Zogenix, Inc. Announces Proposed Convertible Senior Notes Offering

Rhea-AI Summary

Zogenix plans to offer $200 million in convertible senior notes due 2027, with an option for an additional $30 million. The notes are unsecured, will accrue interest payable semi-annually, and can be converted under certain conditions. Proceeds will fund development of Fintepla for Dravet and Lennox-Gastaut syndromes and MT1621 for TK2 deficiency, alongside general corporate purposes. The offering will comply with Rule 144A of the Securities Act and is not registered. The completion and size of the offering depend on market conditions and other factors.

Positive

• Secured $200 million in convertible senior notes to support development of key therapies.
• Intends to use proceeds to advance Fintepla and MT1621 in rare disease markets.

Negative

• Notes will increase debt load if not converted to equity, affecting financial flexibility.

EMERYVILLE, Calif., Sept. 22, 2020 (GLOBE NEWSWIRE) -- Zogenix, Inc. (Nasdaq: ZGNX) today announced its intention to offer, subject to market and other conditions, $200,000,000 aggregate principal amount of convertible senior notes due 2027 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Zogenix also expects to grant the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional $30,000,000 principal amount of notes.

The notes will be senior, unsecured obligations of Zogenix, will accrue interest payable semi-annually in arrears and will mature on October 1, 2027, unless earlier repurchased, redeemed or converted. Noteholders will have the right to convert their notes in certain circumstances and during specified periods. Zogenix will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at Zogenix’s election. The notes will be redeemable, in whole or in part, for cash at Zogenix’s option at any time, and from time to time, on or after October 7, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Zogenix’s common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.

Zogenix intends to use the net proceeds from the offering to fund development and commercialization of Fintepla in Dravet syndrome, Lennox-Gastaut syndrome, and other potential indications, to fund the development of MT1621 in TK2 deficiency and other general corporate purposes, such as working capital and general and administrative expenses.

The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

About Zogenix

Zogenix is a global biopharmaceutical company committed to developing and commercializing therapies with the potential to transform the lives of patients and their families living with rare diseases. The company’s first rare disease therapy, FINTEPLA® (fenfluramine) oral solution, C-IV has been approved by the U.S. FDA and is under review in Europe for the treatment of seizures associated with Dravet syndrome, a rare, severe childhood onset epilepsy. In addition, the company has two late-stage development programs underway: one for FINTEPLA for the treatment of seizures associated with Lennox-Gastaut syndrome, a rare childhood-onset epilepsy and another for MT1621, an investigational novel substrate enhancement therapy for the treatment of TK2 deficiency, a rare genetic disorder. MT1621 is being developed through Modis Therapeutics, a Zogenix company.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release are forward-looking statements, including statements regarding Zogenix’s expectations of the completion, timing and size of the proposed offering and the anticipated use of proceeds therefrom. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions, including the risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the proposed offering, as well as risks and uncertainties inherent in Zogenix’s business, including those described in the company’s periodic filings with the SEC. The events and circumstances reflected in the company’s forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Additional information on risks facing Zogenix can be found under the heading “Risk Factors” in Zogenix’s periodic reports, including its annual report on Form 10-K for the year ended December 31, 2019 and its quarterly report on form 10-Q for the quarterly period ended June 30, 2020, each of which are available on the SEC’s web site at www.sec.gov. Except as required by applicable law, the company does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Contact Information

Zogenix
Melinda Baker
Senior Director, Corporate Communications
+1 (510) 788-8732 | corpcomms@zogenix.com

Investors
Brian Ritchie
Managing Director, LifeSci Advisors LLC
+1 (212) 915-2578 | britchie@lifesciadvisors.com

FAQ

What is Zogenix planning to offer on September 22, 2020?

Zogenix plans to offer $200 million in convertible senior notes due 2027.

What will Zogenix use the proceeds from the note offering for?

The proceeds will fund the development of Fintepla for Dravet syndrome and Lennox-Gastaut syndrome, and MT1621 for TK2 deficiency.

Is the offering of Zogenix notes registered?

No, the offering is not registered under the Securities Act and will be made under Rule 144A.

What are the terms of Zogenix's convertible senior notes?

The notes will accrue interest semi-annually, have a maturity date in 2027, and can be converted under certain conditions.

How much can Zogenix raise through the note offering including the option?

Zogenix can raise up to $230 million, including the initial offering and an additional $30 million option.