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Deja vu? Inyx tale parallels the past

By Kirsty Barnes

- Last updated on GMT

Related tags: Vice president

As Outsourcing-Pharma.com continues to investigate the
circumstances of the Inyx group's insolvency problems, it can
be revealed that some of the senior management have been
involved at a senior level in other firms that have also
experienced financial breakdowns over the last few years, along
with a small current venture that is also in financial trouble.

Incidentally, an internet weblog thread has been active since April 2003, where many claiming to be suppliers or current and former employees of Inyx Inc. and its subsidiaries, have been voicing their concerns over those at the helm. The information obtained below comes from various company sources, predominantly Securities & Exchange Commission (SEC) filings. Inyx Inc. chairman and CEO Dr Jack Kachkar used to majority-own and manage Canadian firm Miza Pharmaceuticals, Inc., which during his tenure created had three operating subsidiaries, Miza Pharmaceuticals (UK), Ltd., Miza Ireland Ltd., and Miza Pharmaceuticals USA, Inc. All are now defunct. Metamorphisis of Miza UK into Inyx Pharma ​ Miza UK was incorporated in September 2000 as a wholly owned subsidiary of Miza Pharma Inc. In May 2001, for $20m, Miza UK, acquired the development and manufacturing business of UK firm CCL Pharmaceuticals, a division of Canadian firm CCL Industries Inc., which also happened to be a part owner of Miza Pharma Inc. at the time. Dr Kachkar resigned as a director of Miza UK in August 2002 and the following month, Miza UK's lenders asked for an administrator to supervise the orderly liquidation of the company's assets for purposes of paying outstanding liabilities. It remained in administration until 7 March 2003, when most of the company's inventory, fixed assets and operating leases were sold to a company called Inyx Pharmaceuticals for $8.36m. Inyx Pharma had only been established a month before the sale, and was actually set up by two former CCL and current Miza employees, Steven Handley and Colin Hunter, who owned 8.75 per cent and 3.5 per cent respectively. On March 3, days before the purchase of the Miza assets, Ontario Limited, a Canadian entity owned by Jordon Slatt, acquired 8.75 per cent of Inyx Pharma for services and 65 per cent as trustee for the JEM Family trust, whose beneficiaries were actually Dr Kachkar and his family. A few weeks later, the owner of a horseracing company called Doblique, sold it to Medira Investments, which was actually a private company wholly-owned by Dr Kachkar's wife, Viktoria Benkovitch. Days after, Dr Kachkar was appointed as CEO and Director. The following month (April), Doblique, now headed by Dr Kachkar, acquired Inyx Pharma (formerly Miza UK) and Doblique's name was changed to Inyx Inc. At this point, Dr Kachkar also became chairman of Inyx Pharma and appointed Steve Handley, who was already Director of Operations for Inyx Pharma, to the position of President of Inyx Inc. At the end of April, Dr Kachkar was the sole director and officer of Inyx Inc. As we now know, Inyx Pharma has since suffered the same fate as Miza UK after it was put into administration last month. Miza Ireland and the lawsuit ​ Miza Ireland first evolved out of a private Irish pharma company called Antigen Holdings Limited. In May 2001, an examiner was appointed to Antigen and in November that year, Dr Kachkar's Miza Pharma Inc. took over the Antigen group and its subsidiaries and renamed them under the Miza brand. At this time, a company called Goldshield did a deal with Miza to buy the Antigen brand, together with the know-how, trademarks, trading styles, sales, distribution and marketing rights of the business. However, one year later, in October 2002, Dr Kachkar resigned as director of Miza Ireland iand the following month, an examinership petition was lodged by two creditors of the Miza Group with the support of Goldshield requesting that Miza Ireland and its subsidiaries be placed into examinership to provide the Miza Group with protection from its creditors and to enable a reorganisation to take place. This was subsequently done. Miza Ireland's assets were later sold to an unrelated third party through an Irish court liquidation proceeding. Following the collapse of Miza Ireland, Miza liquidator Tom Grace took Dr Kachkar and another former Miza director, Robert McClellan Carrigan, to Irish court under section 150 of the Companies Act. According to court documents, Grace alleged that creditors were owed €17.3m when Dr Kachkar took over the plant and by the time it collapsed they were owed a further €9m. In addition he alleged that that "Dr Kachkar and Mr Carrigan either permitted or directed the payment from the Irish companies of significant sums of money and assets in the order of €2.8 million. It is contended that these were transferred on the basis of inter-company charges but with no real basis for same, that the companies were insolvent at the time the transfers were made and also at the same time unable to make the payments due to the scheme creditors."​ Upon ruling on the case in 2005, the judge said that there was no issue as to the honesty of the two directors. The judge did state, however, that the case had to be decided upon as to whether they acted responsibly, and based upon the facts available concluded that they had not. "Mr Kachkar and Mr Carrigan have failed to discharge the onus on them to satisfy the court that as directors of each of the five [Irish] companies… they acted responsibly in relation to the conduct of the affairs of such companies,"​ court documents stated. As a result the judge ruled in favour of restricting Dr Kachkar and Mr Carrigan in Ireland under the Companies Act. The court order has been stayed pending an appeal to the Supreme Court. This is still the current status, it was confirmed by Outsourcing-Pharma.com today. Meanwhile, Miza USA was sold to its management in October 2002 and Dr Kachkar resigned as an officer the following March, and as a director in May, when it was sold and then placed under Chapter 11 bankruptcy proceedings by its new owners under the new name Carr Pharmaceuticals Inc. Dr Kachkar resigned as an officer of Miza Pharma Inc. in December 2002 and as a director in May 2003 and it is now inactive. Inyx Inc. and those familiar faces ​ Meanwhile, the operations of Inyx Inc. and its subsidiaries were in full swing and the faces popping up in management are reminiscent of the days of Miza Pharma Inc. and co. In March 2003 Colin Hunter was appointed as a director of Inyx Pharma and executive vice president in May. In July he was also appointed to Inyx Inc.'s Board of Directors. From 1990 until 2000, he had been European quality director for Medeva Pharma, which was later acquired by Celltech Manufacturing Services (which would later become Ashton Pharma, owned by Inyx Inc.). He then worked for one year as quality director for CCL Industries (which part owned Miza Pharma Inc.) and then until 2003 he was senior vice president of Miza UK (which later became Inyx Pharma, which he helped set up, and hence, we have come full circle). In December 2003 Jay Green was appointed to the newly-created position of executive vice president and director of corporate development of Inyx Inc. Steven Handley, who was president and director of Inyx Inc and director of operations at Inyx Pharma (which he had helped set up), had also previously worked at Medeva, and CCL Pharmaceuticals and its successor Miza UK during the five years prior to 2004, where he was responsible for all manufacturing and technical operations as senior vice president. Rima Goldshmidt, who eventually became vice president, treasurer and corporate secretary, was first employed by Inyx Canada in 2003 and prior to this had worked for nearly two years at Miza Pharma as director of finance. Meanwhile, in May 2003 Inyx Canada was formed, in December 2004, Inyx USA, an Isle of Man company, was established to later operate Aventis PR, a Puerto Rican acquisition made in March 2005. In August that year it bought Celltech from UCB, thorugh its holding company Inyx Europe, and renamed it Ashton Pharma. In January 2006, the firm set up Exaeris in the US and in September it created a new UK entity, LINX Investments, which became the holding company for Inyx UAE, which was headquartered in Dubai, and was also planning to establish operations in Qatar, although this did not materialise. Throughout this time Inyx Inc. and its subsidiaries were experiencing financial difficulties and heavily in debt to its Puerto Rican lender Westernbank. In November 2006, Dr Kachkar approached management with a plan to buy the company's entire shares in an all-cash offer, taking it private, "in a transaction that would be in the best interests of all of the Company's stockholders."​ The move was supported by Inyx' entire senior management team, although plans for this are still in progress. Fast forward to the present, with Aston Pharma and Inyx Pharma in administration and Inyx USA and Exaeris under Chapter 11 bankruptcy protection. Inyx Inc. remains operational. A flood of high level management resignations have occurred at Inyx Inc. in the last few weeks, including Rima Goldshmidt, while Steven Handley and Colin Hunter both resigned as directors. Jay M Green, now the company's vice president, treasurer and corporate secretary, has remained in his current positions and has been elected as a director to fill a vacancy on the Board. Westernbank has also now launched a lawsuit in the Puerto Rico District Court in San Juan, against Inyx and some of its senior management. The lawsuit alleges claims against them under the law for "Racketeer Influenced and Corrupt Organizations," under section 18 of the 1964 Racketeering (RICO) Act, according to the court filing. The bank is also seeking $240,000 in damages. The case is being brought against Dr Kachkar, Steve Handley, Colin Hunter, Rima Goldschmidt and Jay M Green, along with the companies themselves, Inyx Inc., Inyx Pharma Ltd, Inyx Europe Ltd, Inyx Canada Inc. and Ashton Pharmaceutical Ltd. Robert Carrigan, who faced the lawsuit in Ireland along with Dr Kachkar, and who is also the current president and general manager of Inyx USA, appears to have escaped being individually listed on Westbank's current lawsuit. Green told Outsourcing-Pharma.com that: "The only comment I can make is that the RICO charges they [Westernbank] allege are untrue and we will respond to this through the US courts in due course." ​ Due to legal reasons Green said he could not provide any more comment on the past or present situation with Westernbank. However, an update on the Inyx Inc. situation could be provided. Yesterday Dr Kachkar was accepted as the debtor-in-possession lender for Inyx USA and Exaeris by the US Bankruptcy Court in the District of Delaware. "This was despite the objections of Westernbank,"​ said Green. This effectively means that Dr Kachkar will now be financing Inyx' two North American subsidiaries, which will now continue to trade as normal, although they will still remain under Chapter 11 bankruptcy for an indefinite period. Commenting on Kachkar's bid to take Inyx Inc. private, Green said: "We will see how things go now, if we can take still it private we will. It was being done to avoid the costly regulatory compliance issues that lots of small publicly-listed companies in the US face." Karver International - watch this space ​ Amidst all the insolvency and other financial problems, there is another (albeit small) pharma company called Karver International that is currently being operated by the two head honchos in Inyx Inc., Dr Kachkar and Jay Green. On September 13 2004, the owner of a theatre ticket-selling business called Clixtix sold 49 per cent of the company's shares to the First Jemini Family Trust, which was set up for Dr Kachkar, his wife and family. On the same day, a company called MDRX obtained 31 per cent of the shares. Dr Kachkar's wife was a controlling shareholder of MDRX. MDRX then became a wholly-owned subsidiary of Clixtix, which was then renamed as Medeorex. Jay Green came on to the board of directors. He then appointed Dr Kachkar as the chairman, CEO, president, secretary and treasurer. Dr Kachkar then appointed Jay Green to the position of executive vice president. This is where they remain today. In November 2005 Medeorex was renamed again to Karver. Karver is a "development stage company"​ with the goal of acquiring businesses and operating on the healthcare/pharmaceutical scene, but as yet, it does not have any revenue after nearly three years. In May 2005, the firm agreed to acquire part of a privately-held Canadian biotech and medical devices company, called CardioGenics. Since then the closing date has been extended several times and was due on June 30, 2007. It does not appear to have gone ahead. Meanwhile, In February 2007 Karver signed a term sheet to purchase all of the outstanding common stock of Gemoscan International, another Canadian company engaged in diagnostics for the treatment of food intolerances. By March the deal was called off for unknown reasons. In May this year, Karver reported its quarterly results. It incurred a net loss of $189,875 (including interest expense), which was more than double the $71,121 loss incurred in the comparable 2006 quarter. Meanwhile, it has virtually no cash flow, and total liabilities of $1.17m (including accounts payable of $13,807) and total assets of only $111,270. In the report, the company stated: "In addition to establishing a business within the health care and pharmaceutical services sector, we are pursuing corporate and product acquisitions within the pharmaceutical industry in order to establish a competitive position in that market sector. We believe that we may be able to complete such a transaction within the next twelve months." ​ However, the very next paragraph says: "…There is no guarantee that we will be able to generate revenue or raise capital to support the company's operations. This raises substantial doubt about our ability to continue as a going concern." ​ The company said its future success is dependent upon continued financial support from stockholders, the attainment of financing necessary to operate business including completing any potential acquisitions, and achievement of profitable operations upon additional financing. "Management believes that actions presently being taken to obtain additional equity and/or debt financing to fund its operations and implement its strategic business plans, to provide the opportunity for the company to continue as a going concern. This includes management's ability to rely on existing financial industry relationships to raise enough capital for the company prior to the end of 2007,"​ said the report. "Although there can be no assurances that it will be able to raise sufficient capital to generate revenues to sustain operations."​ This is highly reminiscent of the language used in the SEC filing and other reports produced by Inyx Inc. at the end of last year. Will the cycle continue..?

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