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Insys Down on Bankruptcy News Amid Increasing Legal Expenses

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Shares of Insys Therapeutics have plummeted 51.4%, after it filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in the District of Delaware.

The protection will enable the company to facilitate the sale of substantially all of its assets and address its legacy legal liabilities.

Insys has been embroiled in various litigations in recent times amid allegations of fuelling the ongoing opioid endemic in the United States. The company has also been accused of bribing doctors to prescribe its lead drug, Subsys, to patients.    

Subsys is a proprietary sublingual fentanyl spray indicated for the management of breakthrough cancer pain in patients aged 18 years or older, who are already receiving and are tolerant to around-the-clock opioid therapy for their underlying persistent cancer pain.

The company has experienced recurring and increasing losses from operations over the last 18 months due to significant declines in the Transmucosal immediate-release fentanyl (TIRF) market, and considerable legal expenses resulting from the DOJ Investigation and other significant litigation matters. The company had earlier stated of a possible bankruptcy given its limited cash balance.

This month, Insys signed a settlement with the United States, formalizing its previously announced settlement relating to certain civil statutory claims. As part of this agreement, the company agreed to pay $195 million.

Meanwhile, Insys intends to utilize existing cash in hand and operating cash flows to support its continued operations, including payment of all employee wages and benefits without interruption, and continuing programs offered to customers.

As of Mar 31, 2019, the company recorded assets of $172.6 million, and $262.3 million in liabilities.

Zacks Rank & Stocks to Consider

Insys currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks are Bristol-Myers Squibb Co. (BMY - Free Report) , Roche (RHHBY - Free Report) and Celgene Corp. . While Bristol-Myers sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers’ earnings per share estimates have increased from $4.79 to $5.03 for 2020 in the past 60 days.

Roche’s earnings per share estimates have increased from $2.35 to $2.40 for 2019 in the past 60 days.

Celgene’s earnings estimates have moved up by a cent to $10.72 over the past 60 days.

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