Two Pharma Companies File Chapter 11 Bankruptcy
The season surrounding Valentine’s Day brings out the love in many people, but for two pharma companies, this year was a year of heartbreak. California-based Aradigm Corporation and New Jersey-based Immune Pharmaceuticals both filed Chapter 11.
On Feb. 16 Aradigm filed for protection under Chapter 11 of the U.S. Bankruptcy Code to facilitate the sale of its assets. That filing followed an announcement on Feb. 11 that without confirmation of funding from its primary investor, the company would not have enough funds to meet its financial obligations. As a result, Aradigm said it had no alternative but to file for bankruptcy protection in order to preserve its “going concern value.”
The company said it intends to sell all of its assets to an interested party subject to approval from the Bankruptcy Court. The proceeds from the sale will be used to satisfy the claims of its creditors, the company said. Remaining assets, if any, would then be distributed to the stockholders, Aradigm said in a statement.
While the company is suffering from financing issues, Aradigm said it remains confident in the “efficacy, safety and quality of Apulmiq,” a Phase III drug for the treatment of non-cystic fibrosis bronchiectasis. In January, Aradigm announced detailed results from an independent third party evaluation of the Phase III clinical trial results for Apulmiq after it was rejected by the U.S. Food and Drug Administration last year. The company said it is satisfied that the independent results verify the significant treatment effects of Apulmiq. Aradigm has scheduled a meeting to discuss the results with the FDA.
Across the country, shares of Immune Pharmaceuticals have plunged more than 43 percent after the company announced this morning that it too was filing for Chapter 11. The company has run short of funding and has been unable to advance its lead program, bertilimumab, a first-in-class, human monoclonal antibody that targets eotaxin-1.
This morning, the company said that despite “making significant progress” towards a bertilimumab strategic transaction, the company has been unable to negotiate terms for additional funding to keep the company afloat. The company said it expected to receive $3 million in financing from the strategic transaction. Additionally, Immune had hoped to secure $2.5 million in a partnership with Vector Therapeutics for its asset Ceplene, but the company said the transaction never closed. Immune Pharmaceuticals said that while it is under Chapter 11, the company will have “minimal ongoing operations during this reorganization period while it pursues transactions to monetize its assets.”
Neither company provided information as to layoffs or other job losses due to the filings.