Scandal-prone Subsys maker Insys falls as auditor flags going concern doubt
After hiring Lazard in the fourth quarter for counsel on capital planning and strategic alternatives, the auditor of the controversial opioid painkiller maker Insys Therapeutics has raised doubts on the drugmaker’s ability to continue as a going concern.
Insys has a contentious past it is now paying for in millions with legal fees — its former executives are embroiled in court for allegedly bribing doctors to prescribe its potent, addictive fentanyl spray Subsys off-label, by wining and dining them, paying them to speak at “educational events” and in one case even a lap dance. Meanwhile, the drugmaker’s billionaire founder and chief John Kapoor is on trial for racketeering and conspiracy associated with Subsys sales.
Under fire for the role in played in the crisis of opioid abuse, misuse and addiction in the United States, the company in November said it was looking to divest its arsenal of opioid assets — including Subsys, which it has sold since 2012 — to sharpen its focus on its pipeline of cannabis-derived therapeutics. However, its track record is troubling. In 2016, the Arizona-based company reportedly donated $500,000 to a campaign against the legalization of cannabis in Arizona, 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.
On Wednesday, the company warned in a filing that after reviewing its financial statements for the ended December 31, 2018, its auditor had flagged that “losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our legal obligations and settlements and sustain our operations raise substantial doubt about our ability to continue as a going concern”.
If Insys is unable procure more funding, the company will need to significantly cut back operationally, and “curtail some or all of our product development, commercialization and strategic plans.”
Shares of the drugmaker $INSY fell more than 25% on Wednesday, closing at $4.25.
Insys is hardly the only opioid drug maker in financial trouble. Purdue Pharma — the maker of one of most widely abused prescription opioid painkiller Oxycontin — is reportedly considering bankruptcy.
Image: Insys Therapeutics founder John Kapoor departs federal court, in Boston, Jan. 30, 2019. AP IMAGES