Dive Brief:
- Endovascular stent graft maker Endologix said Monday it's reorganizing, filing for Chapter 11 bankruptcy in a Northern Texas court Sunday with plans to become a privately held company.
- With support from creditor Deerfield Partners, the Irvine, California-based medtech said it plans to complete the reorganization by the end of this year's third quarter and "fully intends to operate its business as usual during the process," aiming to eliminate $180 million in net debt.
- The company still plans to launch its latest device for abdominal aortic aneurysm (AAA) patients, a newly FDA-approved stent graft called Alto, in the U.S. in the coming weeks and in Europe later in 2020.
Dive Insight:
The Nasdaq-listed device maker's stock has fallen nearly 90% over the past 12 months, and plunged roughly 67% early Monday to 25 cents a share.
In March, the company secured premarket approval for its Alto abdominal stent graft. Three months later, Endologix was having to address FDA's Class I recall of an earlier abdominal stent graft system tied to 65 adverse events and five deaths.
When the company reported its first quarter results in May, year-over-year global revenues were down approximately 20% to $28.51 million, which the company said reflected the impact of deferred AAA procedures in light of the pandemic — a refrain in CEO John Onopchenko's explanation Monday of the reorganization.
But financial instability preceded COVID-19. For the full year 2019, revenues came to just over $143 million, 8.4% below the prior year's. At the time of reporting those results in February, the company expressed confidence it was on a "path to positive operating cash flow by year-end 2021," and predicted 2020 revenues of at least $145 million, guidance it withdrew in May.
The company submitted a voluntary petition Sunday in Texas Northern Bankruptcy Court. According to the filing, assets as of May 31 totaled closed to $280 million, while debts totaled nearly $245 million.
Monday's announcement said the proposed financial reorganization would eliminate $180 million in net debt from its balance sheet, $130 million of which is held by Deerfield to become equity in the company. Endologix also said the reorganization will give it access to over $110 million in total new financing.
The transition back to being a private company is happening under an interim chief financial officer. Cindy Pinto, vice president of financial planning and analysis, also assumed the role of CFO last month after Vaseem Mahboob, who held the role for five years, left. The company also slotted in a new chief commercial officer in April, Abbott structural heart business veteran Tim Benner.
Efforts to establish greater financial stability come as the company moves forward with its pipeline, which includes a device known as the ChEVAS system, which would combine the company's Nellix 3.5 endograft with parallel visceral stents for patients with juxta-renal, para-renal, and suprarenal AAA.
