Fentanyl-maker Insys Therapeutics Inc. (NASDAQ: INSY) last week agreed to pay a $225 million settlement related to federal criminal and civil charges of illegally marketing its highly addictive Subsys painkiller. On Monday morning, the company announced that it has filed for Chapter 11 bankruptcy protection while it proceeds with an orderly auction of all the company’s assets.
In the announcement, the company said that it will continue its operations while the asset sale is taking place. Subsys is one of two approved drugs the company currently sells. The other, Syndros, is a synthetic version of THC, the psychoactive ingredient in marijuana.
In 2016, Insys contributed $500,000 to campaign against the legalization of marijuana in Arizona, a campaign that ultimately was successful in preventing the state’s voters from approving legal sales of marijuana. The U.S. Drug Enforcement Administration (DEA) approved the sale of Syndros (dronabinol) in 2017. The U.S. Food and Drug Administration (FDA) has approved it for the treatment of anorexia in people with AIDS who have lost weight and to treat nausea and vomiting caused by chemotherapy treatment for cancer.
The company’s website lists several drugs in development, all based either on cannabidiol (a non-psychoactive ingredient in marijuana) or pain relief by means of oral or nasal sprays. Two of the products in development are aimed at treating opioid dependence or overdose.
CEO Andrew Long said:
After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner. INSYS has compelling assets and a highly talented team. We believe this process will provide us with a forum to negotiate an equitable resolution with our creditors and represents the best opportunity for our people and our business.
Insys filed various motions in the U.S. Bankruptcy Court in Delaware that would allow it to maintain its bank accounts, pay its employees, prevent utilities from discontinuing services, pay critical vendors and maintain programs for customers while the disposal of assets takes place. The company said it expects to receive approval for these requests.
Last month, the company’s founder and former CEO John Kapoor and four other former executives were found guilty of paying bribes and kickbacks to doctors who prescribed the opioid painkiller to patients who didn’t need it.
The company’s stock once traded at over $600 a share. The shares closed at $1.31 on Friday and traded at $0.82 early in Monday’s session, down about 37%.