Bind Therapeutics was one of the many biotechs to go public amidst the sector’s recent bull run. But while a number of companies have charged forward since, Bind has stumbled, and today, after a lender forced its hand, the company is seeking bankruptcy protection.
Cambridge, MA-based Bind (NASDAQ: [[ticker:BIND]]) filed for Chapter 11 protection today, a move companies use to protect themselves from creditors while coming up with a plan to reorganize or sell themselves. Chapter 11 is different from Chapter 7, in which companies liquidate their assets in piecemeal fashion.
Bind said the filing was prompted by the recent demand of lender Hercules Technology, which earlier this year accelerated a payment due on a $15 million loan that Hercules gave Bind. According to its most recent annual report, filed on March 15, Bind had $36.9 million in cash at the end of 2015. In that report, Bind said it would need more cash if Hercules pushed its demands on the loan and might consider bankruptcy protection.
That’s exactly how things played out. Bind president and CEO Andrew Hirsch said in a statement that the company’s total cash and assets exceed its loan obligations, and now all options are on the table—from raising more money to selling the company. Moves like this in bankruptcy have to be approved in stepwise fashion by a bankruptcy judge while creditors jockey for position. In most bankruptcies, stockholders are wiped out, which is why the company’s stock plunged 65 percent into penny-stock territory this morning, landing at just $0.50 a share pre-market. Bind went public in 2013 at $15 a share.
It’s been a rough go for Bind since the IPO. Though the company was able to secure partnerships with companies like Amgen, Pfizer, Merck, and AstraZeneca, it hasn’t been able to parlay those deals into a higher stock prices. What’s more, its been a bumpy ride for the company’s lead drug, BIND-014, which is currently being tested as a treatment for non-small cell lung cancer but which hasn’t been effective in cancers of the cervix, head, or neck. Just last month, Bind said it had to lay off 38 percent of its workforce to save money, and was pursuing a strategic shift. Now it’s looking to bankruptcy protection for help.
“We believe this decision is in the best interests of the company and its stockholders,” Hirsch said in a statement this morning.
Bind was co-founded by MIT’s Robert Langer and Harvard Medical School’s Omid Farokhzad. The company develops nanoparticle drugs meant to more effectively and precisely deliver toxic agents like the chemotherapy docetaxel.
Polaris Partners held 9.7 percent of Bind as of an April 29 proxy filing. Flagship Ventures (7.5 percent), Rusnano (7.1 percent), and DHK Investments (6.7 percent) also held significant stakes.
Bind, incidentally, isn’t the only biotech to file for bankruptcy today. Raleigh, NC-based NephroGenex (NASDAQ: [[ticker:NRX]]) also announced a Chapter 11 filing, though unlike Bind, NephroGenex specifically aims to sell itself via a bankruptcy auction.
