KineMed spent years trying to help drug companies and other researchers pinpoint how to best attack a disease. Despite multiple deals with big names in pharma and academia, the business didn’t work. KineMed, of Emeryville, CA, filed for Chapter 11 bankruptcy last week, which means it wants protection from creditors while it comes up with a plan to pay them back, either by selling assets or reorganizing.
The company owes more than $546,000 to law firm Hogan Lovells, its biggest creditor. Other major creditors include the National Institutes of Health ($275,000) and the Bill and Melinda Gates Foundation ($219,000), according to court documents released last week.
KineMed was founded 15 years ago and, still privately held, has accumulated more than 600 investors, according to filings. The firm tried to go public in early 2014 as the biotech bull run was gaining steam but withdrew the attempt six months later without giving a reason. At that time the firm had accumulated about $56 million in losses since inception.
KineMed has technology that analyzes the way diseases change the state of proteins and other molecules. These signals of change—known as biomarkers— are meant to help drug companies test their own products more accurately before they reach human clinical trials. KineMed signed research deals in the past 12 months with Pfizer and Pronutria Biosciences, adding to several other collaborations it has announced in the past. But those deals brought in very little cash. The firm’s records show an annual gross revenue in recent years right around $5 million.
Despite that trickle of cash coming in, KineMed has compensated its executives well recently. CEO and chairman David Fineman, the company’s co-founder, received $256,118 in wages and “expense reimbursement” the past 12 months, according to court filings. Fineman and eight other executives received nearly $2 million in that period for wages, expenses, and travel advances. (Fineman’s daughter also received $15,800 for about two months of what documents listed as “social media consulting services.”)
Fineman did not respond to multiple calls and e-mails.
Fineman was listed as Kinemed’s largest shareholder in 2014, and he still owns nearly 11 percent of the company, according to documents. Four members of KineMed’s top management resigned last month, along with four non-executive directors, according to documents. Fineman is now the only senior manager listed on the company’s website.
One of the directors listed as having resigned, James Manuso of Talfinium Investments in San Francisco, declined to comment during a brief phone call and referred all questions to Fineman.
“I have big aspirations,” Fineman told the San Francisco Business Times in 2005. “I want to see this company valued in the billions of dollars.”
One boldface biotech name associated with Kinemed is Peter Hirth, the former CEO of Plexxikon, which was snapped up by Daiichi Sankyo in 2011 for $805 million upfront. Hirth joined the Kinemed board in 2013 but was one of the directors who recently left, according to documents. Hirth and other non-executive directors were receiving $6,000 a year. Attempts to reach Hirth at his San Francisco residence were unsuccessful.
Bankruptcies in biotech are fairly rare occurrences, compared to other industries. Bind Therapeutics (NASDAQ: BIND) and NephroGenex (NASDAQ: NRX) are recent cases, as Xconomy wrote about here. One of the highest profile filings of late was made by Dendreon, the Seattle pioneer in cell-based cancer immunotherapy that tried to do first, in a sense, what Juno Therapeutics (NASDAQ: JUNO), Kite Pharma (NASDAQ: KITE), and Novartis (NYSE: NVS) have been moving toward the market. After massive debt and anemic sales of its prostate cancer treatment forced Dendreon into bankruptcy in 2014, it was bought early last year by Valeant Pharmaceuticals International (NYSE: VRX).
Photo courtesy of Dan Moyle via a Creative Commons license.