Alpharetta's Atherogenics Consents To Bankruptcy

Appen Newspapers

October 07, 2008

ALPHARETTA – A $300 million debt burden is sending AtheroGenics, an Alpharetta-based pharmaceutical company focused on the treatment of chronic inflammatory diseases, into bankruptcy. Company officials expect either to sell the company, its assets or both.AtheroGenics consented to the involuntary Chapter 7 bankruptcy petition filed Sept. 15 in the U.S. Bankruptcy Court for the Northern District of Georgia. It has sought to convert the case to Chapter 11 of the U.S. Bankruptcy Code.

The debt burden restricted its ability to develop its primary asset, drug candidate AGI-1067.The Alpharetta company had a peak employment of approximately 120 employees in early 2007, said Russell Medford, M.D., Ph.D., its president and CEO. In May 2007 the company announced it was cutting its staff in half. Today 30 employees remain on board until the company's restructuring.The failure of AGI-1067 to achieve primary goals in its drug trials early last year caused the company stock to decline substantially, which damaged its ability to access financing. The drug had been intended to help reduce instances of cardiac arrest, stroke and other cardiovascular problems, but it did not show success. After that point, the company focused on findings that the drug candidate showed a marked reduction in the development of new onset diabetes in patients with impaired fasting glucose, a condition which is a precursor to diabetes.

"Unfortunately, even with positive results from our ANDES diabetes trial, the stock price did not recover," Medford said via e-mail. "We continue to believe that there is a significant medical need and commercial opportunity for our novel lead drug candidate AGI-1067, which could become the first diabetes treatment with demonstrated cardiovascular safety. We hope to identify a potential buyer that is interested in future development of the drug."

Proceeds from any transactions will be distributed to thecCompany's stakeholders, including its creditors."We believe that the Chapter 11 filing is a necessary step in response to the creditors' involuntary liquidation petition," said Medford. "We remain hopeful that AGI-1067 will ultimately continue to be developed, as we believe that it has real potential to be the first diabetes treatment that could reduce serious cardiovascular events. There remains a significant medical need and commercial opportunity for a drug with this profile."

AtheroGenics has retained the services of Merriman Curhan Ford and Co. to assist with the sale of the Company and/or its key assets during the Chapter 11 proceeding. The Company has also retained King & Spalding LLP to serve as its legal advisor in the bankruptcy proceeding.