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 The combination of freezing credit markets and plunging stock prices
has claimed a new victim: the biotechnology industry. Among those
afflicted by cash deficiencies are Massachusetts-based biotech
companies ActivBiotics Inc. and Spherics Inc., which both sought relief
from creditors on Dec. 7 and July 28, respectively, through a
bankruptcy alternative called an assignment for the benefit of
creditors, or ABC, contract.
An ABC is a process similar to a Chapter 7 liquidation in that a
company's assets are transferred to a third party (in this case, an
assignee) who then liquidates the property and distributes the proceeds
to creditors. In the case of Spherics, which now ceases to exist
following an Oct. 10 auction of its intellectual property, investors
who pumped roughly $40 million of venture capital money into the
business simply got tired of funding its continuous operating losses. A third biotech firm to go under includes San Diego-based Orchestra Therapeutics Inc., which filed for Chapter 7 on Oct. 13.
The company, founded under the name the Immune Response Corp. in 1986,
lost the confidence of its investors after unsuccessfully attempting to
develop an AIDS vaccine called Remune in the early 1990s. The company
could barely raise more than a few hundred thousand dollars at a time
from investors since then, and filed for bankruptcy with $1.6 million
in assets and $32.6 million in liabilities. The biotech bankruptcy
story may only be beginning, too. Another one that's on the brink: Toronto-based Generex Biotechnology Corp., which is scrambling to maintain compliance with Nasdaq's listing requirements. - Carolyn Okomo CategoriesComments
From: Carolyn Okomo,
Thank you for catching the address error--the changes have now been made.
Posted on:
November 7, 2008 2:39 PM
From: hey carolyn,
Hi Carolyn,
Posted on:
January 31, 2009 2:30 PM
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Hi Carolyn Okomo'
You made a glaring error at the end of your article. Generex Biotechnology is based in Toronto, Canada. They released their 10K a couple of weeks ago showing that they already have enough cash on hand to meet their needs for the next twelve months and have an unusually small amount of debt. Generex successfully raised capital in March 2008 and have a novel insulin delivery product in Phase III trials, and this same new diabetics product is currently being launched in India by their partner Shreya Life Sciences. Many small stocks have been wounded by the current economic climate, and have caused an unusual effect where their stock prices have irrationaly dipped below $1. That is why NASDAQ has suspended enforcement of the minimum bid requirement until 2009. In October's Annual Report, their auditors and accountants expressed no concern for the companies financial position and are in a sound fundamental position with a vibrant and promising pipeline. To mention them in an article of this type is a sloppy job of reporting.