Insys throws in the towel and files for bankruptcy
Insys has declared bankruptcy, hard on the heels of its agreement last week to a $225 million payment to settle charges it bribed doctors to prescribe opioid painkillers.
It is the first opioid drug producer to have to file for Chapter 11 bankruptcy protection in the US as a result of a crackdown on illegal marketing practices that are claimed to have fuelled an epidemic in opioid abuse and overdose-related deaths in recent years.
Last week, Insys admitted five counts of mail fraud in connection with its marketing of Subsys (fentanyl), a painkiller approved to treat breakthrough cancer pain. Five former Insys executives – including founder and chairman John Kapoor – were convicted after a trial of racketeering conspiracy last month.
In addition to the federal settlement, Insys is also facing upwards of 1,000 lawsuits claiming that it encouraged massive over-prescribing of Subsys for off-label uses.
In a statement on the Chapter 11 filing, the Arizona-based drugmaker said it would continue to operate as normal while it tries to “facilitate the sale of substantially all of the company’s assets and address the company’s legacy legal liabilities.”
That includes paying its employees, continuing to provide its products, and making sure its suppliers are paid in full for goods and services after the 10 June filing date, according to the company. That does mean however that suppliers owed money before the failing date will have to get bankruptcy court approval for payment.
Insys says it aims to complete the asset sales and address its liabilities within 90 days.
The asset sale covers Subsys – which is facing a patent challenge from Teva in the US – as well as Syndros, a liquid dronabinol product approved in 2017 by the FDA for chemotherapy-induced nausea and vomiting in patients who don’t respond to other drugs.
Net revenue for the first quarter of this year was a little under $8 million, down from $24 million a year earlier, and comes almost entirely from Subsys with a modest $400,000 contribution from Syndros.
The company has tried to reduce its reliance on Subsys by bringing forward new products, including a naloxone nasal spray formulation for opioid overdose and a sublingual spray formulation of buprenorphine, but suffered a major setback when the latter drug was rejected by the FDA last year.
Insys reported a net loss of $124 million in the first quarter of the year – coming on the back of a $125 million loss in 2018 – and said it had around $87 million in cash.
Purdue Pharma has also suggested it may be forced to seek protection after agreeing to pay $270 million to settle an opioid-marketing lawsuit brought by Oklahoma in March. That suit is now being fought by Johnson & Johnson alone, after co-defendant Teva also agreed an $85 million settlement last month.
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