A biopharmaceutical company, Clovis Oncology, Inc. (NASDAQ:CLVS) plummeted around 10% in pre trading session on Monday after the company reports that it and certain of its subsidiaries have voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware and will attempt to sell their assets through a court-supervised sales procedure.
The Debtors have filed a number of “first day” motions with the Bankruptcy Court, requesting customary relief that will allow them to transition into Chapter 11 without material disruption to their normal course of business, including authority to obtain debtor-in-possession (“DIP”) financing and pay employee wages and benefits.
Clovis has acquired a pledge of up to $75 million in a multi-draw DIP financing arrangement to provide critical funds throughout the Chapter 11 action. The DIP funding is intended to provide Clovis with the necessary liquidity to operate in the regular course and satisfy commitments to its employees, vendors, and customers during the Chapter 11 action while executing on the sales process, if approved by the Bankruptcy Court.
Prior to filing for Chapter 11, and subject to Bankruptcy Court approval, the Company entered into a “stalking horse” purchase and assignment agreement with Novartis Innovative Therapies AG to acquire substantially all of the Company’s rights to its pipeline clinical candidate, FAP-2286, as a therapeutic agent for a $50 million upfront payment and up to an additional $333.75 million upon successful achievement of specified development and regulatory milestones..
The transaction is part of a sale process governed by Section 363 of the Bankruptcy Code, and it is subject to compliance with agreed-upon and Bankruptcy Court-approved bidding processes that allow for the submission of higher or otherwise better offers, as well as other agreed-upon conditions. Furthermore, the acquisition is subject to normal closing conditions, such as the expiry of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as modified.
Third parties will be notified of the proposed sale to Novartis in line with Section 363 of the Bankruptcy Code, and competitive offers will be requested. In conjunction with its consultants and under the supervision of the Bankruptcy Court, the Company will manage the bidding process and assess any proposals received.
Clovis is also in active conversations with a number of interested parties over the sale of one or more of its other assets. Any of such sales would be subject to Bankruptcy Court examination and approval, as well as adherence to Bankruptcy Court-approved bidding processes.
Clovis is represented as counsel by Willkie Farr & Gallagher LLP, as restructuring adviser by AlixPartners LLP, and as restructuring investment banker by Perella Weinberg Partners L.P.