Molecular Insight files for Chapter 11 protection as shares plunge

by Brendon Nafziger, DOTmed News Associate Editor | December 13, 2010
Struggling pharmaceutical business Molecular Insight Pharmaceuticals Inc. filed for voluntary Chapter 11 protection Friday after bondholders refused a $45 million bailout from Savitr Capital LLC. The Cambridge, Mass. based company, which is developing experimental radiopharmaceuticals to treat cancer, also said two top executives had resigned.

After the announcement last week, shares plunged more than 66 percent, and were trading at 23 cents a share early Monday.

Under the Savitr deal, the private investment firm would buy 90 percent of Molecular Insight's stocks for 45 cents a share. The company would have to replace $195 million of existing bonds with $90 million in secured notes carrying 6 percent yearly interest, which matures in six years. The deal also gives the company about a month to solicit other offers.

"[W]e are hopeful that we will be able to reach a mutually acceptable restructuring agreement with all of our creditors," Joseph Limber, chairman of Molecular Insight, said in prepared remarks.

Under the deal, the company would also have to emerge from restructuring by the end of March, and resolve issues related to Onalta, a radiopharmceutical under investigation for the treatment of neuroendocrine cancers.

Molecular Insight says it has $35.4 million in assets, and liabilities of $198.8 million, according to Chapter 11 documents reviewed by Reuters.

The company said CEO Daniel L. Peters and CFO Charles H. Abdalian both offered their resignations. They're to be replaced by board member Harry Stylli, who will serve as president and chief restructuring officer, and Mark A. Attarian, a partner with executive services firm Tatum, who will act as executive vice president and CFO.

In January, Molecular Insight laid off several employees to free up cash for its oncology pipeline.