Cambridge Biotech Corp. (CBC) filed a reorganization planWednesday that, if approved by the court, would give a new start tothe company that's been mired for years in financial problems.
Under the reorganization plan a new company, AquilaBiopharmaceuticals Inc., would be established at CBC's facility inWorcester, Mass. The company is selling its diagnostics units whilekeeping its therapeutics programs, which entail an immune system-stimulating adjuvant and vaccines for humans and animals.
Alison Taunton-Rigby took over as president and CEO of CBC abouta year ago. She said it could take two to four months for the court'sdecision, and added a favorable ruling would be welcome news.
"People here are looking forward to coming out of bankruptcy andbeing what I'd call a normal biotechnology company," Taunton-Rigby said. "We have some very exciting product developmentprograms, the science is very strong and the people are very good.It's been frustrating being in bankruptcy."
Many of CBC's problems stemmed from financial results from theearly 1990s, which later had to be restated. The company was hit witha shareholder lawsuit, had its stock delisted because it was unable toprovide audited financial statements, and finally in July 1994 filed forprotection under Chapter 11 of the U.S. Bankruptcy Code. (SeeBioWorld Today, July 8, 1994, p. 1.)
On Monday CBC said it signed an agreement to sell its retroviraldiagnostics business for $6.5 million in cash to bioMerieux VitekInc., of St. Louis. That business includes patents and licenses todiagnostic screening and confirmatory tests for HIV and Lymedisease, as well as a manufacturing facility in Rockville, Md. CBC isnegotiating with a different company to sell the rest of its diagnosticbusiness, which relates primarily to enterological diseases and issmaller than the retroviral program.
The company, which released its audited 1995 numbers in March,now is completely up to date with financial reporting. It reported $6.8million in cash at the end of 1995.
Aquila will be capitalized initially with 5 million shares of commonstock. The settlement class of CBC stockholders will get one-quarterof the shares. Those holding the 26 million CBC shares will tradeabout eight shares for each share in the new company. Certaincreditors will be paid in stock, and Aquila employees will be issued$1 million worth of stock under an incentive plan that's been in effectat CBC.
The value of the stock will be determined by the bankruptcy judge.At that time the number of shares issued to employees will bedetermined, as will terms of a rights offering that will include unitsmade up of stock and three-year warrants.
Aquila, Taunton-Rigby said, is a Latin word meaning "eagle." It alsois a constellation, and similar to the name of the South Americanplant from which company products are extracted.
One of the company's products, from its Stimulon adjuvant program,is QS-21, an adjuvant being used by six companies and about 30academic collaborators. CBC supplies QS-21, has manufacturingrights and gets license fees, milestones and royalties from those usingthe adjuvant. A number of trials are ongoing including the adjuvantalong with others' antigens.
Aquila's proprietary programs include vaccines for streptococcalinfections in the elderly, a combination vaccine for human Lymedisease and human granulocytic ehrlichiosis and a vaccine formalaria. None is in human testing. In animal vaccines, the companyhas a feline leukemia product on the market and canine and bovineproducts in field studies. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.