Drug development company Epix Pharmaceuticals Inc. (Bulletin Board:EPIX), established through the 2006 merger of Israel's Predix Pharmaceuticals Ltd. with Epix of the US, is going into liquidation. The company has fired its remaining employees, including about ten at its offices in Ramat Gan.
Epix stated that it has entered into "Assignment for the Benefit of Creditors," effective immediately, in order "to conclude the company's operations and provide for an orderly liquidation of its assets." Epix explained, "The Assignment is a common law business liquidation mechanism under Massachusetts law that is an alternative to a formal bankruptcy proceeding."
For months, the Massachusetts-based Epix had unsuccessfully sought a buyer for its activity, after suffering from cash flow problems and failing to reach a debt settlement. The company's assets will be transferred to its creditors. The company believes that its shareholders will be left with nothing.
Epix collapsed under the weight of its debt to bondholders. The bonds were due to be repaid at the end of 2012, by which time the company expected to have revenue. But the bond contract included a clause allowing for early immediate repayment if the company's market cap fell below a certain threshold and it was delisted from Nasdaq. The delisting took place last week, when the company was relegated to the Bulletin Board.
In an effort at recovery and debt repayment, Epix initially shut down all drug development activity, except for its leading product, an Alzheimer's treatment. Later, in April, it sold the US, Canadian and Australian rights for MS-325 (formerly marketed as Vasovist) to Lantheus Medical Imaging Inc. for $28 million, under pressure. Last December, the company valued MS-325 at $100 million.
These sales enabled Epix to pay most of its bond debt, but not all bondholders agreed to participate in a settlement, and the company was still left with an outstanding debt and no assets left to sell to pay it off.
Epix's efforts to find a buyer also failed, mainly because of it debt liabilities. The company's sole remaining asset is an agreement with GlaxoSmithKline plc (NYSE; LSE: GSK) for the joint development of the Alzheimer's treatment, which could cost up to $1.2 billion to develop. Potential buyers apparently concluded that chances of the product's success under GlaxoSmithKline did not justify an investment in Epix, even if the drug achieved promising results in the efficiency clinical trial.
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2009
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