INSYS Files for Bankruptcy, Share Price Crumbles

Remigio Civitarese
Giugno 13, 2019

INSYS Therapeutics, a pharmaceutical company that makes opioid painkillers, has filed for Chapter 11 bankruptcy protection in the wake of a $225 million settlement with the federal government.

Insys founder John N. Kapoor, center, leaves the John Joseph Moakley United States Courthouse in Boston on May 2, 2019.

Shares of INSYS dipped more than 50 percent on Monday following the announcement that it is filing for bankruptcy protection. It also issued a press release, saying the filing was necessary to help it sell "substantially all of the company's assets and address the company's legacy legal liabilities".

Insys intends to continue operating its business in the ordinary course while it pursues these transactions through the court-supervised sale process.

Insys is one of the first pharmaceutical companies that have filed for bankruptcy after incurring massive legal expenses related to the suits in the country's deadly opioid epidemic.

Insys last week agreed to a $225 million settlement over an criminal and civil investigation by the Department of Justice into its practice of bribing doctors to prescribe a highly addictive fentanyl spray called Subsys. How much of its $225 million settlement with the USA government is ever collected depends on how much money is raised through the bankruptcy court's sales of its assets. Fentanyl, the product's main ingredient, is an opioid rated as 100 times the strength of morphine. The sublingual spray was developed as a pain management drug for adult cancer patients who are already tolerant to around-the-clock opioid therapy.

The bankruptcy filing follows the conviction of majority shareholder John N. Kapoor, the Indian American billionaire and founder and former executive chairman of Insys, by a federal jury for bribing medical practitioners to prescribe the company's opioid-based medication Subsys.

INSYS aims to complete the asset sales within 90 days.

The US Department of Justice claims that between 2012 and 2015, the company started using "speaker programs" to raise brand awareness of Subsys through lunches and dinners. Meanwhile, the company used bribes and kickbacks, including paying sham speaker fees, to get doctors to become prolific prescribers of the unsafe drug. "Today, the company is being held responsible for that and for its role in fueling the opioid epidemic".

According to the Centers for Disease Control and Prevention (CDC), opioid drug were involved in a record 47,600 USA overdose deaths in 2017, the previous year for which there are records.

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