Buyout of Zogenix Likely Based on Garner's Track Record
Based on the track record of Zogenix founder and chairman, Cam Garner, a premium buyout of Zogenix may be on the near term horizon. With tomorrow's FDA PDUFA date on the abuse deterrent formulation of FDA-approved Zohydro ER, Zogenix becomes even more valuable for a potential buyer. After all, Cam Garner has designed and built Zogenix just like he has designed and built other companies he has sold at premium prices in recent years.
Cam Garner Business Model Designed for Premium Buyout
A big key to Zogenix's early success is its founder, Cam Garner. Garner is one of the best in the business at creating and growing specialty pharmaceutical companies into attractive acquisition targets for bigger pharma. His track record of success is legendary as illustrated by taking his profitable business model to tiny Dura Pharmaceuticals (valued at $5 million when Garner took the helm) and executing a strategy that resulted in Dura being acquired a decade later by Irish drugmaker Elan Corp. (NYSE:ELN) in a stock deal worth $1.8 billion.
That Dura business model has been replicated in multiple Garner creations in the years since his 2000 Dura transformation resulting in similar outcomes - premium takeovers greatly benefiting early investors. Examples include Cam Garner-founded companies DJ Pharma (sold to Biovail Corp. for $212M), and Xcel Pharmaceuticals (sold to Valeant Pharmaceutical for $282M).
To make my point and ZGNX buyout forecast even more credible, one only has to look at Garner's latest exit and premium buyout deal. Cam Garner recently sold Cadence, another San Diego based company he founded and chaired the board (just like Zogenix) for $1.3 billion to Dublin-based Mallinckrodt. At the time of the sale, Cadence had annual revenue of $110 million. Seeing the opportunity for major revenue growth going forward, Mallinckrodt purchased Cadence at nearly 12X their 2013 annual revenues.
The Cam Garner business model is very visible for all to see. I believe that Zogenix is for sale at the right price based on his track record. With tomorrow's likely FDA approval of Zohydro ER (AD), buyout interest should intensify and Cam Garner and company may be very close to exiting at a premium valuation to annual sales once again.
Disclosure: The author is long ZGNX.