Epix Finally Sells Vasovist and Flips Debt, But Will It Escape Bankruptcy?
This article was originally published in The Pink Sheet Daily
Executive Summary
Marrying off drugs inherited in Predix merger could help firm stay afloat.
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In survival mode, Epix has sold the just-approved magnetic resonance angiography contrast agent known as Vasovist for $28 million and is looking to exchange $100 million in convertible notes for shares of common stock and cash. If the debt restructuring deal goes ahead as planned, convertible note holders would get $18 million and a 44.7 percent hold on company stock, Lexington, Mass.-based Epix said April 7. But the company also warned that if restructuring fails, it may be forced to file for bankruptcy. Even if the plan gets a green light, survival is not guaranteed. "In the process of clearing out these converts, they may be able to bring in more funding one way or another - there might be some increased comfort with the company," said Needham & Co. analyst Alan Carr. But it's still a tough environment to raise cash, the analyst added, particularly for a company with relatively early-stage assets such as Epix. After ending 2008 with only $24.6 million in cash and cash equivalents, the company reported in a March 12 SEC filing that it had enough cash to fund operations only through this August. At the time, Epix also warned that it was in danger of a NASDAQ delisting, a development that would force the company to redeem the convertible notes at face value plus interest. "We currently do not have sufficient funds to repurchase more than a nominal amount of the notes if tendered by the holders," Epix noted in the filing. Monetizing MS-325 (marketed under the trade name Vasovist by former partner Bayer Schering) is a step in the right direction. Epix sold U.S., Canadian and Australian rights for the novel blood pool agent to Lantheus Medial Imaging of Billerica, Mass. for $28 million and no royalties. The sale price was roughly in line with expectations, Carr said. Vasovist (gadofosveset) was cleared by FDA for use in imaging aortoiliac occlusive disease in adults with known or suspected peripheral vascular disease in December, after an arduous approval process (1 (Also see "Epix Seeks Partner To Market Vasovist" - Pink Sheet, 23 Dec, 2008.)). The firm had been urgently seeking a buyer or partner after Bayer announced in September that it was backing out of a global deal to market the agent, effective March 1, 2009 (2 (Also see "Epix Seeks New Vasovist Partner After Bayer Backs Out" - Pink Sheet, 10 Sep, 2008.)). Lantheus R&D vice president D. Scott Edwards confirmed in an interview that his firm will be launching the contrast agent in the U.S. later this year, but declined to specify a date or provide any details about the commercialization strategy, beyond saying the product will be given sufficient sales and marketing support. Like other biopharma companies, Epix has cut staff substantially, with two rounds of layoffs in March 2009 and October 2008, losing about 62 percent of its workforce for savings of about $7.4 million. Still the company will need additional funding to stay afloat. That money could come from partnering either pipeline assets or its in silico drug discovery platform. A 2006 merger with Predix Pharmaceuticals had led Epix away from imaging agents and toward big ticket therapeutics, including drugs for Alzheimer's disease, cystic fibrosis and depression (3 (Also see "Epix Launches Appeal For FDA Approval Of Vasovist" - Pink Sheet, 6 Jul, 2006.)). GlaxoSmithKline already has an exclusive option on Epix's PRX-03140 candidate for Alzheimer's disease. Two clinical compounds - PRX-08066 for pulmonary hypertension associated with chronic obstructive pulmonary disease and PRX-07034 for cognitive impairment - could be partnered. Marrying off these assets could help get the company to early 2010, when Alzheimer's disease data are due, said Carr. Through the Predix inheritance, Epix also has preclinical compounds in development with Amgen and the Cystic Fibrosis Foundation (4 (Also see "Epix Expanded Agreement With Cystic Fibrosis Foundation Valued At $50 Million" - Pink Sheet, 7 Apr, 2008.)). -Emily Hayes ([email protected]) |