zgnx-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________


			(Mark One)
			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-34962

ZOGENIX, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware			20-5300780
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

5959 Horton Street, Suite 500 Emeryville, California 94608
(Address of Principal Executive Offices and Zip Code)

510-550-8300

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

ZGNX

The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of April 30, 2021 was 55,812,590.

ZOGENIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

TABLE OF CONTENTS


		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (unaudited)	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020 (unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)	5
	Notes to the Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
	Signatures	32

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ZOGENIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except par value)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	86,317	$	166,916
Marketable securities	348,905		338,193
Accounts receivable, net	6,119		3,824
Inventory	2,324		1,026
Prepaid expenses and other current assets	11,065		12,215

Total current assets	454,730		522,174
Property and equipment, net	8,377		8,724
Operating lease right-of-use assets	7,452		7,748
Intangible asset, net	96,587		98,558
Goodwill	6,234		6,234
Other non-current assets	7,584		7,692
Total assets	$	580,964	$	651,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,964	$	11,945
Accrued and other current liabilities	30,749		54,964
Deferred revenue, current	5,297		5,318
Current portion of operating lease liabilities	1,621		1,688
Current portion of contingent consideration	8,900		8,800


Total current liabilities	58,531		82,715

Deferred revenue, noncurrent	5,664		5,479
Operating lease liabilities, net of current portion	9,937		10,314
Contingent consideration, net of current portion	34,100		33,600
Convertible senior notes	151,451		149,353
Total liabilities	259,683		281,461
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding	—		—
Common stock and additional paid-in capital, $0.001 par value: 100,000 shares authorized; 55,813 and 55,736 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1,701,788		1,694,580
Accumulated deficit	(1,380,470)		(1,324,840)
Accumulated other comprehensive loss	(37)		(71)
Total stockholders’ equity	321,281		369,669
Total liabilities and stockholders’ equity	$	580,964	$	651,130

See accompanying notes to the unaudited condensed consolidated financial statements.

ZOGENIX, INC. | Q1 2021 Form 10-Q | 1

ZOGENIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2021		2020
Revenues:
Net product sales	$	12,349	$	—
Collaboration revenue	1,335		1,249
Total revenues	13,684		1,249
Costs and expenses:
Cost of product sales (excluding amortization of intangible asset)	676		—
Research and development	30,969		33,240
Selling, general and administrative	31,272		21,318
Intangible asset amortization	1,971		—
Acquired in-process research and development costs	—		1,500
Change in fair value of contingent consideration	600		(7,900)
Total costs and expenses	65,488		48,158
Loss from operations	(51,804)		(46,909)
Interest income	308		1,088
Interest expense	(3,737)		—
Other (expense) income, net	(397)		20,021
Net loss	$	(55,630)	$	(25,800)

Net loss per share, basic and diluted	$	(1.00)	$	(0.54)

Weighted average number of shares used in the calculation of basic and diluted net loss per common share	55,750		48,185

See accompanying notes to the unaudited condensed consolidated financial statements.

ZOGENIX, INC. | Q1 2021 Form 10-Q | 2

ZOGENIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2021		2020
Net loss	$	(55,630)	$	(25,800)
Other comprehensive (loss) income, net of tax:
Change in unrealized gains related to marketable securities	(112)		(172)
Foreign currency translation adjustments	146		5
Total other comprehensive income (loss)	34		(167)
Comprehensive loss	(55,596)		(25,967)

See accompanying notes to the unaudited condensed consolidated financial statements.

ZOGENIX, INC. | Q1 2021 Form 10-Q | 3

ZOGENIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


Three Months Ended March 31, 2021	Shares of Common Stock	Common Stock and Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2020	55,736	$	1,694,580	$	(1,324,840)	$	(71)	$	369,669
Net loss	—	—		(55,630)		—		(55,630)
Other comprehensive income	—	—		—		34		34
Issuance of common stock under employee equity plans	120	6		—		—		6
Shares repurchased to satisfy tax withholding obligation of vesting restricted stock units	(43)	(896)		—		—		(896)
Stock-based compensation	—	8,098		—		—		8,098
Balance at March 31, 2021	55,813	$	1,701,788	$	(1,380,470)	$	(37)	$	321,281


Three Months Ended March 31, 2020	Shares of Common Stock	Common Stock and Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
Balance at December 31, 2019	45,272	$	1,360,137	$	(1,115,457)	$	379	$	245,059
Net loss	—	—		(25,800)		—		(25,800)
Other comprehensive loss	—	—		—		(167)		(167)
Issuance of common stock, net of offering costs	9,798	221,708		—		—		221,708
Issuance of common stock under employee equity plans	297	3,882		—		—		3,882
Shares repurchased to satisfy tax withholding obligation of vesting restricted stock units	(26)	(569)		—		—		(569)
Stock-based compensation	—	6,394		—		—		6,394
Balance at March 31, 2020	55,341	$	1,591,552	$	(1,141,257)	$	212	$	450,507

See accompanying notes to the unaudited condensed consolidated financial statements.

ZOGENIX, INC. | Q1 2021 Form 10-Q | 4

ZOGENIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(55,630)	$	(25,800)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation	8,098		6,394
Depreciation and amortization	2,365		357
Amortization of debt discount and issuance costs	2,098		—
Acquired in-process research and development expense	—		1,500
Change in fair value of contingent consideration liability	600		(7,900)
Other non-cash items, net	236		(38)
Changes in operating assets and liabilities:
Accounts receivable	(2,295)		—
Inventory	(1,298)		—
Prepaid expenses and other current assets	1,150		(20,463)
Other non-current assets	108		(405)
Accounts payable, accrued and other current liabilities	(9,010)		(4,435)
Operating lease liabilities	(444)		(452)
Deferred revenue	164		(1,249)
Net cash used in operating activities	(53,858)		(52,491)
Cash flows from investing activities:
Cash paid for in-process research and development asset	—		(1,500)
Purchases of marketable securities	(141,652)		(15,695)
Proceeds from sale and maturities of marketable securities	130,888		54,605
Purchases of property and equipment	(87)		(193)
Net cash (used in) provided by investing activities	(10,851)		37,217
Cash flows from financing activities:
Payment of contingent consideration	(15,000)		—
Proceeds from issuance of common stock under equity incentive plans	6		2,040
Payments of tax withholding obligation on vesting restricted stock units	(896)		(569)

Proceeds from issuance of common stock, net of issuance costs	—		221,708
Net cash (used in) provided by financing activities	(15,890)

SEC Form 10-Q filed by Zogenix, Inc.