Struggling pharmaceutical company Zogenix Inc. has won the right to sell its Zohydro ER medication in Massachusetts, after Gov. Deval Patrick issued an executive order prohibiting the sale of the painkiller, saying that it could lead to drug-abuse problems.

The ruling from the U.S. District Court in Massachusetts says that imposing regulations to restrict access to the drug, which was approved by the U.S. Food & Drug Administration in October 2013, violates constitutional law because the FDA is the only regulatory body that is allowed to determine medication approval.

"We are pleased that the emergency rules restricting patient access to Zohydro ER have been modified and clearly state than Zohydro ER can now be prescribed in accordance with its FDA-approved label," says Roger Hawley, chief executive officer of Zogenix, in a company statement earlier in July.

"The use of oxycodone and other narcotic painkillers, often as a route to heroin addiction, has been on the rise," Patrick says. He directed the Massachusetts Department of Public Health to ban Zohydro in March, which he said is not available in an "abuse-deterrent form."

Zogenix filed a lawsuit in the U.S. District Court in Massachusetts to ask the court grant a temporary restraining order to delay Patrick's executive order from going into effect in April. 

The painkiller is an extended-release hydrocodone, an opioid derived from codeine. One of the advantages Zogenix says is offered by Zohydro is that the medication does not include acetaminophen, which has been linked to liver damage.

San Diego-based Zogenix has struggled because of losses and negative cash flows. As of March 31, the company had an accumulated deficit of more than $431 million. The company has been operating mainly through equity and debt financings. Zogenix's accountant raised substantial doubts about its ability to continue as a going concern, or without the threat of liquidation because of the company's consistent history of losses.

The losses are expected to continue for at least the next year as the company's continues to develop product candidates, including an abuse deterrent formulation of Zohydro, according to a filing with the U.S. Securities and Exchange Commission on May 8.

The company announced in November that it was raising $56 million. Before that, in May 2013, the company laid off 55 people as part of a restructuring effort.

For the previous edition of Turnaround Tuesday, see "Kardashian Beauty Brand Developer May Need to Restructure, Sell Assets." 

For more on struggling companies, see Mergers & Acquisitions Distressed Company Watch List

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