Zogenix Inc., a San Diego-based pharmaceutical company making products for the treatment of pain-related and central nervous system disorders, announced that it has acquired Brabant Pharma, a privately-held U.K.-based pharmaceutical company for $20 million in cash and $15 million in stock, plus potential future milestone and royalty payments.

The acquisition includes worldwide development and commercialization rights to Brabafen, a treatment for Dravet syndrome, a rare form of epilepsy that begins in infancy. Brabafen has recently received orphan drug designation in Europe and the U.S. for the treatment of Dravet syndrome.

"This is a transformational acquisition for Zogenix,” said Roger Hawley, chief executive officer of Zogenix. “The addition of Brabant's Dravet syndrome program significantly enhances our (central nervous system) development pipeline. We believe the positive, durable long-term results of Brabafen place us in a leadership position within the Dravet syndrome community. We are fully committed to bringing this promising therapeutic to market for the benefit of these children and their families."

In addition to the $35 million acquisition cost in cash and Zogenix stock (11,995,202 shares to be registered), the terms of the purchase agreement include $50 million in potential regulatory milestone payments and up to $45 million in royalty payments on Brabafen sales. The first milestone payment is not anticipated until late 2016 upon submission of the New Drug Application for Brabafen.

Zogenix also signed a non-binding term sheet which is anticipated to provide a $20 million term loan plus an additional $4 million in a revolving line of credit. This potential financing is expected to help fund research and development expenses for Brabafen and two other treatments, Relday and Zohydro ER.

According to Zogenix (Nasdaq:ZGNX), expenses related to the Phase 3 clinical programs for Brabafen are estimated at $10 million, with an additional $5 million in post-approval clinical expenses. The company ended the third quarter of 2014 with approximately $50 million in cash plus an additional $8.5 million remaining in escrow from the sale of Sumavel DosePro earlier this year. Zogenix anticipates combined selling, general and administrative expenses and research and development expenses, including expenses related to the acquisition, for the second half of the year 2014 to be $50 million to $55 million.