NuOrtho Surgical Files for Bankruptcy; Ex-Employees Seek $2.1 Million In Unpaid Wages

NuOrtho Surgical Files for Bankruptcy As Ex-Employees Seek $2.1 Million In Unpaid Wages
February 26, 2015
By Jessica Wilson, BioSpace.com Breaking News Staff

NuOrtho Surgical Inc., a biotech startup originally housed in the University of Massachusetts Dartmouth incubator, known as the Advanced Technology & Manufacturing Center (ATMC), has filed Chapter 7 bankruptcy. The company claimed $4.7 million in debt, “including $2.1 million owed to former employees in the form of wages and deferred salaries,” reported the Boston Business Journal yesterday.

The Boston Business Journal ran down the list of outstanding debts, noting the company owes $351,000 to its former Chief Executive Officer Jeffrey Morrill, $139,000 to its former Chief Operating Officer Chris Heye, an unspecified amount to law firms in in Massachusetts, Pennsylvania and New Mexico, and an unspecified amount to contracted companies for “services ranging from tax help to consulting.”

NuOrtho Surgical was producing three products at the time of the bankruptcy filing. In better times, just after the company had secured its second round of funding in 2009, the ATMC Director of Operations John Miller lauded NuOrtho Surgical’s technology. “They have very innovative technology for assisting doctors and orthopedic surgeons,” Miller told Massachusetts-based The Herald News in November 2009. “Proof of that comes in the fact that much of the early funding came from doctors who thought highly enough of the devices to put their own money on the line.”

Although NuOrtho Surgical still lists the incubator as the company’s address on its website, the company relocated in 2013. The company “graduated” from the incubator, Keith Mackenzie, research and facilities manager at the Advanced Technology & Manufacturing Center, told the Boston Business Journal. “Sometimes it’s us telling them there’s nothing [more] we can do for them and we send them on their way. In their case, [NuOrtho] decided to move the company out to California,” Mackenzie was quoted as saying by the Boston Business Journal.

NuOrtho Surgical received $1 million in its second round of funding in 2009 from private funding investors. At the time, the company earmarked the money to file a 501k application with the U.S. Food and Drug Administration (FDA) for the company’s first product called Ceruleau. Ceruleau “is a device designed to contour and smooth articular cartilage that is fraying, or that has tears or lesions that are inhibiting knee mobility,” Morrill told to The Herald News in 2009. He indicated NuOrtho Surgical would file for marketing clearance in January 2010. Morill also stated the company’s goal was to reach $5 million in sales in 2010, $10 million by 2011 and $20 million by 2012.

The FDA did grant clearance for the company to market Ceruleau in July 2010. In the end, however, sales never came close to the optimistic figures stated by Morill in 2009. The company only reached $91,500 in product sales in 2013 and $41,600 in 2014, according to the Boston Business Journal.



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Analyst Mark Schoenebaum, a biotech and pharmaceuticals analyst and medical doctor for ISI Group Evercore, has been running a Best Hair in Biopharma contest for several months now. So far, the candidates are Bristol-Myers Squibb Company's John Elicker, ReceptosChief Executive Officer Faheem Hasnain, Celgene's Vice President of Investor Relations Patrick Flanigan and Acorda Therapeutics' Ron Cohen.

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