Wound care company Nuo Therapeutics (OTC:NUOT) said yesterday that a federal court in Delaware approved a bankruptcy plan that would either see it continue as an independent company or become 95% owned by lender Deerfield Management.
Gaithersburg, Md.-based Nuo filed for Chapter 11 bankruptcy protection in January, 2 years after raising $35 million from Deerfield. Formerly known as Cytomedix, the company makes the Aurix hematogel, which is designed to stimulate the body’s native mechanisms to heal wounds.
Nuo listed assets worth $19.2 million and debts of $13.1 million, including $834,144 owed to Arthrex, $70,486 owed to Sparton Medical Systems, $44,537 owed to Johnson & Johnson (NYSE:JNJ) subsidiary DePuy Spine and $42,203 owed to Pfizer(NYSE:PFE). At the time the company said it planned to ask Deerfield for roughly $9 million worth of debtor-in-possession financing.
Yesterday Nuo said that the U.S. Bankruptcy Court for Delaware approved a 2-prong plan for its reorganization. The 1st scenario would see it raise at least $10.5 million by April 20. If it can’t raise the scratch by that deadline Nuo would become 95% owned by Deerfield under the 2nd scenario.
If the money can be raised, Nuo said it pledged to assign the rights to its license with Arthrex to Deerfield, which agreed to exchange the $6 million worth of debtor-in-possession financing advanced after Nuo’s bankruptcy filing for equity worth $29.3 million. If the 2nd scenario plays out, Nuop would also assign the Arthrex rights to Deerfield, plus 95% of its new stock.
“I am delighted that Scenario A affords our shareholders, as well as potentially others, the opportunity to participate in a recapitalized and reorganized Nuo,” acting CEO David Jorden said in prepared remarks. “Should we be successful in raising the necessary equity capital under Scenario A, then I believe the company will be well positioned to capitalize on the significantly increased Medicare reimbursement rate for Aurix available to wound care providers and facilities.”
Nuo also said it inked a deal with wound care clinic operator RestorixHealth to enroll 1,600 patients into coverage with evidence development studies based on the new, $1,411 reimbursement rate for Aurix therapy. Restorix would receive exclusive rights to Aurix in 20 to 30 geographies as part of the deal.
“We firmly believe Restorix is the right partner for Nuo with incentives for both of us properly aligned for efficient and effective patient enrollment in the CED protocols. We have significant confidence in Aurix as a valuable treatment choice and an important element of an advanced wound care product array. Without question, we need to see the CED process favorably concluded in order to fully unlock the product’s inherent commercial value,” Jorden said.
“While extraordinarily painful, the company’s cost structure is now significantly reduced. As such, the commercial revenues available to Nuo through its continued sales and marketing efforts in Veteran Affairs and other federal account facilities, in combination with the advantageous revenue opportunity available in the Restorix collaboration, can positively impact the company’s cash flow projections,” he said.