Bat­tered by le­gal ex­pens­es, opi­oid drug­mak­er In­sys files for bank­rupt­cy days af­ter $225M deal to set­tle gov­ern­ment probes

To no­body’s sur­prise, con­tro­ver­sial opi­oid drug­mak­er In­sys is fil­ing for bank­rupt­cy.

John Kapoor In­sys

Last week, the com­pa­ny $IN­SY agreed to pay $225 mil­lion to set­tle the US gov­ern­ment’s sep­a­rate crim­i­nal and civ­il in­ves­ti­ga­tions re­lat­ed to its fen­tanyl spray Sub­sys, about a month af­ter its founder and for­mer se­nior ex­ec­u­tive team were found guilty by a fed­er­al ju­ry of rack­e­teer­ing. Founder John Kapoor and his four com­pa­tri­ots’ an­tics in­clud­ed brib­ing doc­tors to pre­scribe the po­tent, ad­dic­tive painkiller and dup­ing in­sur­ers in­to pay­ing for the dead­ly opi­oid drug.

The US De­part­ment of Jus­tice set­tle­ment com­pound­ed the stress on a fi­nan­cial­ly strained In­sys. Last month, the com­pa­ny in­di­cat­ed it was fac­ing a liq­uid­i­ty cri­sis trig­gered by the litany of law­suits it was sub­ject to, and in April, In­sys’ au­di­tor raised doubts on the drug­mak­er’s abil­i­ty to con­tin­ue as a go­ing con­cern.

“Af­ter con­duct­ing a thor­ough re­view of avail­able strate­gic al­ter­na­tives, we de­ter­mined that a court-su­per­vised sale process is the best course of ac­tion to max­i­mize the val­ue of our as­sets and ad­dress our lega­cy le­gal chal­lenges…” In­sys CEO An­drew Long said in a state­ment on Mon­day. The com­pa­ny’s shares $IN­SY sank about 46% in­to pen­ny stock ter­ri­to­ry at 71 cents in ear­ly morn­ing trad­ing.

The chap­ter 11 fil­ing will al­low for the pletho­ra of lit­i­ga­tion against In­sys to be pre­sent­ed be­fore a soli­tary judge who will de­ter­mine what each plain­tiff will re­ceive.

The firm will con­tin­ue to sell Sub­sys, while it looks for buy­ers for the spray and its oth­er as­sets. If In­sys is un­able to woo a Sub­sys suit­or in 90 days, the com­pa­ny will be com­pelled to stop mar­ket­ing it, ac­cord­ing to a June 5 agree­ment with the HHS. Sub­sys ac­count­ed for a bulk of $82 mil­lion in 2018 In­sys sales (to­tal loss for that year was about $124 mil­lion), down from $141 mil­lion in 2017 and a far cry from $242 mil­lion in 2016.

Af­ter re­view­ing In­sys’ court doc­u­ments, Er­ic Sny­der of NYC-based law firm Wilk Aus­lan­der found that the In­sys has 92 patents and 62 patent ap­pli­ca­tions pend­ing, mak­ing it dif­fi­cult to val­ue the com­pa­ny’s as­sets. “They say that they are seek­ing to con­duct an auc­tion sale of all of their as­sets on an ex­pe­dit­ed ba­sis, but they have yet to file a mo­tion seek­ing this au­thor­i­ty,” he said in an emailed state­ment.

“This case is very un­usu­al, be­cause they (In­sys) do not have a se­cured cred­i­tor/lender.  So, they are self-fund­ing the bank­rupt­cy. This is very ex­pen­sive and that is prob­a­bly the rea­son they mov­ing for an im­me­di­ate auc­tion, even though they have no “stalk­ing horse” (par­ties in con­tract) bid­ders,” added Sny­der, who serves as chair­man of his firm’s bank­rupt­cy de­part­ment.

In­sys is hard­ly the on­ly opi­oid drug mak­er in fi­nan­cial trou­ble. Pur­due Phar­ma — the mak­er of one of the most wide­ly abused pre­scrip­tion opi­oid painkiller Oxy­con­tin — is re­port­ed­ly con­sid­er­ing bank­rupt­cy. Mean­while, oth­er drug man­u­fac­tur­ers, dis­trib­u­tors and phar­ma­cies are al­so fac­ing hun­dreds of civ­il law­suits for their role in prop­a­gat­ing the opi­oid cri­sis.

“(T)here is lit­tle doubt that Pur­due, the mak­er of Oxy­con­tin, will be next. The po­ten­tial li­a­bil­i­ty and the stig­ma of its as­so­ci­a­tion with the drug over­comes any val­ue of the as­sets,” Sny­der said.

In­sys’ Sub­sys — which is made of fen­tanyl, the man-made opi­oid 50 times more po­tent than hero­in and 100 times more po­tent than mor­phine — was ap­proved in 2012 by the FDA for break­through can­cer pain. Pros­e­cu­tors charged the for­mer In­sys ex­ec­u­tives with in­flat­ing Sub­sys sales by brib­ing doc­tors to pre­scribe the drug to pa­tients with­out can­cer — in an elab­o­rate scheme that in­clud­ed win­ing and din­ing physi­cians, pay­ing them to speak at “ed­u­ca­tion­al events” — there­by fu­el­ing the rag­ing opi­oid cri­sis that kills 130 Amer­i­cans every day. Ju­rors at the tri­al were giv­en a front-row seat to the video en­gi­neered to train the com­pa­ny’s sales reps, in which two im­pec­ca­bly suit­ed men — os­ten­si­bly In­sys em­ploy­ees — rapped about com­pa­ny busi­ness strat­e­gy: “I love titra­tions. Yeah, that’s not a prob­lem. I got new pa­tients, and I got a lot of ‘em…If you want to be great, lis­ten to my voice. You can be great — but it’s your choice.”

Founder John Kapoor — and four mem­bers of the for­mer se­nior ex­ec­u­tive team — face up to 20 years in prison and will be sen­tenced in Sep­tem­ber.

Bat­tered by scan­dal, In­sys in re­cent years sharp­ened its fo­cus on cannabis-de­rived drug de­vel­op­ment, but even in that are­na its track record is trou­bling. In 2016, the Ari­zona-based com­pa­ny re­port­ed­ly do­nat­ed $500,000 to a cam­paign against the le­gal­iza­tion of cannabis in the state, out­rag­ing mar­i­jua­na ac­tivists who ac­cused the com­pa­ny of try­ing to sti­fle com­pe­ti­tion. That skep­ti­cism was war­rant­ed when the fol­low­ing March In­sys’ cannabi­noid oral so­lu­tion Syn­dros was resched­uled by the DEA — at the fed­er­al lev­el cannabis is strict­ly con­trolled in the same sched­ule LSD and hero­in is, and any de­rived prod­uct must be rel­e­gat­ed to low­er cat­e­go­ry be­fore it can be sold — and thus primed for launch.

Im­age: In­sys (Glass­door)

Tar­get­ing a Po­ten­tial Vul­ner­a­bil­i­ty of Cer­tain Can­cers with DNA Dam­age Re­sponse

Every individual’s DNA is unique, and because of this, every patient responds differently to disease and treatment. It is astonishing how four tiny building blocks of our DNA – A, T, C, G – dictate our health, disease, and how we age.

The tricky thing about DNA is that it is constantly exposed to damage by sources such as ultraviolet light, certain chemicals, toxins, and even natural biochemical processes inside our cells.¹ If ignored, DNA damage will accumulate in replicating cells, giving rise to mutations that can lead to premature aging, cancer, and other diseases.

Roivant par­lays a $450M chunk of eq­ui­ty in biotech buy­out, grab­bing a com­pu­ta­tion­al group to dri­ve dis­cov­ery work

New Roivant CEO Matt Gline has crafted an all-equity upfront deal to buy out a Boston-based biotech that has been toiling for several years now at building a supercomputing-based computational platform to design new drugs. And he’s adding it to the Erector set of science operations that are being built up to support their network of biotech subsidiaries with an eye to growing the pipeline in a play to create a new kind of pharma company.

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Fol­low biotechs go­ing pub­lic with the End­points News IPO Track­er

The Endpoints News team is continuing to track IPO filings for 2021, and we’ve designed a new tracker page for the effort.

Check it out here: Biopharma IPOs 2021 from Endpoints News

You’ll be able to find all the biotechs that have filed and priced so far this year, sortable by quarter and listed by newest first. As of the time of publishing on Feb. 25, there have already been 16 biotechs debuting on Nasdaq so far this year, with an additional four having filed their S-1 paperwork.

Ken Frazier, Merck CEO (Bess Adler/Bloomberg via Getty Images)

UP­DAT­ED: Mer­ck takes a swing at the IL-2 puz­zle­box with a $1.85B play for buzzy Pan­dion and its au­toim­mune hope­fuls

When Roger Perlmutter bid farewell to Merck late last year, the drugmaker perhaps best known now for sales giant Keytruda signaled its intent to take a swing at early-stage novelty with the appointment of discovery head Dean Li. Now, Merck is signing a decent-sized check to bring an IL-2 moonshot into the fold.

Merck will shell out roughly $1.85 billion for Pandion Pharmaceuticals, a biotech hoping to gin up regulatory T cells (Tregs) to treat a range of autoimmune disorders, the drugmaker said Thursday.

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With dust set­tled on ac­tivist at­tack, Lau­rence Coop­er leaves Zio­pharm to a new board

Laurence Cooper has done his part.

In the five years since he left a tenured position at Houston’s MD Anderson Cancer Center to become CEO of Boston-based Ziopharm, he’s steered the small-cap immunotherapy player through patient deaths in trials, clinical holds, short attacks and, most recently, an activist attack on the board.

So when the company has “fantastic news” like an IND clearance for a TCR T cell therapy program, he’s ready to pass on the baton.

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Doug Ingram (file photo)

Why not? Sarep­ta’s third Duchenne MD drug sails to ac­cel­er­at­ed ap­proval

Sarepta may be running into some trouble with its next-gen gene therapy approach to Duchenne muscular dystrophy. But when it comes to antisense oligonucleotides, the well-trodden regulatory path is still leading straight to an accelerated approval for casimersen, now christened Amondys 45.

We just have to wait until 2024 to find out if it works.

Amondys 45’s approval was unceremonious, compared to its two older siblings. There was no controversy within the FDA over approving a drug based on a biomarker rather than clinical benefit, setting up a powerful precedent that still haunts acting FDA commissioner Janet Woodcock as biotech insiders weighed her potential permanent appointment; no drama like the FDA issuing a stunning rejection only to reverse its decision and hand out an OK four months later, which got more complicated after the scathing complete response letter was published; no anxious tea leaf reading or heated arguments from drug developers and patient advocates who were tired of having corticosteroids as their loved ones’ only (sometimes expensive) option.

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Steve Cutler, Icon CEO (Icon)

In the biggest CRO takeover in years, Icon doles out $12B for PRA Health Sci­ences to fo­cus on de­cen­tral­ized clin­i­cal work

Contract research M&A had a healthy run in recent years before recently petering out. But with the market ripe for a big buyout and the Covid-19 pandemic emphasizing the importance of decentralized trials, Wednesday saw a tectonic shift in the CRO world.

Icon, the Dublin-based CRO, will acquire PRA Health Sciences for $12 billion in a move that will shake up the highest rungs of a fragmented market. The merger would combine the 5th- and 6th-largest CROs by 2020 revenue, according to Icon, and the merger will set the newco up to be the second-largest global CRO behind only IQVIA.

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J&J ad­comm live blog: Com­mit­tee votes 22-0 to rec­om­mend an FDA OK for the J&J vac­cine, set­ting up 3rd US Covid-19 jab

The US could have a third authorized Covid-19 vaccine within hours.

The FDA’s advisory committee voted unanimously — 22-0 — to recommend the agency issue an emergency use authorization for J&J’s vaccine. If they follow the precedent of the Pfizer and Moderna vaccine,  the FDA will likely authorize the vaccine by Saturday, immediately adding a few million doses to the US supply and adding a 100 million by June. An authorization would give the world its first single-dose vaccine, a major weapon in the effort to vaccinate the world and bring the virus to heel, particularly in rural and developing areas.

Gos­samer push­es ahead with failed asth­ma drug; Cull­gen gets $50M Se­ries B for pro­tein de­graders

After getting beaten up by investors over the key failure of its lead drug GB001, Gossamer had already indicated that they thought they could move ahead in asthma, though likely through a partnership. And the biotech is pushing forward on that front, according to a Q4 statement today, following talks with regulators.

The company reported:

Gossamer engaged with the FDA and the EMA about the clinical development path in asthma, and based off those interactions, Gossamer believes that there is a viable clinical development path for GB001, or its backup molecule, in asthma. Gossamer does not currently plan to move forward with GB001, or its backup molecule, in further clinical trials without a partner.