Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Zogenix, Inc. (the Company) is a pharmaceutical company committed to developing and commercializing therapies that address specific clinical needs for people living with central nervous system disorders who need innovative treatment alternatives to help them return to normal daily functioning. The Company was incorporated in the state of Delaware on May 11, 2006 as SJ2 Therapeutics, Inc. and commenced operations on August 25, 2006. On August 28, 2006, the Company changed its name to Zogenix, Inc.

The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through equity financings, debt financings, revenues from the sale of products and proceeds from business collaborations and divestitures. As the Company continues to incur losses, successful transition to profitability is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. This may not occur and, unless and until it does, the Company will continue to need to raise additional cash. These conditions raised substantial doubt about the Company’s ability to continue as a going concern as noted in our consolidated financial statements for the year ended December 31, 2014. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

Subsequent to the issuance of the Company's annual report for the year ended December 31, 2014 dated March 11, 2015, and the reporting period included in these consolidated financial statements for the three months ended March 31, 2015, the Company sold its Zohydro ER business to Ferrimill Limited (Ferrimill) and received cash proceeds, net of $10,000,000 placed in escrow, of approximately $70,000,000, plus approximately $900,000 for Zohydro ER finished goods inventory acquired by the purchaser. Also, approximately 100 sales and marketing employees transitioned to the purchaser in conjunction with the divestiture.

On May 16, 2014, the Company sold its Sumavel DosePro business to Endo Ventures Bermuda and Endo Ventures Limited (collectively, Endo). In connection with the sale, the Company entered into a supply agreement under which the Company performs contract manufacturing services to provide Sumavel DosePro product exclusively to the purchaser subsequent to the sale.

Recent Developments

On April 24, 2015, the Company sold its Zohydro ER business, 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. Zohydro ER activity has been excluded from continuing operations for all periods herein and reported as discontinued operations as a result of this sale. See Note 6, Sale of Zohydro ER business, for additional information on the divestiture of the Company's Zohydro ER product line. All prior period Zohydro ER business information herein has been recast to conform to this presentation.