The company announced it is seeking authorization to pursue both an auction and sale under the U.S. Bankruptcy Code.
Nearly six months after the company hinted at the chance of a sale, South San Francisco-based Achaogen has filed for bankruptcy as it continues to seek a potential buyer.
Achaogen, which has been struggling financially despite securing regulatory approval for Zemdri (plazomicin) last year, filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware, the company said Monday. The company also announced that it is seeking authorization to pursue both an auction and sale under the U.S. Bankruptcy Code. While the company is looking at a potential sale or auction, Achaogen said it has filed a series of motions with the Bankruptcy Court to ensure the continuation of normal operations during the process.
As Achaogen seeks a potential buyer, the company said it has secured $25 million in financing from the Silicon Valley Bank to fund operations through the process. Achaogen said the financing will provide it with the necessary amount of capital to meet its operational and financial obligations to patients, providers and its employees.
Bidding procedures for a potential auction, if approved, would allow interested parties to submit binding offers to acquire substantially all of Achaogen’s assets, the company said. They would be acquired “free and clear” of Achaogen’s debts. The first bids are expected to be submitted by May 29, should the court approve them. A structured auction would then begin no later than June 3, with a potential sale concluded by June 13, the company said.
Blake Wise, Achaogen’s chief executive officer, said the company came to the decision to file for bankruptcy after completely assessing the company’s “strategic options and financial situation.” Wise said Achaogen leadership believes this is the best course of action for the company.
“We continue to believe Zemdri (plazomicin) has the potential to be a valuable component of a portfolio of anti-infective or hospital products and an important life-saving medicine for patients,” Wise said in a statement.
Zemdri was approved in September as a treatment of complicated urinary tract infections that are caused by certain Enterobacteriaceae. That approval from the U.S. Food and Drug Administration (FDA) was somewhat bittersweet for the company. It had also sought approval of Zemdri for bloodstream infections, but the FDA rejected that particular indication. An approval for that indication would have created an even wider market for Zemdri.
Last summer, ahead of the regulatory approval of Zemdri, Achaogen initiated a corporate restructuring that included the elimination of 80 positions, or about 28 percent of staff. Part of that July restructuring included the loss of some C-suite leaders. The company said Kenneth Hillan, president of R&D, Tobin Schilke, chief financial officer and Lee Swem, chief scientific officer, were all departing the company.
In November, when the company hinted at a potential sale, Achaogen imitated a strategic review that restructured the company as part of a plan to reduce operating expenses by 35 to 40 percent.
