Long-troubled Valeritas, manufacturers of a wearable, disposable insulin pump, has filed for Chapter 11 bankruptcy as part of a plan to hand off its business to the specialty drugmaker Zealand Pharma, through a court-supervised sale.
Late last December, Valeritas disclosed supply chain disruptions that left the company with no products to ship, leading to a one-time write-off of inventory of up to $8 million and enough cash-on-hand to fund operations into this month.
At the same time, in separate developments, the international commercial reach of the company’s V-Go basal-bolus delivery device took a big hit. Two distribution agreements covering multiple countries were terminated early in the face pricing pressures and competitive market conditions, according to Valeritas: one in Europe with MedTrust, and one with the Middle Eastern drug manufacturer Julphar.
It was at that point the company brought on the M&A investment firm Lincoln International to search for a way forward, including the sale of the company through a Chapter 11 process.
Now, they’ve found a buyer in the Denmark-based biotech, which focuses on therapeutics for gastrointestinal and metabolic diseases including diabetes. If the deal is completed, Zealand says it will pay a total cash consideration of $23 million for all of Valeritas’ assets.
Zealand plans to incorporate the company’s U.S.-based business infrastructure to provide a foothold for the future launch of its dasiglucagon HypoPal rescue pen for cases of low blood sugar. Pending approval by the FDA, the company is aiming for a 2021 rollout.
According to Valeritas, “the transaction contemplates the retention of nearly the entirety of” the company’s approximately 140 full-time employees, with plans to continue its V-Go operations.
“After a thoughtful and thorough review of strategic alternatives, we determined that a process to sell our business is the best path forward to maximize value for all stakeholders,” said President and CEO John Timberlake. “During this process, we will remain focused on successfully serving our patients and healthcare providers as we continue to work hard to improve the health of and simplify the lives of people with diabetes.”
“We believe that entering the process with an agreed offer from Zealand, whose stated goal is to work with our highly-talented workforce to build a successful commercial competitor in the U.S. diabetes market, is the most advantageous option for Valeritas,” Timberlake added. “We thank our employees for their continued hard work and commitment towards fulfilling our vision of making V-Go the future standard of care for how patients with type 2 diabetes deliver their insulin.”
For the first nine months of 2019, Valeritas reported $22.4 million in revenue and loss before income taxes of $41.9 million. Zealand’s $23 million offer represents a “stalking-horse bid,” which sets the low-end bar on Valeritas’ purchase price while allowing other buyers to still submit competitive proposals.