Insys Therapeutics Inc. filed for bankruptcy protection after agreeing to pay hundreds of millions of dollars to settle a probe by U.S. prosecutors over the promotion of its highly addictive opioid painkiller.
Court papers filed Monday in Delaware by the drugmaker, whose former executives were convicted of bribing doctors, list at least $175.1 million in assets and $262.5 million in liabilities. Chapter 11 protection will allow the company to keep operating while it devises a plan to pay its obligations, including to the U.S. Justice Department, and to divest its fentanyl painkiller Subsys.
“After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner,” Chief Executive Officer Andrew Long said in a statement.
Shares of the Chandler, Arizona, company fell as much as 49% to 67 cents in New York, their lowest-ever intraday price.
Insys is the first drugmaker to seek bankruptcy protection from its creditors as a result of legal action related to the U.S. opioid epidemic. Several much larger, more diversified drugmakers have been sued by state and local governments that say drugmakers used misleading marketing tactics and created an addiction crisis.
In May, Insys founder and former Chief Executive Officer John Kapoor, 75, and four former executives were convicted of engaging in a racketeering conspiracy to bribe doctors to boost off-label prescriptions of Subsys, a fentanyl spray originally intended to treat cancer pain. The executives baited doctors with sham speaker fees, lavish dinners and nightclub outings, and then duped insurers into covering the prescriptions, prosecutors said. Kapoor and the others each face a maximum of 20 years in prison and will be sentenced in September.
Insys has separately agreed to pay $225 million to settle U.S. claims that the drugmaker used illegal marketing tactics to lure doctors into ramping up Subsys prescriptions. Under terms of the deal, Insys will pay $195 million to resolve whistle-blower claims, a $2 million criminal fine and forfeit $28 million in cash over a five-year period.