San Diego’s Zogenix Moving Fast to Commercialize Drug-and-Device Combo
It took centuries for the basic concept of a syringe—a plunger that fits tightly in a tube—to evolve into the medical hypodermic syringe, which uses a hollow needle to inject medication beneath the skin.
The founders of San Diego’s Zogenix say they have developed a faster and simpler method for subcutaneous injections—and on a much faster track.
The specialty pharmaceutical company was founded just four years ago, and won FDA approval for its combined migraine drug and needle-free delivery system in mid-2009. It began selling its sumatriptan delivery device in January, under a marketing agreement with Illinois-based Astellas Pharma that was announced last August.
Zogenix also found time since 2006 to raise a total of $199 million in capital ($164 million in venture funding and $35 million in debt financing) and to initiate a pivotal, late-stage trial of a controlled-release formulation of a second drug candidate, a novel tablet form of hydrocodone for long-term, chronic pain.
Suffice it to say, the company has accomplished a lot in a short time.
But Zogenix CEO Roger Hawley says it wasn’t exactly clear what technologies Zogenix would develop when he founded the startup with seed funding from some of San Diego’s most-prominent life science investors, including Cam Garner, the former chairman and CEO of Dura Pharmaceuticals. Hawley, who had previously worked at Brisbane, CA-based InterMune and Glaxo, says he met Garner after Elan had acquired San Diego-based Dura for $1.8 billion in 2000.
“Cam was sort of exiting Elan at the time when I was recruited,” Hawley says. They were both founding investors in the startup, along with Jim Blair of Domain Associates, Hybritech founder David Hale, and Scott Glenn, a former Quidel CEO who was then with San Diego-based Windamere Ventures. “We all put a little seed money into the company, and I started looking for a product,” Hawley says.
As it turned out, Hawley says the first product they looked at was a needle-free drug delivery technology that was being developed for use with sumatriptan, a fast-acting migraine drug, by Hayward, CA-based Aradigm. Hawley, who was familiar with migraine drugs from his years at Glaxo, led the acquisition of the Aradigm technology. Aradigm’s Stephen Farr, who had led development of the technology at Aradigm, joined Zogenix as a co-founder, president, and chief operating officer.
“It’s not that unusual, really,” Hawley says. Garner “is kind of a serial entrepreneur. He often picks the management team first… It starts small, and if you’re in the pharmaceutical business it quickly gets to be a very large amount of money.”
Despite Hawley’s modesty, Zogenix didn’t really start small. Its Series A round came to a whopping $60 million, with Clarus Ventures, Domain Associates, BA Venture Partners (now Scale Venture Partners), Thomas, McNerney & Partners, and Life Science Angels chipping in; the round later expanded to $78 million. Zogenix filed for an IPO in 2008, but market conditions led the company to cancel those plans. That necessitated last December’s Series B round of $71 million, which was extended in July to include an additional $15 million in equity and $35 million in debt financing. Additional investors include Abingworth Management, Chicago Growth Partners, with Oxford Finance Corp. and Silicon Valley Bank providing the debt facility.
“Actually, our story hasn’t changed since we formed the company, which is something we’re proud of,” Hawley says. They first planned to validate the technology now being marketed as Sumavel DosePro and win FDA approval as a drug-device combination. “The device really has global potential,” Hawley says. “No one else can do what we do”
The DosePro injector resembles a pen and each one comes filled with a fixed dose of sumatriptan. The device uses the sudden release of nitrogen gas to drive a piston at a fixed pressure. The piston, in turn, pushes the drug through a laser-drilled hole at the tip of a capsule, where a small amount of the drug forms a liquid jet. The drug is delivered just under the skin—as a liquid—in less than 1/10th of a second. The “hole” in the skin is about 0.3mm, similar or smaller to a hypodermic needle. Because there is no needle, nothing beneath the skin gets pierced—including blood vessels, according to Zogenix spokeswoman Catherine O’Connor.
Of course, O’Connor adds that “Needle-free” doesn’t necessarily mean “pain-free.” Patients in three Zogenix studies described the sensation of the needle-free injection as mild discomfort to mild pain. O’Connor says they rated the pain as a “2″ on a 1-to-10 pain scale (with 0 being no pain).
DosePro’s big advantage, Hawley says, is that “it’s single-use, needle-free and fully disposable.” Zogenix’ studies also show that 98 percent of patients could get it right on their first try at home, and Hawley says, “for a drug-device combination, that’s unusual.”
The Zogenix technology is currently more expensive than rival needle-free, pin-based auto-injectors that patients can buy for $5 to $7 apiece to self-administer injections. But Hawley says it is usually necessary for patients to load the drug into those devices themselves. As for the cost, Hawley says, “The difference in cost, quite honestly, is that those auto-injectors are now made at scale; a lot of companies are using them. Our technology is new; we’re the only one who manufactures it. We think over time, with more volume, we can actually get fairly close to those auto-injector costs with much more convenience.”
What’s less clear, to me at least, is what advantages the DosePro device has over an existing pen-style, auto-injector, which comes with a pre-filled drug dose.
Hawley says the needle-free design addresses patients’ needle anxiety and eliminates needle disposal issues and the risk of needle stick injuries. Zogenix marketing materials suggest another important reason could be that the DosePro technology, as a combined drug-and-delivery device, could be used to extend the patent protection of “injectable compounds nearing patent expiration [that are] looking to extend and protect market share.”
The plan that Hawley laid out for Zogenix also called for bringing a second drug candidate to market. This turned out to be the hydrocodone compound, which was licensed from Elan.
“Our goal beyond that is to develop more of our own products, as well as to out-license the DosePro delivery system to other companies for their own products,” Hawley says. “The device really has global potential. No one else can do what we do…What it offers the doctor is that it removes the fear and complexity of self-administration of pharmaceuticals.”
With some 8.3 million Americans being treated for migraines with prescription medications, and a total U.S. population of nearly 30 million migraine sufferers, Zogenix says it is targeting a multi-billion dollar market. But Hawley tells me the company will still require additional funding beyond the nearly $200 million in capital raised so far.
The Zogenix CEO can’t say just yet how much additional capital might be required, or what the timing would be. But he says he’d like to get the Zogenix board to again consider working toward an IPO. “It’s rare to see a company that’s still private that has a marketed product and Phase 3 assets,” Hawley says. “Even though we’re four years old, sooner or later we need to become a public company.”