Protarga, Inc.

Division: Phoenix Capital Resources, Phoenix Management Services


Protarga, Inc. was a clinical stage pharmaceutical Company with a promising cancer drug in Phase III testing before the Food & Drug Administration (FDA) based in Pennsylvania.


Protarga had raised more than $57 million of capital over a 6-year period, and when Phoenix was engaged in early 2003 had less than $3 million of cash remaining. The Company had recently withdrawn its registration statement for an IPO due to unfavorable market conditions and had been otherwise unsuccessful in attracting new capital or finalizing any licensing arrangements.


Phoenix assisted with the right-sizing of the business and negotiated with a variety of suppliers and creditors to conserve cash. Phoenix also assisted with the identification of potential purchasers and investors, and the negotiation and structuring of a pre-petition loan, stalking horse bid, and DIP loan from Spectrum Pharmaceuticals, Inc., a publicly-traded pharmaceutical company. Spectrum’s offer consisted of $2.0 million of cash and potential future consideration based on licensing deals and achievement of certain sales thresholds that, based on a Monte Carlo simulation, had an additional net present value of $16.7 million. Phoenix helped develop the bidding and auction procedures, and coordinated communication with 400+ potential purchasers. Two additional bids were received. After 42 rounds of bidding, Luitpold Pharmaceuticals, Inc. was selected as the winning bidder with a bid that consisted of $7.5 million of cash and future consideration with an estimated additional NPV of $54.1 million. This 363 sale was consummated about 7 weeks after Protarga filed its bankruptcy petition. Through Phoenix’s efforts, the value achieved for the unsecured creditors increased almost 3-fold from a cash perspective.