ZGNX: Zogenix Is Vastly Over-valued Even With FDA Approval
Zohydro is not well accepted in medical community
This can be evidenced by the fact that FDA Analgesic Drug Products Advisory Committee voted 2-11 against the approval of Zophydro. Even on Zohydro's efficacy, the panel was almost split (7 Yes, 6 No). The main concern that panel members expressed is that 12-week pivotal trial is not long enough to demonstrate efficacy in a chronic patient population that will almost certainly be using the drug for much longer period. The panel members also estimated there could be just as many emergency room visits for Zohydro users as there are for pure oxycodone users; about 85 emergency room visits for every million tablets dispensed. There are only 14 visits for every million hydrocodone combination pills dispensed. Among the 1,512 patients exposed to Zohydro during clinical trials, there is one patient died because he hoarded Zohydro capsules and then opened and ingested them all after completion of the study.
Zohydro market opportunity is very limited
In Zogenix's presentation to the FDA (slide 111), it stated that the peak sale would be 90,000 patients/year by year 5 post launch. Even under the most optimistic scenario laid out by the company, the 90,000 patients roughly translates to about $150MM at most in revenue if we assume 2 pills/day and $9/pill for 90 days treatment period. Zohydro is categorized as Schedule II drugs, which can be supplied for no more than 90 days on a single prescription.
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