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Pharmaceutical firm files voluntary Chapter 11

Savient, a firm that manufactures drugs used by patients in Pennsylvania and other states, made a formal Chapter 11 bankruptcy filing in late October. The firm's filing was entered in the Bankruptcy Court for the District of Delaware, and it included a request for authorization to complete a sale.

The bankruptcy filing led to an 87.5 percent drop in the company's stock, and this reportedly came on the heels of a two-year long effort to launch a new gout drug in the U.S.. The drug, Krystexxa, was originally approved by the FDA in September 2010, but the company's efforts to sell its assets were met with disinterest. The organization was then forced to market the product by itself, and it only enjoyed limited success.

According to reports, the company's inability to sell Krystexxa in sufficient quantities resulted in liabilities of more than $260 million in comparison to only $73 million in assets. The firm says that it will continue operating as usual during the bankruptcy proceedings, but it had already eliminated 35 percent of its workforce prior to filing, and it will now have to sell all of its assets, including the new drug in order to appease creditors and shareholders.

Bankruptcy proceedings involve many negotiations and decisions about what to do with assets. Executives who believe that they've found good solutions may find that their efforts are frustrated by creditors who want to make sure they get their money's worth. In addition, regulatory requirements may make it impossible to undertake certain deals that could relieve debt. Attorneys who can investigate alternate means of liquidating assets or negotiate with stakeholders may facilitate bankruptcy proceedings that result in more acceptable arrangements for large organizations and their creditors.

Source: Bio World, "Savient Files Chapter 11; Krystexxa to Remain Available", Catherin Shaffer, October 15, 2013

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