AtheroGenics files for Chapter 11 bankruptcy
Tue Oct 7, 2008 7:52am EDT
Oct 7 (Reuters) - Pharmaceutical company AtheroGenics Inc (AGIX.O: Quote, Profile, Research, Stock Buzz) said it filed for Chapter 11 bankruptcy protection due to "substantial debt burden" that hampered the development of its lead product, an experimental diabetes drug.
The filing comes in response to the involuntary bankruptcy petition filed against the company by creditors on Sept. 15 in the U.S. Bankruptcy Court for the Northern District of Georgia after it failed to repay convertible notes due 2008 and 2011.
Shares of the company plummeted 83 percent to 4 cents before the bell. They closed at 24 cents Monday on Nasdaq.
AtheroGenics, which has filed to convert the petition under Chapter 11 of the U.S. Bankruptcy Code, said it expects to sell the company and its key assets during the bankruptcy proceedings.
The company said it could not forecast the amount of these proceeds or whether the combination of sale proceeds and cash on hand will exceed its liabilities. AtheroGenics has retained Merriman Curhan Ford and Co to assist with the sale of the company and its key assets during the Chapter 11 proceeding, and King & Spalding LLP as its legal adviser. (Reporting by Esha Dey in Bangalore; Editing by Amitha Rajan)
reuters.com
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AtheroGenics Files for Chapter 11 Bankruptcy
ATLANTA , GA – October 7, 2008 – AtheroGenics, Inc. (Nasdaq: AGIX), a pharmaceutical company focused on the treatment of chronic inflammatory diseases, today announced that it has consented to the Involuntary Chapter 7 Petition filed against the Company on September 15, 2008 in the U.S. Bankruptcy Court for the Northern District of Georgia, and has filed to convert the case to a case under Chapter 11 of the United States Bankruptcy Code.
The filing became necessary as a result of the Company’s substantial debt burden, which created a significant impediment to its ability to effectively develop its primary asset, AGI-1067.
During the bankruptcy proceedings, AtheroGenics expects to sell the Company and/or its key assets. Proceeds from any transactions will be distributed to the Company’s stakeholders, including its creditors. Prior to the sale process, AtheroGenics cannot forecast the amount of these proceeds or whether the combination of sale proceeds and cash on hand will exceed the Company’s liabilities. Therefore, the Company cannot predict whether or not any proceeds will be distributed to shareholders.
"We believe that the Chapter 11 filing is a necessary step in response to the creditors’ involuntary liquidation petition,” said Russell M. Medford, M.D., Ph.D., President and Chief Executive Officer of AtheroGenics. “We remain hopeful that AGI-1067 will ultimately continue to be developed, as we believe that it has real potential to be the first diabetes treatment that could reduce serious cardiovascular events. There remains a significant medical need and commercial opportunity for a drug with this profile."
AtheroGenics has retained the services of Merriman Curhan Ford and Co. to assist with the sale of the Company and/or its key assets during the Chapter 11 proceeding. The Company has also retained King & Spalding LLP to serve as its legal advisor in the bankruptcy proceeding.
About AtheroGenics
AtheroGenics is a pharmaceutical company focused on the treatment of chronic inflammatory diseases, including diabetes and coronary heart disease. The Company's lead antioxidant and anti-inflammatory drug candidate, AGI-1067, is being studied for the treatment of diabetes and has successfully completed a Phase 3 clinical trial known as ANDES (AGI-1067 as a Novel Anti-Diabetic Agent Evaluation Study). In addition, the Company has other clinical and preclinical anti-inflammatory compounds, including AGI-1096, an oral agent for the prevention of organ transplant rejection. For more information about AtheroGenics, please visit atherogenics.com .
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