Two biotech companies, Bind Therapeutics ($BIND) and NephroGenex ($NRX), are seeking the temporary protection of a Chapter 11 bankruptcy order as both look to a potential sale.
The writing has been on the wall for Bind since the start of April when the Cambridge, MA-based biotech released a mixed bag of results for its Phase II program for the nanoparticle cancer drug Bind-014.
The so-so data saw it halt one trial and stop another until it can find a partner. Its CEO told FierceBiotech at the time that it simply couldn’t afford to run the second trial, which did have positive results, any further.
It shares spiralled downward with Andrew Hirsch, president and CEO of Bind, also telling FierceBiotech that “anything was now on the table” for his company, including a sale. At the end of last week, the company cut its workforce by 38%, leaving it with just 61 employees.
Today, the biotech filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. This order essentially allows a company in a financial sticky spot temporary protection from creditors in order to allow it to reorganize.
“We believe this decision is in the best interests of the company and its stockholders,” said Hirsch. “The protections afforded by Chapter 11 provide for an orderly process and additional time that enables us to pursue the strategic and financial alternatives that are in process.”
The filing will also help stave off the demand by its lender, Hercules Technology III, for an “accelerated repayment” of its outstanding loan. Details of just how much is owed were not disclosed.
“Our current cash and assets exceed the loan amount, and we are current on our regularly scheduled repayment obligations,” said Hirsch. “Through this process, we expect to be able to maintain ongoing financing activities and collaborator obligations while moving our R&D initiatives and pipeline forward.”
In a statement, Bind said that it “intends to continue to manage and operate its business” under the remit of the Bankruptcy Court.
It will now work with an investment bank to “review financial and strategic alternatives with the goal of maximizing stockholder value.” Selling the company or some of its assets, or seeking a major licensing deal, are all still options on the table for the biotech.
It’s not been short of those interested in its research platform, and it currently has a number of ongoing collaborations with Big Pharma, including Pfizer ($PFE), AstraZeneca ($AZN), Roche ($RHHBY) and Merck ($MRK), which are all predominately using the biotech’s Accurins platform for early-stage oncology targets.
Things look tough for Bind, but it’s not the only company going through the mill, as Raleigh, NC-based kidney disease biotech NephroGenex has also filed for a Chapter 11 bankruptcy order after pausing the trial of a key drug back in February.
Studies on Pyridorin for the treatment of diabetic nephropathy were stopped due to a lack of capital to keep it going, as the biotech also announced the restructuring of its operations and the “implementation of a strategic transaction”--which includes a potential reverse-merger deal.
The latest balance sheet from the company, posted back on Feb. 23, showed it had paid off its approximately $6.3 million term loan, leaving it with around $11.5 million in cash, cash equivalents and short-term investments.
The biotech said today that, with investment banking firm Cassel Salpeter & Co., it will seek a sale of its assets through a sale process under the remit of the Bankruptcy Code.
“The Board and management team have conducted a rigorous assessment of all of our strategic alternatives and believe that this process represents the best possible solution for NephroGenex, taking into account our financial situation,” said Richard Markham, chairman of the board of NephroGenex.
“We are committed to an outcome that maximizes value and believe that a bankruptcy sale process will enable us to meet that objective.”
NephroGenex said it will seek to go on with normal operations during this process, including the “timely payment of future employee wages and salaries, as well as maintaining employee benefits.”
Two weeks ago the biotech disclosed in a SEC filing that it had terminated Pierre Legault as chief executive officer and president. It also let go Jaikrishna Patel, the company’s chief scientific officer.
A week before this, the company had also announced that it had been put on notice by The Nasdaq Stock Market as it was headed toward being delisted.
There are a variety of requirements to stay listed, but one is having a share price of at least $1. NephroGenex’s share price had in fact dropped below that threshold for 30 consecutive days. It has a 180-day grace period, which ends on Oct. 4, to comply.
Bind currently has a market cap of nearly $30 million, while NephroGenex’s cap is just $5.6 million.