NEW YORK (TheStreet) -- Zogenix (ZGNX) shares are down as much as 22.7% this afternoon on the news that rival Purdue Pharma has completed testing of an abuse-resistant version of its painkiller hydrocodone. Purdue Pharma, which also produces the popular painkiller OxyContin, plans to apply for regulatory approval later this year.
Purdue's announcement looks to undercut the sales of Zogenix's just released hydrocodone drug Zohydro as physicians would seemingly be more inclined to prescribe the form of drug that is least subject to abuse. Ultimately the Food and Drug Administration could even go as far as pulling Zohydro from the market if it finds that Purdue's drug is safer.
Zogenix has replied by stating that it is working on its own version of an abuse-proof Zohydro, but says that it would not be ready for testing until 2016.
Hydrocodone based painkillers are the most prescribed painkillers in the U.S. with over 130 million hydrocodone products prescribed annually. Some 3 out of every 4 prescription pill overdose fatalities are attributed to painkillers.
TheStreet Ratings team rates ZOGENIX INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZOGENIX INC (ZGNX) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and feeble growth in its earnings per share."