When Insys Therapeutics settled with the feds for a whopping $225 million last week on federal kickback charges, the drugmaker hoped it had put its troubled past behind it. Turns out that was only the tip of the iceberg for the embattled opioid maker.
Insys filed for Chapter 11 bankruptcy Monday on the heels of an agreement with the Department of Justice to shell out civil and criminal penalties to tie up charges the company paid doctors to boost scripts of its powerful fentanyl spray Subsys.
The Arizona-based drugmaker will look to sell almost all of its assets within 90 days without interrupting payments to vendors and suppliers or normal operations, the company said in a release.
“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,” Insys CEO Andrew Long said.
In premarket trading Monday, Insys’ share prices had declined roughly 60% since Friday’s market close to 52 cents per share. Since its six-month high of $6.50 per share on March 1, the drugmaker’s share prices have fallen 92%.
Insys’ bankruptcy filing caps a troubled period for the drugmaker after it agreed to five years of deferred prosecution in its settlement agreement and watched its founder and former CEO John Kapoor go down on federal racketeering charges in May.
Kapoor was found guilty by a Boston jury of driving a scheme to reward sales managers for wining and dining physicians to boost Subsys sales, a strategy federal prosecutors said exacerbated the nation’s opioid epidemic. Kapoor was the first C-level executive to be held directly responsible for his company’s role in the driving the crisis.
Insys’ executive-driven bribery scheme included allegations that doctors were treated to expensive seafood dinners and strip club visits as part of a sham speaker program directed by the company’s marketing team. The former head of that program, sales vice president Alec Burlakoff, reached a plea agreement on fraud charges in federal court and is currently working with the Arizona attorney general’s office in their ongoing investigation of Kapoor.
Burlakoff and Kapoor were just two of the company’s team members knocked by federal prosecutors. Another former CEO, Mark Babich, pleaded guilty to mail fraud charges and testified against Kapoor in his trial. The federal probe also nabbed former Insys sales managers involved in the scheme and five Manhattan doctors who were also implicated.