Innovative biotech firm files Chapter 11 bankruptcy to close down

The biotechnology industry had a rough year in 2023 with more than two dozen companies filing for bankruptcy. The rise in bankruptcies last year came after 20 biotech firms filed for bankruptcy protection in 2022, but only nine filed in 2021, PharmaVoice reported.

Among the firms filing for bankruptcy in 2023 was cancer drug developer Sorrento, which filed for Chapter 11 in February 2023 after losing a lawsuit over its Cynviloq drug that cost it a $172 million judgment.

Two dozen Biotech firms had to file bankruptcy

Digestive disease drug developer 9 Meters Biopharma filed for Chapter 11 in July 2023 after clinical trials for its drug Vurolenatide did not go well and it was forced to shut down operations.

Novan, a producer of medical dermatology products, in July 2023 filed for Chapter 11 protection seeking a sale of all of its assets to Ligand Pharmaceuticals after having difficulty profiting from its products.

The biotech distress from 2023 carried over into 2024 as clinical-stage biopharmaceutical company Humanigen filed for Chapter 11 bankruptcy protection on Jan. 3 after efforts to negotiate a sale of its assets failed.

“The company’s negotiations with a privately held biopharmaceutical company relating to a proposed business combination, as disclosed in the company’s quarterly report on Form 10-Q filed on May 15, 2023, have ended without execution of a definitive agreement,” Humanigen said in a Securities and Exchange Commission filing.

The company said that it would need to delist from Nasdaq and would not be able to continue as a going concern. It reported about $500,000 in assets and $44 million in liabilities in its Chapter 11 petition.

Biotech technicians working in the lab. Image source: Getty Images

InVivo files Chapter 11 to wind down operations 

Biomaterials and biotechnology company InVivo Therapeutics Corp. on Feb. 1 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware with plans to wind down its operations after two clinical trials for its acute spinal cord injury treatment, Neuro-Spinal Scaffold device, failed to produce necessary results to continue forward.

The Burlington, Mass., life sciences company also asserted in court papers that it was unable to attract or acquire new assets to support its continued operation. The company said a bankruptcy filing would be the most efficient method of shutting down its clinical trials, liquidating its remaining assets, and distributing remaining cash and any sale proceeds to creditors and equity holders.

InVivo, which was founded in 2005, licensed certain intellectual property for its Neuro-Spinal Scaffold device through Boston Children’s Hospital and Massachusetts Institute of Technology. The license expires in 2027 or the life of the last patent expiration, whichever is later, unless terminated earlier by Boston Children’s Hospital, according to court papers.

The company sought to develop its investigational Neuro-Spinal Scaffold implant, a bioresorbable polymer scaffold that is designed for implantation at the site of injury within a spinal cord and is intended to treat acute spinal cord injuries. Despite significant investment and some promising results from initial clinical trials, setbacks in subsequent clinical trials and financial constraints forced the company to terminate development of the implant and seek and winddown and sale of any remaining assets.