(Bloomberg) -- Clovis Oncology Inc. filed for bankruptcy and plans to sell its experimental cancer drug at an auction with Novartis Innovative Therapies making a binding, opening bid worth as much as $681 million.

Novartis has agreed to pay $50 million initially and another $630.75 million in payments if the cancer drug, FAP-2286, wins regulatory approval and later hits certain sale goals, Clovis said in a statement. The agreement will be considered the opening bid of a court-supervised auction, should a judge approve the deal and competing offers come in.

For Clovis, which once had a market value of over $3 billion, the opening bid for its pipeline candidate is a far cry from the $5.1 billion that a competitor secured from GSK Plc in 2018. Back then Clovis was riding high on speculation it could secure a similar deal for another cancer drug, Rubraca. But regulatory setbacks and disappointing sales have left the company saddled with debts. 

The company is also talking to other parties about selling different parts of its business. 

On Sunday, Clovis sought court protection after warning that it was close to running out of cash. The biotechnology company reported assets worth $319.2 million to $754.6 million in liabilities in its Chapter 11 bankruptcy petition filed in Delaware. Chapter 11 allows a company to continue operating while it works out a plan to repay creditors. 

Clovis, based in Boulder, Colorado, has faced mounting losses and in November skipped an interest payment on its convertible bond due 2025. Later that month, the US Food and Drug Administration asked it to limit the use of its drug Rubraca in patients with certain types of cancer. 

The company’s biggest unsecured debt is $444 million in bonds owed to investors who are represented by the Bank of New York Mellon. Those notes are due in 2024 and 2025, according to court records.

To help pay for the bankruptcy case, Clovis has arranged a $75 million loan, which must be approved by a judge before the company can access the money. Law firm Willkie Farr & Gallagher is handling the bankruptcy case, AlixPartners is the company’s restructuring adviser and Perella Weinberg Partners is acting as investment banker.

The case is Clovis Oncology, Inc., 22-11292, US Bankruptcy Court, District of Delaware (Wilmington).

 

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