Achaogen wants to sell itself through an auction as a part of a Chapter 11 bankruptcy reorganization, which the antibacterial-product maker announced it filed for this morning.
Achaogen plans to continue its normal business operations through the Chapter 11 process and took out a $25 million loan from Silicon Valley Bank to do so. The news comes less than one year after the South San Francisco, CA-based biotech launched its antibiotic plazomicin (Zemdri), and announced at the end of July 2018 it would eliminate 80 positions, which was roughly 28 percent of its staff, in order to focus on the launch and two other research programs that already have funding.
Shares of Achaogen (NASDAQ: AKAO) have traded under $1 since Feb. 15 and dropped by more than 50 percent on the news to 23 cents each Monday.
If the court approves Achaogen’s bankruptcy proposal, potential buyers will be expected to submit bids by May 29, with the sale intended to conclude June 13.
Achaogen CEO Blake Wise told Xconomy last year the decision to cut staff was made in order to give the company the strongest possible financial position to support the commercialization of plazomicin. The drug, a once daily infusion, costs $944 a day, and a course of treatment will range from five to 14 days. Achaogen has submitted a marketing application to the European Medicines Agency.
As Xconomy reported last year, the FDA approved plazomicin as a treatment for complicated urinary tract infections in patients who have limited or no treatment alternatives. But it was a split decision for the drug. The regulator rejected plazomicin as a treatment for bloodstream infections, telling the company in a letter that its clinical trial did not provide enough evidence of the drug’s efficacy for that indication. The injectable drug’s label carries a boxed warning that alerts physicians and patients that the drug may cause kidney problems or affect muscle use.