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)

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

NYU surgeon transplants an engineered pig kidney into the outside of a brain-dead patient (Joe Carrotta/NYU Langone Health)

No, sci­en­tists are not any clos­er to pig-to-hu­man trans­plants than they were last week

Steve Holtzman was awoken by a 1 a.m. call from a doctor at Duke University asking if he could put some pigs on a plane and fly them from Ohio to North Carolina that day. A motorcyclist had gotten into a horrific crash, the doctor explained. He believed the pigs’ livers, sutured onto the patient’s skin like an external filter, might be able to tide the young man over until a donor liver became available.

UP­DAT­ED: Agenus calls out FDA for play­ing fa­vorites with Mer­ck, pulls cer­vi­cal can­cer BLA at agen­cy's re­quest

While criticizing the FDA for what may be some favoritism towards Merck, Agenus on Friday officially pulled its accelerated BLA for its anti-PD-1 inhibitor balstilimab as a potential second-line treatment for cervical cancer because of the recent full approval for Merck’s Keytruda in the same indication.

The company said the BLA, which was due for an FDA decision by Dec. 16, was withdrawn “when the window for accelerated approval of balstilimab closed,” thanks to the conversion of Keytruda’s accelerated approval to a full approval four months prior to its PDUFA date.

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How to col­lect and sub­mit RWD to win ap­proval for a new drug in­di­ca­tion: FDA spells it out in a long-await­ed guid­ance

Real-world data are messy. There can be differences in the standards used to collect different types of data, differences in terminologies and curation strategies, and even in the way data are exchanged.

While acknowledging this somewhat controlled chaos, the FDA is now explaining how biopharma companies can submit study data derived from real-world data (RWD) sources in applicable regulatory submissions, including new drug indications.

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Marty Duvall, Oncopeptides CEO

On­copep­tides stock craters as it pulls can­cer drug Pepax­to from the mar­ket

Shares of Oncopeptides crashed more than 70% in early Friday trading after the company said it’s pulling its multiple myeloma drug Pepaxto (melphalan flufenamide) from the US market after failing a confirmatory trial. The move will force the company to close its US and EU business units and enact significant layoffs.

The FDA had scheduled an adcomm meeting next Thursday to discuss Pepaxto, which first won accelerated approval in February and costs about $19,000 per course of treatment. The committee was to weigh in on whether the confirmatory trial demonstrated a worse overall survival in the treatment arm compared to the control arm.

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Pfiz­er pitch­es its Covid-19 vac­cine for younger chil­dren ahead of ad­comm next week

Pfizer will present its case to the FDA’s vaccine adcomm next week, seeking authorization for a lower-dose version of its Covid-19 vaccine for kids ages 5 through 12, which the Biden administration said will likely begin rolling out early next month.

Two primary doses of the 10 µg vaccine (the dose for those ages 12 and up is 30 μg) given 3 weeks apart in this group of children “have shown a favorable safety and tolerability profile, robust immune responses against all variants of concern including Delta, and vaccine efficacy of 90.7% against laboratory-confirmed symptomatic COVID-19,” the company said in briefing documents ahead of next Tuesday’s meeting of the FDA’s Vaccines and Related Biological Products Advisory Committee.

David Lockhart, ReCode Therapeutics CEO

Pfiz­er throws its weight be­hind LNP play­er eye­ing mR­NA treat­ments for CF, PCD

David Lockhart did not see the meteoric rise of messenger RNA and lipid nanoparticles coming.

Thanks to the worldwide fight against Covid-19, mRNA — the genetic code that can be engineered to turn the body into a mini protein factory — and LNPs, those tiny bubbles of fat carrying those instructions, have found their way into hundreds of millions of people. Within the biotech world, pioneers like Alnylam and Intellia have demonstrated just how versatile LNPs can be as a delivery vehicle for anything from siRNA to CRISPR/Cas9.

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David Livingston (Credit: Michael Sazel for CeMM)

Renowned Dana-Far­ber sci­en­tist, men­tor and bio­phar­ma ad­vi­sor David Liv­ingston has died

David Livingston, the Dana-Farber/Harvard Med scientist who helped shine a light on some of the key molecular drivers of breast and ovarian cancer, died unexpectedly last Sunday.

One of the senior leaders at Dana-Farber during his nearly half century of work there, Livingston was credited with shedding light on the genes that regulate cell growth, with insights into inherited BRCA1 and BRCA2 mutations that helped lay the scientific foundation for targeted therapies and earlier detection that have transformed the field.

No­vo CEO Lars Fruer­gaard Jør­gensen on R&D risk, the deal strat­e­gy and tar­gets for gen­der di­ver­si­ty

 

I kicked off our European R&D summit last week with a conversation involving Novo Nordisk CEO Lars Fruergaard Jørgensen. Novo is aiming to launch a new era of obesity management with a new approval for semaglutide. And Jørgensen had a lot to say about what comes next in R&D, how they manage risk and gender diversity targets at the trendsetting European pharma giant.

John Carroll: I’m here with Lars Jørgensen, the CEO of Novo Nordisk. Lars, it’s been a really interesting year so far with Novo Nordisk, right? You’ve projected a new era of growing sales. You’ve been able to expand on the GLP-1 franchise that was already well established in diabetes now going into obesity. And I think a tremendous number of people are really interested in how that’s working out. You have forecast a growing amount of sales. We don’t know specifically how that might play out. I know a lot of the analysts have different ideas, how those numbers might play out, but that we are in fact embarking on a new era for Novo Nordisk in terms of what the company’s capable of doing and what it’s able to do and what it wants to do. And I wanted to start off by asking you about obesity in particular. Semaglutide has been approved in the United States for obesity. It’s an area of R&D that’s been very troubled for decades. There have been weight loss drugs that have come along. They’ve attracted a lot of attention, but they haven’t actually ever gained traction in the market. My first question is what’s different this time about obesity? What is different about this drug and why do you expect it to work now whereas previous drugs haven’t?

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