Zohydro ER business arising prior to the Closing date.
The Asset Purchase Agreement contains customary representations, warranties and covenants, including covenants to cooperate in seeking regulatory approvals, as well as the Companys agreement not to compete in the single entity, extended-release hydrocodone market for five years following the Closing. The obligation of the Buyers to purchase the Zohydro ER business is subject to the satisfaction or waiver of a number of conditions set forth in the Asset Purchase Agreement, including (i) the accuracy of the representations and warranties and compliance with covenants contained in the Asset Purchase Agreement, (ii) the absence of any law or order by any governmental authority that would make illegal or otherwise prohibit the consummation of the transactions under the Asset Purchase Agreement, (iii) all required consents of, notifications to and filings with any governmental authority shall have been made and any waiting periods shall have expired, including the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), (iv) the absence of any actions or proceedings challenging or seeking to restrain or prohibit any of the transactions under the Asset Purchase Agreement, (v) there not
having been a material adverse effect with respect to the Companys Zohydro ER business, (vi) the delivery to the Buyers of a transition services agreement, registration rights agreement, escrow agreement and other ancillary transaction documents and receipt of third party consents, and (vii) other customary conditions. In addition, the Company is required to extinguish all encumbrances on the assets to be sold to Pernix, including the security interests previously granted to Oxford Finance LLC and Silicon Valley Bank (together, the lenders) pursuant to the Companys loan and security agreement, dated December 30, 2014, with the lenders. The Company is currently in discussions with the lenders to amend the loan and security agreement to remove the security interests on the assets to be sold to Pernix. However, if the Company is unable to reach an agreement with the lenders, the Company expects to eliminate its existing debt obligation to the lenders by repaying all amounts owed under the loan and security agreement, including applicable termination fees, which as of December 31, 2014 was $23.3 million.
The Company expects the Closing to occur during April 2015, subject to the satisfaction of the foregoing closing conditions. Either party may terminate the Asset Purchase Agreement if the Closing has not occurred by May 9, 2015, provided that if the Closing has not occurred due to lack of governmental approval, the Closing may be extended up to 60 additional days to obtain such approval. The Company and Pernix may also terminate the Asset Purchase Agreement by mutual consent, for a material uncured breach by the other party, or if a final governmental order prohibiting the transaction is issued.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Asset Purchase Agreement, copies of which the Company expects to file with the Companys applicable Quarterly Report on Form 10-Q. The representations, warranties and covenants contained in the Asset Purchase Agreement were made only for the purposes of the Asset Purchase Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Asset Purchase Agreement and may not have been intended to be statements of fact, but rather, as a method of allocating risk and governing the contractual rights and relationships among the parties to the Asset Purchase Agreement. In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Asset Purchase Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Companys stockholders. In reviewing the representations, warranties and covenants contained in the Asset Purchase Agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions were not intended by the parties to the Asset Purchase Agreement to be characterizations of the actual state of facts or conditions of the Company or the Zohydro ER business. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and filings that the Company publicly files with the U.S. Securities and Exchange Commission. The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Current Report on Form 8-K not misleading.
***
Zogenix cautions you that statements included in this Current Report on Form 8-K 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, designed and similar expressions are intended to identify forward-looking statements. These statements are based on the Companys current beliefs and expectations. These forward-
looking statements include statements regarding the timing and likelihood of closing the Zohydro ER transaction and the potential to receive future milestone payments from the Zohydro ER transaction. 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 press release due to the risk and uncertainties inherent in Zogenixs business, including, without limitation: the uncertainty of approval under the HSR Act for the proposed sale of Zohydro ER; the parties ability to satisfy the conditions to closing the proposed transaction on the anticipated timeline or at all; Pernixs ability to repay the Note when expected; the value of the common stock consideration is subject to changes based on fluctuations in the value of Pernix Therapeutics common stock; long-term financial risks associated with selling Zogenixs commercialized and registered products; potential litigation costs that may arise due to opposition to the proposed transaction; and other risks detailed in Zogenixs public periodic filings with the U.S. 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 report 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.
Item 2.02 | Results of Operations and Financial Condition. |
On March 10, 2015, Zogenix, Inc. issued a press release announcing its financial results for the fourth quarter and full-year ended December 31, 2014. A copy of this press release is attached hereto as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of the Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Item 2.02 of the Current Report on Form 8-K.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit |
Description | |
99.1 | Press Release, dated March 10, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ZOGENIX, INC. | ||||||
Date: March 10, 2015 | By: | /s/ Ann D. Rhoads | ||||
Name: | Ann D. Rhoads | |||||
Title: | Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Press Release, dated March 10, 2015 |
Exhibit 99.1
Zogenix Reports Fourth Quarter and
Full Year 2014 Financial Results
Conference Call and Webcast to Discuss Fourth Quarter Results and
Definitive Agreement to Sell Zohydro ER to Pernix;
Scheduled for Today, March 10, at 4:30 p.m. ET
Clinical and Regulatory Update
| Received FDA approval for new formulation of Zohydro® ER (hydrocodone bitartrate) Extended-Release Capsules, CII, with BeadTek |
| On track to begin Phase 3 clinical study for ZX008 (orphan drug candidate for Dravet syndrome) in the third quarter 2015; data expected in 2016 |
| Enrolled first patient in Relday (novel long-acting injectable formulation of risperidone for schizophrenia) multi-dose clinical study; data on track for third quarter 2015 |
Fourth Quarter 2014 Highlights
| Total prescriptions for Zohydro ER were 18,956, up 25% compared to the third quarter1 |
| Total net revenue of $14.9 million |
| Net product revenue of $5.0 million |
| Zohydro ER gross factory sales to wholesalers of $9.2 million during the fourth quarter; $27.3 million for full year 2014 |
SAN DIEGO March 10, 2015 Zogenix, Inc. (Nasdaq: ZGNX), a pharmaceutical company developing and commercializing products for the treatment of central nervous system (CNS) disorders, today reported financial results for the fourth quarter ended December 31, 2014.
Roger Hawley, chief executive officer of Zogenix, stated, As we enter 2015, we are very excited about the prospects for our differentiated clinical pipeline featuring ZX008 and Relday. We are confident in our ability to execute on these development programs based on our proven success obtaining product approvals, including the recent approval of the new formulation of Zohydro ER with BeadTek. As a result of this recent approval, our discussions for Zohydro ER evolved into broader strategic interest in the brand, which led to the sale of the Zohydro ER business to Pernix announced today in a separate press release.
1 | Symphony Health Solutions, Source® PHAST Prescription Monthly, October December 2014 |
Stephen Farr, president of Zogenix, said, This year we expect to make significant advancements in our clinical pipeline. We are making excellent progress in preparing for the Phase 3 clinical trial for ZX008, our orphan drug candidate for the treatment of Dravet syndrome, which we expect to begin in the third quarter. The existing long-term data on ZX008 from the open-label European study showed that 67% of patients were seizure-free and 87% had a greater than 90% reduction in seizure frequency, during an average treatment period of greater than 12 years. These are very positive effectiveness data in a disease with significant unmet patient need. We also recently enrolled the first patient with schizophrenia in our multi-dose clinical study for Relday, the successful completion of which will position this asset to be Phase 3 ready and for potential international partnering opportunities. ZX008 and Relday represent significant opportunities for the Company and we look forward to advancing these programs over the course of the year.
Fourth Quarter and Full Year 2014 Financial Results
Total revenues for the fourth quarter 2014, which consisted of net product revenue, contract manufacturing revenue, and service and other revenue, were $14.9 million, up 50% from $9.9 million in the fourth quarter 2013.
Net product revenue for the fourth quarter 2014 was $5.0 million, compared to $9.0 million in the fourth quarter 2013. The Company launched Zohydro ER in March 2014, with revenue recognized based on product dispensed through patient prescriptions as estimated by Source Healthcare Analytics. The fourth quarter 2013 net product revenue consisted of sales from the SUMAVEL DosePro business, which the Company sold in May 2014 to Endo International plc (Endo).
As of December 31, 2014, the Company had $7.1 million in deferred revenue for Zohydro ER sold to wholesalers but not yet dispensed through patient prescriptions. Gross-to-net sales deductions will be recorded at the time the prescription units are dispensed.
Contract manufacturing revenue on SUMAVEL DosePro supplied to Endo under the companies supply agreement for the fourth quarter 2014 was $8.9 million.
Service and other revenue for the fourth quarter 2014 was $930,000, compared to $915,000 in the fourth quarter 2013, and was primarily comprised of fees from Valeant Pharmaceuticals for the Companys co-promotion of Migranal® Nasal Spray, which began in August 2013.
Total revenues for the full year 2014 were $40.5 million, up 23% from $33.0 million in the full year 2013. Net product revenue for the full year 2014 was $21.7 million, compared to $31.7 million in the full year 2013. Contract manufacturing revenue for the full year 2014 was $15.4 million. Service and other revenue for the full year 2014 was $3.4 million, compared to $1.3 million in the full year 2013.
Cost of goods sold for the fourth quarter 2014 was $9.4 million, compared to $7.1 million in the fourth quarter 2013. Cost of goods sold or the full year 2014 was $15.8 million, compared to $21.2 million in the full year 2013. Cost of sales in the fourth quarter 2014 included an $8.4 million charge for excess and obsolete inventory primarily related to the transition from the original formulation of Zohydro ER to the new formulation with BeadTek technology planned for the second quarter 2015. Excluding this charge, product gross margin for fourth quarter 2014 was 80% compared to 21% in the fourth
quarter 2013, and was 66% for full year 2014, compared to 33% for full year 2013. The year-over-year improvement was primarily due to product mix, as the Company launched Zohydro ER in March 2014, and sold the SUMAVEL DosePro business in May 2014.
Cost of contract manufacturing for SUMAVEL DosePro supplied to Endo during the fourth quarter 2014 was $8.4 million, and $14.3 million for full year 2014.
Royalty expense for the fourth quarter 2014 was $495,000, an increase from $341,000 in the fourth quarter 2013. Royalty expense for the full year 2014 was $1.7 million, an increase from $1.2 million in the full year 2013. The increase in royalty expense for the quarter and year reflect the launch of Zohydro ER in March 2014.
Research and development expenses for the fourth quarter 2014 were $6.0 million, up 74% from $3.4 million in the fourth quarter 2013. Research and development expenses for the full year 2014 were $18.9 million, up 48% from $12.8 million for the full year 2013. The increase in research and development expenses for the quarter and year was primarily due to development expenses for abuse-deterrent formulations and Relday, and, to a lesser degree, the acquisition of Brabant Pharma in October 2014.
Selling, general and administrative expenses were $17.7 million for the fourth quarter 2014, up 31% from $13.5 million for the fourth quarter 2013. Selling, general and administrative expenses were $88.9 million for the full year 2014, up 78% from $50.0 million for the full year 2013. The increase in selling, general and administrative expenses for the quarter and the year was primarily the result of the launch of Zohydro ER, including expansion of the Companys sales force and the addition of its medical affairs team. It also reflects the implementation of the FDA required ER/LA opioids REMS program and the Companys voluntary initiatives to support the responsible commercialization of Zohydro ER.
Other income for the fourth quarter 2014 totaled $6.6 million, compared to expense of $21.1 million in the fourth quarter 2013. Other income for the full year 2014 totaled $28.7 million, compared to expense of $27.7 million in the full year 2013. The other income and expense in 2013 and 2014 reflects a non-cash mark-to-market adjustment to the fair value of the Companys outstanding warrants driven primarily by changes in the Companys stock price. Additionally, in the fourth quarter 2014, the Company recorded $5.0 million income from consideration received for its exclusivity waiver exchange with Purdue Pharma L.P. and $3.5 million income for sale of right to reference its carcinogenicity data to Teva Pharmaceuticals USA, Inc., both related to Zohydro ER.
Net loss for the fourth quarter 2014 was $20.5 million, or $0.14 per share compared to a net loss of $35.6 million, or $0.28 per share, for the fourth quarter 2013. Non-GAAP net loss adjusted for certain non-cash and non-recurring items for the fourth quarter 2014 was $0.13 per share compared to a loss of $0.13 per share for the fourth quarter 2013. Net income for the full year 2014 was $8.6 million, or $0.06 per share compared to a net loss of $80.9 million, or $0.74 per share, for the full year 2013. Non-GAAP net loss adjusted for certain non-cash and non-recurring items for the full year 2014 was $0.65 per share compared to a loss of $0.54 per share for the full year 2013. The adjustments are detailed in the non-GAAP financial results table included in this release.
Cash and cash equivalents as of December 31, 2014 were $42.2 million. Additionally, restricted cash was $8.5 million as of December 31, 2014, consisting of the portion of proceeds from the sale of the SUMAVEL DosePro business to Endo required to be held in escrow until May 2015. On December 30, 2014, the Company secured $20 million in term loans and $4 million in revolving line commitments for working capital and general business purposes.
Ann Rhoads, chief financial officer of Zogenix, said, Our research and development and selling, general and administrative expenses came in lower than expected for the fourth quarter and full year. We achieved this while also generating positive revenue trends for Zohydro ER.
2015 Financial Guidance
Zogenix is not providing financial guidance on expected 2015 revenues and expenses at this time. However, the Company expects its current financial resources and the expected proceeds from the sale of the Zohydro ER business to provide a cash runway through three significant clinical milestones: the end of phase 2 meeting for Relday, followed by the regulatory submissions in the U.S. and Europe for ZX008, which are anticipated in the fourth quarter 2016. The Company expects to provide updated financial guidance after the transaction is closed on its first quarter 2015 conference call.
Conference Call and Web Cast
Zogenix will hold a conference call today, March 10, 2015 at 4:30 p.m. ET to discuss financial results and operational highlights for the fourth quarter ended December 31, 2014. To participate, please dial (877) 417-5253 (U.S.) or (315) 625-3082 (International); participant passcode: 85134635. To access the live webcast please visit the Zogenix Investor Relations website at http://ir.zogenix.com.
A replay of the conference call will be available beginning March 10, 2015 at 7:30 p.m. ET until March 17, 2015, by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (International); passcode: 85134635. A replay of the webcast will also be accessible on the Investor Relations website for one month, through April 10, 2015.
Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the Companys commercial activities, the Companys financial status and performance, development programs and any comments the Company may make about its future plans or prospects in response to questions from participants on the conference call.
About Zogenix
Zogenix, Inc. (Nasdaq: ZGNX) is a pharmaceutical company committed to developing and commercializing therapies that address specific clinical needs for people living with CNS disorders who need innovative treatment alternatives to help them return to normal daily functioning.
Forward Looking Statements
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, plans, expects, will, potential and similar expressions are intended to identify
forward-looking statements. These statements are based on the companys current beliefs and expectations. These forward-looking statements include statements regarding: Zogenixs cash runway; the timing and likelihood of closing the Zohydro ER transaction; the expected timing of, and Zogenixs ability to achieve, key clinical milestones and regulatory submissions for Zogenixs development pipeline; and the expected timeframes for initiation of and results from clinical trials and other clinical development plans for ZX008 and Relday. Actual results may differ from those set forth in this release due to the risk and uncertainties inherent in Zogenixs business, including, without limitation: the uncertainty of approval under the Hart Scott Rodino Antitrust Improvements Act for the proposed sale of Zohydro ER; the parties ability to satisfy the conditions to closing for the proposed transaction on the anticipated timeline or at all; the uncertainties associated with the clinical development and regulatory approval of product candidates such as ZX008 and Relday, including potential delays in enrollment and completion of clinical trials; the potential that earlier clinical trials may not be predictive of future results; Zogenixs reliance on third parties to conduct its clinical trials, enroll patients, manufacture its preclinical and clinical drug supplies and manufacture commercial supplies of its drug products, if approved; Zogenixs ability to fully comply with numerous federal, state and local laws and regulatory requirements that apply to its product development and commercial activities; Zogenixs ability to obtain additional financing in order to complete the development and commercialization of its product candidates; and other risks detailed under Risk Factors and elsewhere in Zogenixs periodic reports and other filings made with the Securities and Exchange Commission from time to time.
In this press release, Zogenixs financial results are provided both in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, Zogenix provides its net income (loss) and net income (loss) per share for the three and twelve months ended on December 31, 2014 and 2013 adjusted for certain non-cash or non-recurring items, which are non-GAAP financial measures. Management believes these non-GAAP financial results reflect the Companys ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in the Companys business, as they exclude certain income or other expenses that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial results provide useful information to investors and others in understanding and evaluating the Companys operating results and future prospects in the same manner as management, and in comparing financial results across accounting periods and to those of peer companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. A reconciliation of the non-GAAP financial results to GAAP financial results is included in the attached financial statements.
DosePro® and Zohydro® ER are registered trademarks of Zogenix, Inc.
BeadTek is a trademark used by Zogenix under license.
SUMAVEL® is a registered trademark of Endo International, plc.
MIGRANAL® is a registered trademark of Valeant Pharmaceuticals International, Inc. or its affiliates.
Zogenix, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | ||||||||||||||||
Revenues: |
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Net product revenue |
$ | 5,040 | $ | 9,006 | $ | 21,715 | $ | 31,699 | ||||||||
Contract manufacturing revenue |
8,929 | | 15,392 | | ||||||||||||
Service and other revenue |
930 | 915 | 3,424 | 1,313 | ||||||||||||
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Total revenue |
14,899 | 9,921 | 40,531 | 33,012 | ||||||||||||
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Operating (income) expense: |
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Cost of goods sold |
9,354 | 7,097 | 15,817 | 21,241 | ||||||||||||
Cost of contract manufacturing |
8,421 | | 14,342 | | ||||||||||||
Royalty expense |
495 | 341 | 1,718 | 1,242 | ||||||||||||
Research and development |
5,989 | 3,447 | 18,936 | 12,805 | ||||||||||||
Selling, general & administrative |
17,702 | 13,549 | 88,899 | 50,040 | ||||||||||||
Restructuring |
| | | 876 | ||||||||||||
Impairment of long-lived assets |
| | 838 | | ||||||||||||
Net gain on sale of business |
| | (79,980 | ) | | |||||||||||
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Total operating expense |
41,961 | 24,434 | 60,570 | 86,204 | ||||||||||||
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Income (loss) from operations |
(27,062 | ) | (14,513 | ) | (20,039 | ) | (53,192 | ) | ||||||||
Other income (expense): |
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Interest income |
2 | 6 | 20 | 18 | ||||||||||||
Interest expense |
(91 | ) | (1,815 | ) | (3,090 | ) | (6,610 | ) | ||||||||
Loss on early extinguishment of debt |
| | (1,254 | ) | | |||||||||||
Change in fair value of warrant liabilities |
(1,086 | ) | (19,147 | ) | 25,332 | (21,927 | ) | |||||||||
Change in fair value of embedded derivatives |
| (153 | ) | (14 | ) | 759 | ||||||||||
Other income (expense) |
7,755 | 6 | 7,716 | 96 | ||||||||||||
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Total other income (expense) |
6,580 | (21,103 | ) | 28,710 | (27,664 | ) | ||||||||||
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Net income (loss) before income taxes |
(20,482 | ) | (35,616 | ) | 8,671 | (80,856 | ) | |||||||||
Provision for income taxes |
(39 | ) | | (84 | ) | | ||||||||||
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Net income (loss) |
$ | (20,521 | ) | $ | (35,616 | ) | $ | 8,587 | $ | (80,856 | ) | |||||
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Net income (loss) per share, basic and diluted |
$ | (0.14 | ) | $ | (0.28 | ) | $ | 0.06 | $ | (0.74 | ) | |||||
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Weighted average shares outstanding, basic |
150,016 | 127,869 | 142,607 | 108,568 | ||||||||||||
Weighted average shares outstanding, diluted |
150,016 | 127,869 | 145,046 | 108,568 |
Zogenix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 42,205 | $ | 72,021 | ||||
Restricted cash |
8,500 | | ||||||
Trade accounts receivable, net |
8,877 | 6,665 | ||||||
Inventory |
13,439 | 9,936 | ||||||
Prepaid expenses and other current assets |
4,957 | 4,257 | ||||||
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Total current assets |
77,978 | 92,879 | ||||||
Property and equipment, net |
10,618 | 13,011 | ||||||
Intangible assets |
102,500 | | ||||||
Goodwill |
6,234 | | ||||||
Other assets |
5,505 | 6,614 | ||||||
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Total assets |
$ | 202,835 | $ | 112,504 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 8,523 | $ | 4,622 | ||||
Accrued expenses |
20,576 | 22,817 | ||||||
Common stock warrant liabilities |
5,093 | 31,341 | ||||||
Revolving credit facility |
1,450 | | ||||||
Deferred revenue |
8,595 | | ||||||
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Total current liabilities |
44,237 | 58,780 | ||||||
Long term debt |
21,703 | 28,802 | ||||||
Contingent purchase consideration |
53,000 | | ||||||
Deferred tax liability |
20,500 | | ||||||
Other long-term liabilities |
8,116 | 6,496 | ||||||
Stockholders equity |
55,279 | 18,426 | ||||||
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Total liabilities and stockholders equity |
$ | 202,835 | $ | 112,504 | ||||
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Zogenix, Inc.
Non-GAAP Financial Results(1)
(in thousands, except per share amounts)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net income (loss) (as reported, GAAP) |
$ | (20,521 | ) | $ | (35,616 | ) | $ | 8,587 | $ | (80,856 | ) | |||||
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Net income (loss) per share (as reported, GAAP) |
$ | (0.14 | ) | $ | (0.28 | ) | $ | 0.06 | $ | (0.74 | ) | |||||
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Adjustments for certain non-cash or non-recurring items: |
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Change in fair value of warrant liabilities |
$ | 1,086 | $ | 19,147 | $ | (25,332 | ) | $ | 21,927 | |||||||
Change in fair value of embedded derivatives |
| 153 | 14 | (759 | ) | |||||||||||
Reserve for excess and obsolete inventory |
8,363 | | 8,363 | | ||||||||||||
Consideration received for exclusivity waiver exchange |
(5,000 | ) | | (5,000 | ) | | ||||||||||
Sale of right to reference carcinogenicity data |
(3,500 | ) | | (3,500 | ) | | ||||||||||
Restructuring expenses |
| | | 876 | ||||||||||||
Impairment of long-lived assets |
| | 838 | | ||||||||||||
Net gain on sale of business |
| | (79,980 | ) | | |||||||||||
Loss on extinguishment of debt |
| | 1,254 | | ||||||||||||
United Kingdom stamp duty on Brabant acquisition |
692 | | 692 | | ||||||||||||
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Total adjustments to net loss |
$ | 1,641 | $ | 19,300 | $ | (102,651 | ) | $ | 22,044 | |||||||
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Net loss adjusted for certain non-cash or non-recurring items |
$ | (18,880 | ) | $ | (16,316 | ) | $ | (94,064 | ) | $ | (58,812 | ) | ||||
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Adjusted net loss per share (non-GAAP) |
$ | (0.13 | ) | $ | (0.13 | ) | $ | (0.65 | ) | $ | (0.54 | ) | ||||
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Weighted average shares outstanding, diluted |
150,016 | 127,869 | 145,046 | 108,568 | ||||||||||||
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(1) | Management believes these non-GAAP financial results reflect the Companys ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in the Companys business, as they exclude certain income or other expenses that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial results provide useful information to investors and others in understanding and evaluating the Companys operating results and future prospects in the same manner as management, and in comparing financial results across accounting periods and to those of peer companies. |
Contacts:
Investors and Media
The Ruth Group
Zack Kubow / David Burke
646.536.7020 / 7009
zkubow@theruthgroup.com
dburke@theruthgroup.com
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