Melinta Therapeutics has filed for Chapter 11 bankruptcy. Deerfield is set to take control of Melinta as payment for the $140 million loan it extended to the antibiotics business.
New Jersey-based Melinta sounded the alarm repeatedly in 2019, warning investors of doubts about its ability to continue as a going concern in May and stating in November that the situation was likely to come to a head in the next few months. Faced with a bleak financial situation, Melinta has put together a restructuring agreement designed to put it on sounder fiscal footing.
The agreement will see Deerfield receive 100% of the equity issued by the reorganized company. To facilitate the agreement, Melinta is seeking Chapter 11 protection. Melinta is set to lay off about 60 people in conjunction with the reorganization.
Earlier efforts by Melinta to improve its financial performance also cost people their jobs but failed to keep the company out of bankruptcy. Jennifer Sanfilippo, the latest in a succession of people to hold the CEO title at Melinta, thinks this time will be different.
“We are confident that this process will secure new ownership of the business with the financial resources to support the company’s antibiotics portfolio and ensure these potentially life-saving products continue to get to patients in need,” Sanfilippo, Melinta’s interim CEO, said in a statement.
Melinta’s filing for bankruptcy capped off a bleak year for the antibiotics industry. Aradigm and Achaogen filed for bankruptcy in the first half of the year, despite the latter company winning FDA approval for an antibiotic in June 2018.
That series of bankruptcy filings, which featured two companies with commercial products, will add to fears that the antibiotics business model is broken. Some investors and biotechs retain an interest in the sector—Brii Biosciences, for example, is spending some of its $260 million fundraising haul on antibiotics R&D—but other therapeutic areas have a far better track record of delivering a return on investment.