The company said it has filed a motion seeking authorization for an auction and sale process.
What caused the once high-flying biotech to go bankrupt?
Split Verdict Chokes Stock
The writing on the wall was clear after Achaogen’s lead product candidate Zemdri, or plazomicin — an antibacterial agent evaluated for complication urinary tract and bloodstream infections — secured a go-ahead from the DFA only for the former indication.
The split verdict was announced June 26, 2018 and sent shares of Achaogen down by about 20 percent in a single session. Subsequently, the shares were in a freefall, dropping from a little over $12 on June 25 to 50 cents at the close Friday.
Damage Control Fails
Achaogen announced a restructuring initiative in late July, trimming 28 percent of its workforce, or 80 positions, as it embarked on Zemdri commercialization in the U.S. and filed for marketing authorization approval in the EU while also developing its C-Scape program.
In late February, the company announced a $15-million underwritten public offering.
The fourth-quarter results reported in March showed that Zemdri fetched merely $800,000 in sales in 2018.
The Path Forward
Achaogen said it has enlisted court support to continue normal operations during the sale process. It also said it has support of its secured lender Silicon Valley Bank, which has committed to $25 million in funding to facilitate the auction and sale process.
- May 29: Submission of bids
- June 3: latest date for commencement of structured auction
- June 13: expected date of completion of sale
With the stock now near-worthless, long-term believers in Achaogen are likely to be left with nothing. Even with the sale process being contemplated, the shareholders are unlikely to get much from the liquidation, as common shareholders are last in line in claiming ownership to the company’s assets.
Achaogen’s lead product as well as its pipeline could be swooped up by another company.
Reacting to the bankruptcy filing and planned sale process, the penny stock dipped further and was down 64.57 percent at 18 cents at the time of publication Monday.
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