Zogenix, Inc (NASDAQ:ZGNX)’s Zohydro ER may fail?

Posted by Lynn Eisler September 11, 2013 0 Comment 2657 views

U.S regulators are telling makers of some opioid pain relievers such as oxycodone and hydrocodone to expressly instruct patients and doctors that alternative treatments should be considered first. Zogenix, Inc (NASDAQ:ZGNX) is awaiting FDA approval for Zohydro ER. This will be the 1st single ingredient hydrocodone drug and there is a definite need for a potent drug like Zohydro ER in the massive chronic-pain market.

Unfortunately for Zogenix, Inc (NASDAQ:ZGNX) , the FDA has now in an effort to combat misuse and addiction of these drugs. In a statement, the FDA said that the manufacturers will have to print instructions on the labels of long-acting and extended release opiods. All the new labels will indicate that these drugs are only for patients who have not found alternatives to be adequate said the agency.

Inopportune timing

Though this news has come at a time when Zogenix, Inc (NASDAQ:ZGNX) has put up Zohydro ER for approval, fact is that there was no guarantee that the regulator was going to approve the drug in the first place. In 2012 December, the Food Drug Administration’s ADAC committee voted 11:2 against the recommendation of Zohydro ER. The Analgesic Drug

Advisory Committee comprises of independent experts and they were sharply divided over the efficacy and safety. But their concern about addiction possibilities was unanimous and they said that the approval of this drug will only unleash a fresh wave of substance abuse and dependence.

Feeble finances

Irrespective of what the FDA rules in this case, Zogenix, Inc’s  feeble financial status and the extremely competitive landscape is something that does not give Zohydro ER much of a fighting chance. At 2013 March end; ZGNX had an average quarterly-burn rate of $1.5 million and $25 million in cash reserves. What this indicates is that the company will have just $10 million in its coffers.

The company had laid-off almost 40 percent of its work-staff in June as it wanted to conserve that cash till the FDA announcement came through. Unfortunately, by the looks of it, this is something that might not happen at all.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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