Amidst a “fire sale” restructuring of bankrupt Insys, the former maker of notorious fentanyl spray Subsys, opioid plaintiffs are still hoping to pick some meat off the drugmaker’s bones. And now, Insys is floating a deal that would come at pennies on the dollar.
As part of its liquidation, Insys would create a “victims restitution trust” to help settle the drugmaker’s liabilities––legal and otherwise––that could have been as high as $16 billion, the company said in a Securities and Exchange Commission (SEC) filing. That number was reduced in arbitration, though the SEC filing doesn’t disclose it.
Of the roughly $1 billion opioid liability that Insys faces, plaintiffs will likely see far, far less, given the company only holds $39 million in cash reserves, the drugmaker said. The U.S. Department of Justice (DOJ) would also have a claim of $243 million, along with undetermined claims for forfeiture and restitution, according to Reuters.
Closing its opioid accounts would put a cap on an ignominious end to Insys as some of the drugmaker’s top brass face prison time for their role in boosting sales of highly addictive Subsys.
In September, Insys won a bankruptcy court’s approval to hive off Subsys to Wyoming-based BTcP Pharma LLC, part of the MMB Healthcare network. The deal was expected to net Insys $20 million in royalties.
According to Reuters, six state attorneys general opposed the sale of Subsys for fear that the new buyer would market the spray in much the same way Insys had. The states eventually withdrew their opposition after BTcP owner Michael Burke pledged that the drug’s marketing would restrict its prescription for cancer patients alone.
After a $225 million settlement with the DOJ in June, Insys agreed to restructure and divest its products within 90 days of filing Chapter 11 bankruptcy. In its first sale after that announcement, Hikma Pharmaceuticals snapped up unit-dose nasal and sublingual spray manufacturing equipment as well as pipeline products of epinephrine and naloxone nasal sprays, in a $12 million deal. Naloxone spray is used to counteract opioid overdoses.
According to bankruptcy records, Hikma made a $1 million down payment and agreed to pay the remaining $11.2 million on closing. The London-based company, which does some contract work, did not say where it intends to develop and produce its new assets.
As part of its settlement, Insys also agreed to five years of deferred prosecution on civil and criminal charges.
Insys’ bankruptcy filing turned the page on a troubled period––to say the least––for the drugmaker after it watched its founder and former CEO John Kapoor go down on federal racketeering charges in May.
Kapoor was found guilty by a Boston jury of driving a scheme to reward sales managers for wining and dining physicians to boost Subsys sales, a strategy federal prosecutors said exacerbated the nation’s opioid epidemic. Kapoor was the first C-level executive to be held directly responsible for his company’s role in the driving the crisis.