April 12, 2017
By Alex Keown, BioSpace.com Breaking News Staff
YORK, Pa. – As was expected, struggling medical device maker Unilife Corporation filed for bankruptcy. Shares of Unilife are down more than 25 percent this morning following the filing for chapter 11.
The filing for chapter 11 came one week after the company said it lacked the finances to fund operations past April 7. Unilife announced the filing of chapter 11 this morning, which it said will help facilitate a restructuring of the company’s balance sheet or the sale of its assets.
In its announcement this morning, Unilife said it obtained a commitment for a $7 million debtor-in-possession (“DIP”) financing facility underwritten by an affiliate of OrbiMed Advisors, a company it identified last week as a potential financial lifeline. The funding, which is subject to approval by the United States Bankruptcy Court, combined with existing resources, is expected to provide capital to fund operations during the chapter 11 proceedings.
In a statement, Chief Executive Officer John Ryan said the decision to file chapter 11 “will best position Unilife’s business for future success.”
“Now, in light of the terms of the company’s debt obligations and its inability to continue to finance the business outside of bankruptcy, we need to restructure the company’s debt and equity or sell the assets as a going concern,” Ryan said in his statement.
Unilife’s operations will remain ongoing during the chapter 11 process. The company’s foreign affiliates in Australia are not included in the filing but are expected to be included in the restructuring or sale, Unilife said.
If Unilife is unable to secure financing, a shutdown of the company is likely, which will result in about 130 layoffs, the Philadelphia Business Journal reported this morning. Those layoffs will come on top of previously announced layoffs, including the announcement of the termination of 51 percent of employees at two Pennsylvania locations earlier this month.
The situation at Unilife has been brewing for some time. In July 2016, the company terminated 40 percent of its employees as part of a new business strategy. And again in October 2016, the company made additional cuts as part of a comprehensive cost measure. In addition to job cuts, Unilife said in October it had sublet a “significant portion” of its office space in King of Prussia.
The situation was exacerbated last week when Unilife announced it received a notice from one of its key wearable injectors customers that the client was placing a program with Unilife on hold for reasons unrelated to the product. Unilife did not name the customer in its announcement, but the company has had a number of collaborative deals for wearable injectors with companies like Sanofi (SNY) and MedImmune (AZN), a subsidiary of AstraZeneca (AZN).
Earlier this month, Unilife said it has notified all remaining employees as well as state and local government officials, that if the company is not successful in securing any kind of financial support, then it will be forced to permanently close its York and King of Prussia, Pa. locations. If no financing is available, Unilife said those sites will be shut down by June 4, 2017.
