Judge turns down motion to appoint examiner or trustee in Biovest bankruptcy case

A Florida judge has turned down an appeal to appoint an examiner or Chapter 11 trustee in the bankruptcy case of immunotherapy developer Biovest International.

The denial comes after an equity committee filed a motion April 8 in the Tampa division of U.S. Bankruptcy Court requesting an examiner or trustee to investigate allegations that Biovest "since 2005, consistently misrepresented to the public the status of its efforts to obtain FDA approval for its principle drug," according to the motion. In cases of potential fraud or mismanagement, a judge can appoint an examiner, which investigates alleged wrongdoings that occurred prior to the bankruptcy. 

The motion alleges that "the committee discovered evidence that [Biovest] mishandled the process for FDA approval and misrepresented the status of the process to the public." Biovest closed a Phase III trial in 2008--8 years after starting--for its cancer vaccine BioVaxID but failed to hit recruitment targets. In 2012, the company filed for accelerated approval, but the FDA denied its request and asked for an additional Phase III trial. 

In an email statement to FierceBiotech, the company said: "Biovest considers the recent motion filed by the equity committee ... to be nothing more than a tactical filing within the company's ongoing reorganization proceedings." Biovest immediately filed a response to the motion rejecting the equity committee's claims.

"Biovest has consistently disclosed risks associated with the regulatory process in its public communications and SEC filings, including without limitation the risks arising from an a final, unfavorable decision by the FDA," the company said to FierceBiotech.

In March, Biovest said it wants to emerge from Chapter 11 in mid-2013, as it did in 2010 from a previous exit from bankruptcy. The company is seeking approval of a plan to get rid of its debt and reel in $5.6 million in new funding, and is working toward regulatory filings in Europe and Canada for BioVaxID for combating follicular non-Hodgkin's lymphoma. The company anticipates market approval late in 2014.

The lawyers of the equity committee did not respond to inquiries for comment.

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