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Clovis enters home stretch of its bankruptcy reorganization

BOULDER — Clovis Oncology Inc. has entered the final stages of its Chapter 11 bankruptcy reorganization.

Delaware Bankruptcy Court Judge J. Kate Stickles accepted the third revision of the Chapter 11 plan on Friday. The move means that secured claims will be paid, and unsecured claims will be paid at a level not worse than what they would have gotten if the company had liquidated.

Clovis filed for bankruptcy court protection on Dec. 11, 2022. At that time, it had given notice that it defaulted on a loan Dec. 1. It listed $319 million in assets and $754.5 million in debt.

The company had been struggling with the marketing of its only Food and Drug Administration approved drug, Rubraca, and the FDA had recently limited its usage in the treatment of ovarian cancer.

As it turned out, Rubraca and an unapproved drug, FAP-2286, a peptide-targeted radionuclide therapy agent, were assets that the company could use to leverage its return to normal operations.

The reorganization plan permits the sale of Rubraca for $135 million, and it approves a stalking horse bid from Novartis AG (NYSE: NVS) to buy FAP for $50 million up front and $333.75 million and later $297 million if certain milestones are met.

Numerous leases and contracts were voided, including a manufacturing agreement with Swiss company Lonza Ltd. (OTCMKTS: LZAGY), which will receive $4.1 million as an administrative expense claim and be assigned an unsecured claim of $30 million. Any raw materials that Lonza may have from Clovis are considered abandoned, the court said.

Of the $31.8 million of cash on hand prior to bankruptcy filing, $25.8 million is encumbered, $3.69 million is unencumbered and $2.3 million is disputed. The disputed amount will be designated as “Rubraca cash.”

The company, which had 120 employees at time of the filing, now has 76 employees, according to the most recent Securities and Exchange Commission filing.

Source: BizWest