Melinta seeks buyout bids to secure escape from bankruptcy

Bankruptcy
Melinta thinks it can “emerge as a going concern … as soon as late first quarter." (Getty/Gam1983)

A U.S. bankruptcy court has given groups interested in buying antibiotic biotech Melinta Therapeutics until March 2 to make an offer. The bidding process creates an opportunity for Melinta’s business to continue as a going concern despite its financial difficulties.

Melinta filed for bankruptcy late last year after months of escalating financial tensions. The New Jersey-based biotech has a small portfolio of approved products but, like its peers in the antibiotic space, has struggled to turn them into commercial successes. Sales over the first nine months of 2019 totalled $45.9 million, down 25% compared to the same period of 2018.

With liabilities of $289 million on its books as of the end of September, Melinta looked to bankruptcy for a way out of its predicament. That process took a step forward Thursday when the bankruptcy court approved Melinta’s bidding procedures and sale process timeline.

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Deerfield Management is in pole position to buy Melinta. In conjunction with its original bankruptcy filing, Melinta put together a deal to allow Deerfield to take control of its assets as payment for a $140 million loan. 

That deal looks set to go through unless another group lodges a “higher and better bid” for Melinta by March 2. Court documents reveal Melinta began formally looking for a buyer in September, well before it filed for bankruptcy. The process, which also targeted potential financiers, led to 30 parties getting access to the data room and, after that, 18 expressions of interest in a transaction.

None of those expressions of interest manifested in a deal, but the court documents state “a number of parties … remain interested in a transaction” but need additional time. Those parties now have a hard deadline by which to firm up their interest in Melinta. 

The bidding procedure agreed to by the court allows Melinta to hold an auction on March 6 if it receives multiple competing bids. Melinta will use the process to determine the best bid with a view toward having a deal to present to the court for approval on March 13. 

Based on the timeline, Melinta thinks it can “emerge as a going concern under new ownership and on a financially sound footing as soon as late first quarter or early second quarter” of 2020. 

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