Once val­ued at $4B, an em­bat­tled Ako­rn — nurs­ing a mar­ket cap of rough­ly $37M — files for bank­rupt­cy

Scarred by a se­ries of FDA warn­ings, a scorned buy­er and the un­cer­tain­ty of Covid-19, Ako­rn is fi­nal­ly throw­ing in the tow­el.

On Wednes­day, the spe­cial­ty gener­ic drug­mak­er said it was fil­ing for Chap­ter 11, weeks af­ter it said it had giv­en up on find­ing it­self a buy­er amidst the broad­er un­cer­tain­ty of Covid-19.

Some of Ako­rn’s lenders have agreed to a stalk­ing horse bid to pur­chase the Lake For­est, Illi­nois-based drug­mak­er’s as­sets, set­ting a base­ment price for the court-su­per­vised sale of the busi­ness. On the dock­et are the com­pa­ny’s US busi­ness and sub­sidiaries — Ako­rn’s en­ti­ties in In­dia and Switzer­land are ex­empt from the bank­rupt­cy process. Ako­rn hopes to com­plete the sale process by the third quar­ter.

The move is hard­ly shock­ing, giv­en Ako­rn’s calami­tous past few years. Last year, the spe­cial­ty gener­ic drug­mak­er re­ceived two warn­ing let­ters from the FDA. The lat­ter let­ter, sent in June 2019, in­volved an in­spec­tion by the agency of its Som­er­set, New Jer­sey man­u­fac­tur­ing fa­cil­i­ty in Ju­ly and Au­gust of 2018.

Ear­li­er in Jan­u­ary 2019, Ako­rn re­ceived a warn­ing let­ter re­lat­ed to an­oth­er plant — one in De­catur, Illi­nois —  fol­low­ing an in­spec­tion the pre­vi­ous April and May. The FDA de­tailed stan­dard man­u­fac­tur­ing vi­o­la­tions, in­clud­ing poor asep­tic and san­i­ti­za­tion prac­tices. Then in Feb­ru­ary, the com­pa­ny’s Ami­tyville, New York fa­cil­i­ty was hit with an­oth­er warn­ing, in the form of a Form 483, which high­light­ed records were not kept for the main­te­nance, clean­ing, san­i­tiz­ing and in­spec­tion of equip­ment.

Apart from pre­vi­ous­ly re­stat­ing its fi­nan­cial state­ments, in April 2018 dial­y­sis provider Fre­se­nius walked away from a $4 bil­lion takeover of Ako­rn, cit­ing an in­ves­ti­ga­tion that found Ako­rn had ma­te­ri­al­ly breached the FDA’s da­ta in­tegri­ty re­quire­ments. In its Jan­u­ary warn­ing let­ter, the FDA said it had con­cerns that Ako­rn’s qual­i­ty sys­tem does not “en­sure the ac­cu­ra­cy and in­tegri­ty of da­ta to sup­port the safe­ty, ef­fec­tive­ness, and qual­i­ty of the drugs you man­u­fac­ture.”

The com­pa­ny, which sells a range of brand­ed and gener­ic drugs in­clud­ing a li­do­caine gel and a mor­phine sul­fate oral so­lu­tion, gen­er­at­ed net sales of $682 mil­lion last year, down 2% from the $694 mil­lion it gen­er­at­ed in 2018. As of March 2020, the com­pa­ny had net debt of $781,446.

Doug Boothe

“We look for­ward to sep­a­rat­ing lega­cy lit­i­ga­tion and debt from the Com­pa­ny’s most valu­able as­sets – our prod­ucts, our peo­ple, our man­u­fac­tur­ing fa­cil­i­ties and our knowl­edge – so that we can move for­ward un­en­cum­bered by these li­a­bil­i­ty ex­po­sures un­der new own­er­ship that be­lieves in our fu­ture,” Ako­rn chief Doug Boothe said in a state­ment.

The com­pa­ny’s in­vestors did not quite see it that way, push­ing Ako­rn’s shares $AKRX deep­er in­to pen­ny stock ter­ri­to­ry by falling more than 19% to 22 cents in ear­ly trad­ing, and a mar­ket cap hov­er­ing at $36.6 mil­lion.

“We con­tin­ue to be­lieve that the com­mer­cial port­fo­lio has the kind of prod­uct mix that is less like­ly to see sig­nif­i­cant com­modi­ti­za­tion/ero­sion, par­tic­u­lar­ly the hos­pi­tal in­jectable seg­ment (this is bear­ing in mind that the sig­nif­i­cant pres­sure on the busi­ness in re­cent years was main­ly a func­tion of high­er-mar­gin as­sets such as in­jectable ephedrine that at one point had lim­it­ed com­pe­ti­tion but that sub­se­quent­ly saw sig­nif­i­cant com­pe­ti­tion ma­te­ri­al­ize),” Piper San­dler an­a­lysts wrote in a note last month.

Bris­tol My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

Back during the lead up to the $74 billion buyout of Celgene, the big biotech’s leadership did a little housecleaning with a major pact it had forged with Jounce. Out went the $2.6 billion deal and a collaboration on ICOS and PD-1.

Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

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GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Fangliang Zhang, AP Images

UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Leen Kawas, Athira CEO (Athira)

Can a small biotech suc­cess­ful­ly tack­le an Ever­est climb like Alzheimer’s? Athi­ra has $85M and some in­flu­en­tial back­ers ready to give it a shot

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.