Proteus Digital Health has filed for Chapter 11 bankruptcy protection, noting that its efforts to raise money or sell the company fell victim to the COVID-19 pandemic.
The Redwood City, Calif.-based company missed a $100 million funding target in December. Once valued at $1.5 billion, Proteus previously raised $420 million from investors including Novartis Venture Fund and Kaiser Permanente Ventures, according to an April report by Forbes.
Proteus’ products combine oral medications with an ingestible sensor. The sensor-embedded pill was approved by the FDA in November 2017. Otsuka Pharmaceutical (TYO:4578) and Proteus developed the Abilify MyCite pill to treat schizophrenia, manic and mixed episodes linked with bipolar I disorder and depression in adults. Otsuka and Proteus signed an $88 million deal in 2018 in which Proteus would help Otsuka develop more digital medicines while commercializing the smart pill technology.
The first cancer patients were treated using its digital oncology therapy in January 2019. At the time, company had also launched a digital oral oncolytic medication registry to gather real-world data from cancer patients using digital medicines.
In January of this year, Proteus abandoned the mental illness and cardiovascular work in its digital pill technology after its deal with Otsuka ended prematurely. Proteus then said it was shifting its focus to getting insurers to pay for the digital technology in patients who have cancer and infectious diseases. In May, the company announced a multi-year, outcomes-based deal with the state of Tennessee’s Medicaid program, TennCare, to support TennCare-covered patients undergoing hepatitis C treatment with medication adherence and stronger connections to their care teams.
“Filing for bankruptcy protection allows Proteus to continue its sales process in a more concerted and efficient manner while continuing to run the business as usual,” the company said in an email to MassDevice.
Corporations that file for Chapter 11 bankruptcy protection are not necessarily quitting the business. The protection from creditors is designed to allow them to restructure and regain their financial footing.
The bankruptcy filing in U.S. District Court in Delaware lists 20 creditors, most of whom Proteus owe less than $500,000. They include Romaco North America, a global supplier of pharmaceutical tableting and packaging technologies ($510,848); Otsuka ($397,721); drug manufacturer Xcelience ($215,616); investment bank B. Riley FBR ($98,789); and Robert Bosch North America ($50,000).
In the filing, Proteus said it and its advisors “commenced a robust marketing process to secure additional funding or bids for a sale of the Debtor’s business. Despite having several promising opportunities, the onset of the COVID-19 pandemic created significant uncertainty in the capital markets and frustrated the Debtor’s efforts. However, the Debtor has had fruitful discussions with Otsuka and other interested parties regarding a potential sale transaction.”
The company said it anticipates that it will seek approval of bidding and sale procedures in the early weeks of the bankruptcy case, according to the filing. It employs 93.