The company resolved its case with the US Justice Department for $225m (€198m), which saw a subsidiary of the company plead guilty to five counts of mail fraud.
The actual charges against the company were that it had used ‘speaker programs’ as a “vehicle to pay bribes and kickbacks to targeted practitioners” for them to prescribe Subsys, a fentanyl-based sublingual spray for treating pain in cancer patients.
According to court documents, Insys Therapeutics improperly encouraged physicians to administer the highly addictive pain killer for patients who did not have cancer and then lied to insurers about patients’ diagnosis to receive reimbursement.
The announcement that the company would file for bankruptcy arrives after the company had experienced year-on-year losses, which saw the company post a full-year EBITDA loss of $28.7m for 2018, following a $11.5m loss the previous year.
Such losses left Insys with $104m in cash reserves, as of the end of last year. The company stated that it would utilise this cash to support continued operations, including the payment of vendors and suppliers in full, after filing for bankruptcy.
At its peak, in 2015, its lead product, Subsys, had a 46.8% share of the transmucosal immediate-release fentanyl (TIRF) market and brought in revenues of $91m in full-year 2015 results.
“After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximise the value of our assets and address our legacy legal challenges in a fair and transparent manner,” said Andrew Long, CEO of Insys.
The company’s founder and former chairman, John Kapoor, had previously been convicted, alongside four colleagues, of bribing physicians to prescribe Subsys to unsuitable patients – with the individuals facing up to 20 years in prison.
Insys announced that it aims to conduct an auction and sale process of all assets within 90 days.
The share price of Insys sunk to $0.64, down from $6.96 per share this time last year.