Orbus files for bankruptcy

Canada's Orbus Pharma announced in May 2010 that it had gained protection from its creditors under the provisions of the Bankruptcy and Insolvency Act. The move came as a result of a number of financial difficulties the firm has faced in recent times. Orbus was originally known as Bovar, created in Calgary, Alberta in June 1977. In May 2002, the firm completed the purchase and subsequent amalgamation with Orbus Life Sciences, a firm which had begun operations in April 2000. Bovar changed its name to Orbus Pharma in May 2003 to better reflect the activity of the company. Orbus develops generic versions of oral dosage products, which it then licenses to sales and marketing organisations which then distribute the products under their own names, ideally under five year supply agreements. The firm targets Europe and Canada as its primary markets, but had an eye on the United States as well.

Orbus' website lists four prescription products which have been completed. Amitriptyline, which was completed in the first quarter of 2009; cefuroxime axetil, which has been approved in Denmark and Canada; oxcarbazepine, which was completed in the third quarter of 2009; and moduret hydrochloride / amiloride. Another three products are listed as being under development: fluvastatin XR, metoprolol XR and a 600 mg oxcarbazepine tablet. Over the years, Orbus has signed a number of agreements with a range of companies, with a view to marketing its products in various countries. Amongst the most recent has been an agreement with Intas Pharmaceutical for worldwide rights, excluding the US and China, for Orbus' metoprolol succinate.

However, despite the progress which the firm had made in its product portfolio, Orbus suffered from financial weaknesses; in its most recent annual report, for 2008, the firm noted it had seen disappointing results in both product development timelines as well as the large amount of cash used in operations. This led to the President and CEO stepping down from his position. The new interim manager reviewed the company's business, and found weaknesses in a number of areas, leading to measures including cost reduction programmes and rationalisation of Orbus' product offering. In January 2009, the company announced that it may be up for sale, having previously announced in October 2008 that it was planning to sell its cephalosporin manufacturing facility and product line. An agreement was reached for China's Nanjing Sanhome Pharmaceutical to acquire at least 51% of Orbus' issued and outstanding common shares, and this looked to be progressing. However, in March 2010, Sanhome withdrew from the private placement. Orbus ultimately had nowhere else to turn, announcing in April 2010 that it was discontinuing its pursuit of a private placement after determining that no market was available for its common shares; neither was there any other source of financing available. The firm also decided to discontinue operations at a second site, leaving limited operations at its Markham facility.

Seeking protection under the Bankruptcy and Insolvency Act was by now the most likely way forward for the firm. The move will enable Orbus to continue with efforts to restructure its business whilst being protected from its creditors. Whilst announcing the move, Orbus also announced that it was to close its operations at its Markham facility, and would put the site up for sale. The firm does have assets, in terms of products and intellectual property. Perhaps the firm will be able to trade its way out of its current difficulties; otherwise its best hope will be to be acquired by another firm.

Ian Platts – Editor, World Generic Markets