Achaogen files for bankruptcy protection, seeks asset sale
- Achaogen filed for bankruptcy Monday through a voluntary petition for Chapter 11 protection in federal court.
- The South San Francisco, California-based drugmaker is also seeking legal OK to pursue an auction and sale. Per an anticipated timeline in the court filing. Achaogen expects bids to be submitted by May 29, the auction to start by June 3 and the sale's conclusion by June 13. Silicon Valley Bank has committed $25 million to fund the company through the sale as its secured lender.
- Achaogen's share price fell more than 50% to $0.22 on Monday's market open, furthering what has been a sharp decline in the stock over the past two years. The company expects the bankruptcy to serve "as a basis for delisting," according to a filing with the Securities and Exchange Commission.
Multiple reductions in the size of its staff and scope of its work proved insufficient for Achaogen to stave off Chapter 11. Neither was a Food and Drug Administration approval last June of its first drug, a once-daily antibiotic called Zemdri (plazomicin).
Even Zemdri's approval brought challenges, as the FDA only approved the drug for certain complicated urinary tract infections, knocking back the company's bid to win an OK in bloodstream infections.
Earlier this year, researchers detailed the hurdles faced in Zemdri's bloodstream infection study, noting researchers screened more than 2,000 patients for the study but were able to enroll just 39.
In a related editorial published in the New England Journal of Medicine, two FDA directors and a Brigham and Women's Hospital's clinical research director characterized such challenges as endemic in antimicrobial drug development.
"Those who have followed this field will recognize that scientific challenges and economic strain are not the exception but represent the typical scenario that is faced when a new antibacterial drug is developed," they wrote.
Given Zemdri's limited approval, sales have remained tiny since its launch last July. The drug posted $500,000 in net product sales during the fourth quarter, but failed to break $1 million in total sales for all of 2018.
At the end of January, the biopharma had $92 million in assets and $120 million in debt, according to its Chapter 11 filing.
Layoffs haven't been enough to stabilize its finances, even as Achaogen has shrunk its workforce by more than 80% from roughly a year ago. The company has gone from 230 employees last February to about 40 full-time workers.
In an April 15 statement, CEO Blake Wise said Achaogen's board and management team "unanimously agree that this structured sale process represents the best possible solution for the Company."
Pending court approval for the sale, the auction process will play out over the next two months.
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