Why Zogenix Inc. Stock Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Zogenix , a specialty pharmaceutical company focused on developing therapies to treat central nervous system disorders and pain, soared higher by as much as 20% after providing an update on the development of more abuse-resistant forms of severe pain medication, Zohydro ER.

So what: According to its early morning press release, Zogenix is advancing two forms of abuse-resistant Zohydro ER formulations. It's doing so because physicians and investors have been concerned about the severe paid medications' potential for abuse in its currently approved formulation. Zogenix notes that it intends to file a supplemental new drug application for its extended release capsules in October 2014 which could be on pharmacy shelves by early 2015 if all goes well. This would reduce instances of abuse by injection or nasal administration.

In addition, Zogenix also selected the final tablet formulation with the assistance of collaborator Altus Formulation. This tablet formulation should reduce injection and nasal administration abuse, as well as oral ingestion abuse potential. Zogenix is aiming to file a supplemental new drug application for its abuse-resistant Zohyrdo ER tablet in the first-half of 2016.

Now what: It's good to see Zogenix being so proactive about its lead drug considering the readily apparent abuse concerns. If Zogenix is able to successfully bring both formulations to market then I believe shares could eventually head higher, especially considering that so few pain meds in tablet form are truly classified by the FDA as "abuse resistant." However, investors would also be wise to consider the fact that pain management is one of the most crowded indication fields, so success isn't a given, and Zohydro ER tablets aren't likely to make it to pharmacy shelves any time before late 2016. For Zogenix this likely means ongoing losses and tight cost controls until these sNDA's are filed.

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The article Why Zogenix Inc. Stock Soared originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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