NovaDel seeks sale to save it from bankruptcy protection

19-Jan-2012 - Last updated on 19-Jan-2012 at 11:05 GMT

Drug delivery firm NovaDel has warned it lacks the cash to continue beyond this month and may file for bankruptcy protection.

NovaDel Pharma began looking into “strategic alternatives” in August after a court ruled it would be unable to market its oral spray formulation of Pfizer’s Viagra (sildenafil citrate) in the US until 2019. A buyer or additional funding is yet to emerge and NovaDel is nearing the end of its cash reserves.

“The Company has estimated the timing and amounts of cash receipts and disbursements over the next month and believes it will not have adequate cash to meet its working capital needs after the end of January 2012”, NovaDel said in a press statement.

Steven Ratoff, CEO of NovaDel, is still seeking additional financing or the sale of some or all the assets. However, if he is unable to make a deal NovaDel “intends to file for bankruptcy protection”.

On September 30 NovaDel had cash reserves of $430,000 (€330,000), less than half the amount it had nine months earlier, and its operating loss for the quarter totalled $810,000. Since then three directors have resigned and the company’s share price has tumbled by more than 30 per cent.

Drug delivery blues

The day before NovaDel gave its bankruptcy warning another drug delivery business, Bioject, said it was seeking “strategic alternatives”, including the sale of the company. Bioject has reached this point after being hit with a series of setbacks in 2011.

In November Ralph Makar, CEO of Bioject, said: “Recent communications from the US Food and Drug Administration has raised concerns about the use of Bioject’s devices in key market areas and has effectively halted our expansion in those markets unless the FDA modifies or reverses its position.”

Makar said the FDA communication would have “a major negative impact on revenue” and no new sources of income were apparent at that time. In response Bioject cut its workforce, reduced the hours of its remaining 20 employees and is now considering selling the business.

Some shareholders may not benefit from a deal though. “A sale of the company may not result in proceeds to the common shareholders, given the liquidation preferences of the preferred shareholders”, Bioject said.