Shareholders of Angiotech Pharmaceuticals Inc. (TSX:ANP) are ruing the day the company hitched its wagon to Boston Scientific Corp. (NYSE:BSX) and its Taxus drug-eluting stent, as the Canadian pharma and medical device maker enters bankruptcy protection north of the border.
The Vancouver-based firm said the Supreme Court of British Columbia approved its bankruptcy plan, aimed at eliminating $250 million in debt under Canada’s Companies’ Creditors Arrangement Act. The plan will wipe out the company’s existing shareholders, apart from a group connected with its 2006 acquisition of Quill Medical Inc.
The bankruptcy deal calls for holders of some of Angiotech’s debt to receive stock in exchange for their notes, according to the company, which also lined up a $25 million line of credit with Wells Fargo Capital Finance LLC to continue operations during the bankruptcy period.
Taxus sales have plunged in recent years as competitors’ more-recent DES models, such as Abbott Laboratories’ (NYSE:ABT) Xience V, have gained market share. Angiotech’s royalties from Taxus sales were down 56 percent during the third quarter, the company said.
The bankruptcy plan also contains $6 million to settle a lawsuit filed by a group representing former shareholders of Angiotech acquisition Quill Medical Inc., filed last October.
QSR Holdings Inc. alleged that Angiotech concealed damaging information about the sales performance of a Quill product prior to Angiotech’s acquisition of the company and acted to deliberately reduce future milestone-related payments to QSR. QSR contended that Quill would not have inked the 2006 merger agreement if it had known about $2.4 million worth of returned Quill wound closure products, according to court documents. At the time of the merger, Angiotech subsidiary Surgical Specialties Corp. had a distribution agreement with Quill, and allegedly hid the returned product in a warehouse.