INSYS Therapeutics files for bankruptcy in wake of US settlement over Subsys marketing practices

INSYS Therapeutics on Monday announced that it filed for bankruptcy under Chapter 11 of the US Bankruptcy Code to facilitate the sale of its assets and management of its liabilities, sending shares in the company down as much as 60 percent. The news comes shortly after INSYS agreed to pay $225 million to resolve US criminal and civil investigations into its marketing of the opioid analgesic Subsys (fentanyl), having entered a preliminary settlement last year.  

CEO Andrew Long stated "after conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximise the value of our assets and address our legacy legal challenges in a fair and transparent manner." In the bankruptcy filing, the drugmaker noted that it had at least $175.1 million in assets and $262.5 million in liabilities.

In the bankruptcy petition, the federal government acknowledged that it will become an unsecured creditor and it will not receive the full payment from the settlement. INSYS plans to ask the presiding bankruptcy judge to approve an agreement that will cap the amount paid to the US government at $190 million.

Earlier this year, INSYS indicated that it could be forced to file for bankruptcy to manage its mounting legal costs, while an advisor had also questioned the ability of the drugmaker to continue its operation as a going concern.

INSYS will continue to promote Subsys while pursuing a sale, although the firm will have to stop promoting the drug after 90 days under the terms of its settlement with the government. Meanwhile, the settlement agreement is structured so that a potential Subsys buyer can take over the product without assuming responsibility for the fines.

Other companies facing rising legal costs associated with opioid products include Purdue Pharma, which announced in March that it was considering bankruptcy in response to lawsuits related to its marketing of OxyContin (oxycodone). The company, which is facing about 2000 lawsuits across the US, recently entered into a $270-million settlement with Oklahoma to resolve one such lawsuit. For related analysis, read ViewPoints: Opioid makers on hot seat chart very different courses.

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