K-V Pharmaceutical (KVPBQ) is protesting drug maker Hologic
Inc.'s (HOLX) "brazen" attempt to circumvent bankruptcy law to get
its hands on the rights to Makena, a drug that reduces the risk of
premature births.
K-V Pharmaceutical, which filed for bankruptcy last month, said
in a court filing Thursday night that Hologic is trying to derail
its restructuring efforts in order to reacquire the worldwide
rights to Makena. The premature birth drug is crucial to K-V's
business and reorganization efforts.
"Without Makena, the debtors will have no prospects for a
successful restructuring," K-V's lawyers said in a filing in U.S.
Bankruptcy court in New York.
Hologic developed Makena and then sold the rights to K-V
Pharmaceutical four years ago. Last year the Food and Drug
Administration granted Makena exclusive "orphan drug" status for
seven years, prompting some industry analysts to peg the value of
the drug at more than $2 billion.
But Hologic says K-V's missteps and mismanagement are rapidly
depleting the drug's value and it wants to reacquire its rights to
the drugs.
K-V initially marketed the drug at $1,500 per shot, a price
which prompted howls of protests from women, obstetricians and
members of Congress. The public outcry resulted in the Food and
Drug Administration's decision to refrain from taking action
against "compounders" that make far cheaper premature-birth drugs
using the same active ingredient as Makena's.
While K-V later cut the price, the damage was done. K-V is suing
the Food and Drug Administration in Washington over its decision.
The company says it was the "misguided policy decisions by the
FDA"--and not its own missteps--that caused it to miss a $45
million August payment due to Hologic and file for bankruptcy.
In any event, K-V said Hologic's allegations of mismanagement
are "just plain wrong." In fact, the company says its recent
negotiation strategies with state Medicaid agencies and targeted
litigation with the FDA are growing Makena's market share and
increasing revenue.
That's important because Hologic wants a bankruptcy judge to
lift the automatic stay, barring it from reacquiring the rights to
the drug.
The automatic stay, a cornerstone of U.S. bankruptcy law, bars
creditors from interfering with a company's property, pursuing
lawsuits or trying to collect payment for debts. To get a judge to
lift the stay, Hologic needs to prove the value of its interest in
Makena is declining in value and that K-V can't protect it.
A Hologic lawyer wasn't immediately available for comment.
A preliminary hearing on the dispute is slated for Monday.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
-Joe Checkler contributed to this article.
Write to Patrick Fitzgerald at patrick.fitzgerald@dowjones.com.
Follow him on Twitter @WSJBankruptcy
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