A pair of struggling drug developers—BIND Therapeutics and NephroGenex—today said they have filed for Chapter 11 bankruptcy protection from creditors.
BIND said in a regulatory filing that it entered Chapter 11 yesterday after failing to restructure debt owed to a lender, Hercules Technology III, L.P.
The debt dispute capped a rough month for BIND, in which the company eliminated 38% of its workforce—leaving it with 61 employees—in a restructuring that followed a shift in R&D strategy and mixed results in two Phase II studies for its lead candidate.
On April 26, BIND said, Hercules issued the company a formal notice that it was in default under its credit facility. Hercules alleged that BIND had violated the credit facility by failing to deliver a control agreement to Hercules concerning one of BIND’s investment accounts.
Hercules demanded immediate payment in full of the outstanding balance of the Credit Facility, together with accrued interest, attorneys’ fees, late fees, and costs of collection—an amount equal to approximately $14.5 million—by April 29.
Hercules extended BIND’s $15 million term loan, secured by substantially all company assets except its intellectual property, while the two continued talks aimed at restructuring the debt, BIND said.
“The company determined that the terms proposed by Hercules, including immediate repayment of a substantial portion of the outstanding principal balance of the credit facility, were not in the company’s best interests,” BIND stated in the regulatory filing.
As of yesterday, BIND acknowledged, it still owed principal of $13.2 million under the credit facility.
BIND aims to develop a new class of highly selective targeted and programmable therapeutics called Accurins®, polymeric nanoparticles engineered to target specific cells and tissues in the body at sites of disease.
The company recently shifted its R&D focus toward developing innovative medicines that incorporate unique combinations of novel tumor-directed targeting ligands and new classes of payloads, including oligonucleotides and molecularly targeted therapies. The shift followed the appointment of Jonathan Yingling, Ph.D., as CSO.
Both BIND and NephroGenex filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. BIND listed estimated assets and liabilities in the range of $10 million to $50 million, while NephroGenex listed total debts of approximately $6.2 million and total assets of only approximately $4.9 million.
NephroGenex, a developer of treatments for kidney diseases, is pursuing Chapter 11 more than 2 months after stating that it would “pause” development of its Phase III lead candidate Pyridorin®, restructure its operations, and consider “strategic alternatives,” including a potential reverse merger.
“The Board and management team have conducted a rigorous assessment of all of our strategic alternatives and believe that this process represents the best possible solution for NephroGenex, taking into account our financial situation,” NephroGenex Chairman Richard J. Markham said in a statement. “We are committed to an outcome that maximizes value and believe that a bankruptcy sale process will enable us to meet that objective.”
NephroGenex said it has retained the investment banking firm Cassel Salpeter & Co. to assist with an anticipated sale of its assets, for which the company said it planned to seek approval “in the early weeks of its Chapter 11 case.”
In a February 24 statement, NephroGenex cited clinical trial costs, the company’s cash balance, and uncertainty in the capital markets as reasons for its actions.
NephroGenex was among public companies whose share prices fell the most last year, placing the company on GEN’s List of Top 10 Wall Street Losers of 2015, published February 22.