Market Overview

Insys Plunges 70% After Bankruptcy Warning

Insys Plunges 70% After Bankruptcy Warning

Opioid drugmaker Insys Therapeutics Inc (NASDAQ: INSY) may soon go bust, the company suggested in the first-quarter earnings report it released Friday after the close.

Following Insys' fourth-quarter print in March, analysts were largely bullish on the company, premising their optimism on valuation and pipeline catalysts. All of that could change.

Legal Pressure 

Insys is in litigation in a federal court in Boston over allegations that between 2012 and 2015, the company paid bribes to doctors to prescribe the sublingual fentanyl spray Subsys.

Following the lawsuit, the company announced a strategic review for its opioid-related assets in November — including Subsys.

Insys said in its first-quarter release that it has been experiencing increasing losses from operation, primarily due to the weakness in the transmucosal immediate release fentanyl market, and "significant legal expenses" from an ongoing Department of Justice investigation.

For the first quarter, Insys reported a loss of $1.66 per share, sharply wider than the 28 cents per share loss in the year-ago quarter.

As of March 31, available liquidity amounted to $87.6 million in cash and cash equivalents and investments, the company has no debt.

Insys said it expects to continue to generate negative cash flow from operating activities.

A federal jury earlier this month issued a verdict against the company's founder John Kapoor and four former executives.

Pushed To The Brink

Insys expressed doubts over its ability to complete a final settlement with the Justice Department, raising doubts about its ability to survive as a going concern and the prospect of a bankruptcy filing.

The company conceded that the situation may worsen if it is not able to complete the strategic review and reach a settlement with the government. 

"Accordingly, it may be necessary for the company to file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in order to implement a restructuring," Insys said. 

Insys shares were down 74.17 percent at 93 cents at the time of publication Monday. 

Related Links:

Teva Plummets Amid Massive Price Fixing Accusations; Other Generic Drugmakers Also Fall

OxyContin Maker Purdue Pharma's Legal Entanglement, Explained


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