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Organization and Basis of Presentation
9 Months Ended
Sep. 30, 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 central nervous system therapies that address specific clinical needs for people living with orphan and other 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.
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.
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 to Ferrimill Limited (Ferrimill), a wholly-owned subsidiary or Pernix Therapeutics Holdings, Inc. (Pernix Therapeutics), and received $80,000,000 in cash, $10,000,000 of which was placed in escrow, plus approximately $926,000 for Zohydro ER finished goods inventory acquired by the purchaser. 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 5, 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.
On July 1, 2015, the Company effected a 1-for-8 reverse stock split of its common stock and changed its authorized shares of common stock to 50,000,000. All historical per share information presented herein has been adjusted to reflect the effect of the reverse stock split and change to authorized shares of common stock.
On August 5, 2015, the Company completed a public offering of 5,462,500 shares of its common stock at a public offering price of $18.00 per share, including the option to purchase an additional 712,500 shares granted to the underwriters. The shares were registered pursuant to a registration statement on Form S-3 filed on November 6, 2014. The Company received net proceeds of approximately $92,000,000, after deducting underwriting discounts and commissions and offering-related transaction costs.
In its report on our consolidated financial statements for the year ended December 31, 2014, the Company's independent registered public accounting firm included an explanatory paragraph expressing substantial doubt regarding the Company's ability to continue as a going concern. 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 our accounting firm's report dated March 11, 2015, we sold our Zohydro ER business and received consideration of $80.0 million in cash, $10.0 million of which has been deposited in escrow to fund potential indemnification claims for a period of 12 months. Also, approximately 100 sales and marketing employees transitioned to Pernix in conjunction with the divestiture. In addition, we raised $92.0 million, after deducting underwriting discounts and commissions and estimated offering-related transaction costs, from a public offering of our common stock in August 2015. As a result, we are currently operating with an improved cash position and at lower expense levels than previously forecast.
Although it is difficult to predict future liquidity requirements, we believe that our cash and cash equivalents as of September 30, 2015, along with our projected manufacturing revenues will be sufficient to fund our operations for at least the next twelve months.