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Saturday, January 07, 2023 7:46:30 AM
By John George
A U.S. Bankruptcy Court judge had approved an agreement under which Malvern-based PhaseBio will transfer its bentracimab program assets to SFJ Pharmaceuticals for $32.9 million.
Bentracimab is a new drug candidate in late-stage clinical testing as a treatment to reverse potentially adverse effects of blood-thinning medicine.
PhaseBio, which also has offices in San Diego, filed for Chapter 11 on Oct. 23, about two weeks after it was sued for breach of contract by California-based SFJ, its development partner for bentracimab. The two companies entered into a co-development agreement in January 2020.
In its lawsuit, SFJ argued that because PhaseBio (NASDAQ: PHAS) had not improved its financial position since filing a "going concern" notice in March 2022, tied to its shrinking cash reserves, the bentracimab program should be transferred to SFJ under the terms of their co-development contract.
PhaseBio voluntarily filed for Bankruptcy Court protection with a plan to sell its assets through an auction before the end of the year. The court gave the two companies until the end of January to fully execute an asset transfer agreement reached with SFJ to resolve the litigation.
An SFJ spokesperson said the company "is pleased with the outcome which allows SFJ to move forward in advancing this much needed therapy with the goal of bringing it to market to the benefit of patients globally."
Representatives of PhaseBio were not available for comment.
In November, Chiesi Farmaceutici of Italy was designated as the stalking horse bidder for PhaseBio after it entered into an agreement to acquire all of the company's assets for $40 million at closing, and $60 million in future contingent payment tied to the development of bentracimab.
Complicating the bidding process, however, was that SFJ held a secured claim of $120 million against PhaseBio for obligations from their co-development agreement.
Under the agreement approved Dec. 31 by Judge Laurie Selber Silverstein, PhaseBio will be required to reimburse Chiesi any expense incurred after being approved by the Bankruptcy Court as the stalking horse bidder. Chiesi's agreement with PhaseBio included a $2 million break-up fee and expense reimbursements of up to $750,000 if its asset purchase agreement was terminated.
The bulk of the sale proceeds will be used to pay PhaseBio's lenders. It could not be immediately determined what the company's unsecured creditors will receive. At the time of its bankruptcy filing, PhaseBio listed both assets and liabilities between $10 million and $50 million. The company's specific list of creditors was sealed by the court.
The program transfer agreement between PhaseBio and SFJ includes a provision requiring the companies to cooperate in designating certain PhaseBio employees to be offered full-time employment at SFJ.
PhaseBio, led by CEO Jonathan Mow, started 2022 with 60 employees. In its last quarterly report covering the period ending June 30, the company said it had cash and cash equivalents of $7.8 million and accrued expenses and liabilities of $12.9 million.
On Nov. 3, PhaseBio’s common stock was suspended from trading on Nasdaq and, effective the next day, its stock began being quoted on the OTC Pink Marketplace under the symbol “PHASQ.” The stock was delisted on Dec. 31.
https://www.bizjournals.com/philadelphia/news/2023/01/05/phasebio-malvern-bankruptcy-sfj-pharmaceuticals.amp.html
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