[Updated, 2:30 p.m. ET, see below] It’s not uncommon for a biotech’s larger partner to make a buyout offer for its smaller counterpart. But unfortunately for Bind Therapeutics, that bid, from pharma giant Pfizer, means the company could be about to close down for good.
Cambridge, MA-based Bind (NASDAQ: BIND) said that Pfizer (NYSE: PFE) has won a bankruptcy auction for all of its assets with a $40 million bid. The good news is that offer is double the $20 million lead, or so-called stalking-horse bid Pfizer kicked off the auction with this week—enough to pay off all of Bind’s secured and unsecured debt, according to a company spokesperson. That includes the more than $13 million due to Bind’s top lender, Hercules Technology, a debt that forced Bind to file for Chapter 11 bankruptcy protection in May.
It’s unclear whether any payouts will go to Bind’s shareholders. Stockholders often get wiped out in Chapter 11 cases, which is part of the reason Bind’s shares currently trade at less than a dollar. Shares did jump about 23 percent, to $1.15 apiece, on Wednesday after Bind disclosed Pfizer’s winning bid.
Polaris Partners held 9.7 percent of Bind as of an April 29 proxy filing. Flagship Ventures (7.5 percent), Rusnano (7.1 percent), and DHK Investments (6.7 percent) also held significant stakes.
The bad news from the auction, however, is Bind was valued at over $200 million when it went public three years ago at $15 a share. And according to Pfizer spokesperson Dean Mastrojohn, the New York pharma giant plans to bring Bind’s assets in-house and close down the company.
“[We] are still working through all the details,” Mastrojohn said, adding that Bind’s technology—a method of creating nanoparticle drugs that can more precisely deliver toxic agents like the chemotherapy docetaxel—is “highly complementary” to Pfizer’s own work in cancer immunotherapy. It adds “a leading nanotechnology platform to our portfolio,” he said.
[Updated with deal’s approval] According to the Bind spokesperson, a bankruptcy judge approved Pfizer’s offer at a hearing on Wednesday. Court papers show that the “backup bidder” for Bind should the Pfizer deal fall through before it closes is NanoCarrier, a Japanese nanotechnology company.
Bind’s bankruptcy filing was prompted when Hercules accelerated a payment due on a loan offered to the company. It’s been a tough go for Bind, one of the startups to emerge from the labs of MIT’s Robert Langer and Harvard Medical School’s Omid Farokhzad, since the company went public in 2013. Though the company was able to secure partnerships with companies like Amgen, Pfizer, Merck, and AstraZeneca, it hasn’t been able to parlay those deals into higher stock prices, and its lead drug, BIND-014, has disappointed in clinical trials. Bind announced plans to lay off 38 percent of its workforce just a month before the bankruptcy filing.