Oscient Pharma Seeks Bankruptcy, Finds Buyer for No. 2 Product
Oscient Pharmaceuticals has apparently run short on options to keep its struggling drug business afloat. The Waltham, MA-based biotech firm (NASDAQ:OSCI) and its subsidiary Guardian II Acquisition Corporation have each filed for Chapter 11 bankruptcy protection and Oscient has landed a buyer for one of its two marketed products, Oscient announced late yesterday.
The company says it has struck an agreement to sell its assets associated with the antibiotic drug gemifloxacin mesylate (Factive), to a subsidiary of Cary, NC-based Cornerstone Therapeutics (NASDAQ:CRTX) for more than $5 million. Yet it’s expected that there will be a competitive auction for the Factive assets in bankruptcy court before the deal is sealed. The antibiotic, which treats forms of bronchitis and pneumonia, accounted for only $16.5 million of Oscient’s $86.8 million in 2008 revenue. The firm is also seeking a buyer for its top-selling drug, fenofibrate (Antara), which is prescribed for patients with above-normal cholesterol and triglyceride levels.
Oscient appears to be the latest victim of a lousy environment for unprofitable life sciences companies searching for funds to stay alive. Other local examples include Waltham, MA-based drug developer Dynogen Pharmaceuticals, which filed for bankruptcy early this year, and synthetic DNA maker Codon Devices, which reportedly shuttered its operations in Cambridge, MA, this spring. The cash shortage has also prompted Lexington, MA-based Epix Pharmaceuticals (NASDAQ:EPIX) to sell off assets and seek other alternatives to stay afloat.
Oscient, which plans to continue operations while in bankruptcy, has racked up $183.3 million in debts and has assets valued at $174 million, according to its bankruptcy filing. The filing says that the company owes $46 million to U.S. Bank National Association, of Boston, $7.8 million to funds associated with Dallas-based investment firm Maverick Capital, $6.6 million to BB Bioventures in South San Francisco, and $5.5 million to medical products giant Abbott Labs, headquartered in Abbott Park, IL, to name its four largest creditors listed in the bankruptcy filing.
The bankruptcy filing is the latest measure Oscient has taken to keep its business intact. The company cut about 100 of its some 300 workers in February to save money, and last month it said it planned to slash another 180 jobs, including its entire 150-person sales force. Still, the company said last month that it only had enough cash to operate into the third quarter of 2009. Also, the Nasdaq plans to de-list Oscient’s common stock later this month for the company’s failure to pay fees to meet its listing obligations, according to the company.