After losing FDA battle, ReGen files for bankruptcy
April 14th, 2011 // 1:53 pm @ jmpickett
A Hackensack-based medical device maker has filed for Chapter 11 bankruptcy protection, succumbing to financial pressure after the federal government yanked approvals for its flagship product.
ReGen Biologics Inc., which filed reorganization April 8 in a federal court in Delaware, listed $5.2 million in debt, but only $1.5 million in assets.
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Gerald Bisbee Jr., ReGen’s president and chief executive officer, cited the company’s failure to get and maintain required approvals from the Food and Drug Administration for its Menaflex collagen meniscus implant, which aims to repair damaged knee tissue. Menaflex has been used in about 3,000 patients. ReGen also makes a suture for the Menaflex device.
“As a result, the Company has not obtained the debt and equity financing required to sustain operations, notwithstanding substantial efforts to obtain such financing,” Bisbee wrote.
ReGen appeared to be prepared to sell its assets through the bankruptcy process, however. In court papers, Bisbee said ReGen’s board held a meeting the day before the bankruptcy filing during which it approved a sale offer from a buyer whose identity was redacted.
Neither Bisbee nor attorneys representing the company responded to requests for interviews Wednesday afternoon.
ReGen had won clearance for its Menaflex device through the FDA’s “fast-track” approval process in 2008. But in September 2009, the agency acknowledged it was influenced by political pressure from New Jersey’s congressional delegation, which had received political donations from ReGen and its lobbyist, and said it would re-examine earlier approvals. The lawmakers have denied pressuring the FDA, saying they had only requested fair treatment for ReGen.
In October 2010, the FDA withdrew its approval for ReGen’s implant. In filings with the Securities and Exchange Commission, the company received official notice of the revocation on March 30 of this year.
That month, ReGen said it would no longer pursue approvals through the FDA, despite the agency’s offer of a hearing on the issue. “Enough is enough,” Bisbee said then, accusing the FDA of “blatantly arbitrary and unfair processes.”
Ivy Capital Partners LLC, a Montvale-based private equity firm that invests in health-care companies, is among ReGen’s secured creditors and owns a 10.4-percent stake in the company’s stock, according to court records.
In March, an Ivy subsidiary, Sports Medicine Holding Co., agreed to infuse up to $750,000 (through secured notes with a 12-percent annual interest rate) into the company, according to securities filings.
Russell Warren Jr., a principal of Ivy, said in a brief phone conversation his firm has only been a “passive investor,” and not part of ReGen’s board or management.
“We’re obviously disappointed to see what’s happened with the FDA,” Warren said.
ReGen’s stock, which has been traded over the counter, was worth 1.5 cents on Wednesday.
In the last annual financial report filed with the SEC, ReGen reported $1.3 million in sales revenue and $1.4 million in total revenue in 2008.
