At a time when bacteria are growing more resistant to common antibiotics, many companies that are developing new versions of the drugs are hemorrhaging money and going out of business, gravely undermining efforts to contain the spread of deadly, drug-resistant bacteria.
Melinta Therapeutics, founded in 2000 as Rib-X Pharmaceuticals, is an American publicly traded biopharmaceutical firm that focuses on the design and development of novel broad-spectrum antibiotics for the treatment of antibiotic-resistant infections in hospital and community settings.
On December 27, Melinta filed for bankruptcy protection, becoming the latest casualty of a persistent cash burn in the antibiotic industry. The drugmaker, which has four antibiotics on the market, warned that it was running out of cash last month.
Melinta has entered into a Restructuring Support Agreement with the lenders. Under the Agreement, the Supporting Lenders would acquire the Company as a going concern by exchanging $140 million of secured claims arising under its senior credit facility for 100 percent of the equity to be issued by the reorganized Company pursuant to a pre-negotiated chapter 11 plan of reorganization.
The Company’s Agreement with the Supporting Lenders positions the Company to emerge from Chapter 11 on an expedited basis under new ownership and continue operating as a going concern on sound financial footing. At the same time, the Supporting Lenders’ proposal to acquire the Company remains subject to a Court-supervised competitive process, which could result in higher and better offers.
The Agreement will be filed with the Securities and Exchange Commission in a current report on Form 8-K.
Global health officials have repeatedly warned about the rise of bacteria and other microbes that are resistant to most drugs due to their overuse, prompting health agencies to push for newer versions of antibiotics.
However, antibiotics are relatively cheap and are more effective the less they are used, making profitability hard to achieve.
Most of Big Pharma shuns the antibiotic space. Larger drugmakers, including AstraZeneca Plc, Novartis and Sanofi SA, have stopped developing antibiotics.
While smaller players such as Achaogen Inc have already failed and filed for bankruptcy. Bankrupt and running out of cash after going $186 million in the red last year, Achaogen has sold off the global rights to Zemdri (plazomicin for multidrug-resistant, gram-negative pathogens) along with its lab equipment for just $16 million.
The California biotech Aradigm filed for bankruptcy after a major knockback from the FDA for its lead inhaled antibiotic product and protracted efforts to try to resurrect the program.
“This is a crisis that should alarm everyone,” said Dr. Helen Boucher, an infectious disease specialist at Tufts Medical Center.