Date: Nov 11, 1996 Author: Lisa Benavides Source: bizjournals (
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After more than two years in Chapter 11 bankruptcy, Cambridge Biotech Corp. is hoping at least a part of its old self can gain new life with a new name.
The Worcester-based company spun out its therapeutic immune system business into the newly formed Aquila Biopharmaceuticals Inc. two weeks ago as part of its court-approved reorganization plan.
The 70-employee Aquila also plans to eventually move from the 75,000 square feet it now occupies in Worcester's Biotechnology Research Park to smaller space, though a new location has not been determined.
Aquila has been trading for about a week on Nasdaq, opening with a high of $5 on Oct. 24 and reaching a low of $3 on Monday.
Cambridge Biotech was delisted from Nasdaq trading in 1994, following a number of controversies, including accusations it had released inaccurate revenue numbers.
Meanwhile, what remained of Cambridge Biotech--its 100-employee diagnostic business--was sold to Rockland-based BioMerieux Vitek Inc. two weeks ago for $5.85 million in cash. BioMerieux Vitek is part of BioMerieux, a French biotechnology group.
Cambridge Biotech's old manufacturing operations in Rockville, Md., are now a wholly owned subsidiary of BioMerieux. The subsidiary will continue to develop kits to diagnose diseases caused by retroviruses.
As for the bankruptcy, settlements are now being made to creditors, plaintiffs and former shareholders. Unsecured creditors will receive cash payments equal to 51 percent of their claims or receive shares of Aquila stock at $9.50 per share equal to 100 percent of their claims.
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Once the largest and oldest biotech in Worcester with 400 employees, Cambridge Biotech had its operations sold off piecemeal as part of the bankruptcy reorganization.
In May, the company sold its intestinal diseases and human Lyme disease diagnostic businesses to New York-based Carter-Wallace Inc. for $4.5 million in cash.
It also sold its reference laboratory business to West Bridgewater-based Boston Biomedica Inc. for an unspecified, upfront amount, as well as royalties on revenuesfrom the existing client base.
In June, Cincinnati-based Meridian Diagnostics Inc. bought Cambridge Biotech's product line to treat intestinal diseases for $5.5 million in cash.
As for Aquila, the company is forging ahead to create and commercialize products that stimulate the immune system to control or prevent infectious diseases and cancer.
About 30 former Cambridge Biotech employees will lose their jobs early next year, leaving 70 for Aquila. The laid-off employees have been given Aquila shares as an incentive to temporarily stay on until reorganization is completed by early next year.
"Our biggest challenge now is getting the story out to our investors and Wall Street, and getting people to understand what the business of Aquila is," said Alison Taunton-Rigby, the former CEO of Cambridge Biotech and Aquila's new president and CEO.
Aquila inherits the vaccine for feline leukemia that Cambridge Biotech had on the market, as well as development of other veterinary vaccines. Cambridge Biotech's biggest business was its diagnostics, so Aquila is dealing with products still in the early stage of development, Taunton-Rigby said.
On the human side, the company is working on vaccines for Lyme disease, malaria, cancer and pneumococcal infections. The worldwide vaccine market was estimated in 1993 to be $2.5 billion per year, according to Frost & Sullivan, a Mountain View, Calif.-based research firm. The total vaccine market is predicted to be more than $5 billion annually by 1999.
Taunton-Rigby was brought in to run Cambridge Biotech early last year, following the resignation of the company's president and CEO, Patrick Leonard, and two other top officials, Frederick Casselman, vice president of legal affairs and technology licensing, general counsel and secretary; and James Bass, vice president of finance and CFO.
The three resigned after the company revealed its financial statements were riddled with discrepancies and inaccuracies. In 1994, the company laid off 32 employees, filed for bankruptcy, was the subject of a U.S. Securities and Exchange Commission investigation and was delisted from Nasdaq trading.
Taunton-Rigby, best known for her success in getting Cambridge-based Genzyme Corp.'s first drug to market, came to Cambridge Biotech after a short stint as president of Cambridge-based Mitotix Inc.
She resigned from the privately held biotechnology firm after 15 months over differences with company founder and chief scientist David Beech.
To help raise money under its bankruptcy reorganization, Cambridge Biotech sold its Galway, Ireland, manufacturing plant in late 1994 to Waltham-based SelfCare Inc. for more than $2 million.
The sale of Cambridge Biotech had been held up by the France-based Institut Pasteur, which had filed motions in court to keep its rival, BioMerieux Vitek, from acquiring the diagnostics business.
Early last month, the First U.S. Circuit Court of Appeals sided with Cambridge Biotech in allowing the reorganization plan. But the court proceedings aren't finished.
Institut Pasteur has appealed the First Circuit Court's findings, and there are a handful of creditors who have disputed its claims to settlements.
Taunton-Rigby is optimistic that with Aquila's formation, she can get back to the business of building a vaccine development company.
"It's not easy going through what we've gone through," she said. "We've had very strong technology and excellent employees, and that's pulled us through."
