"SMART" MEDICINES MANUFACTURER FILES FOR BANKRUPTCY

The American company Proteus Digital Health (formerly Proteus Biomedical), previously valued by experts at $ 1.5 billion filed a lawsuit for bankruptcy protection in accordance with Chapter 11 of the US Bankruptcy Code. Having become one of the first medical “unicorns”, the company was unable to attract the necessary additional investments for further development.

The organization operates in the digital healthcare market, releasing high-tech products in the mHealth format.

Technological solutions previously offered by Proteus allow the doctors and patients to monitor health and collect various medical data on the mobile devices. This ensures the fastest and most effective patient care, and prevention of possible health impairments. Earlier, the experts noted that the biological sensors that the company had launched on the market could change the entire medical industry.

Recently, however, the company has been in a difficult financial situation, struggling to attract additional financing.

In November 2019, almost all the employees of the company were sent on unpaid leave for several weeks. As a result, by the end of the week, the company applied to the court, asking for protection against bankruptcy and permission for the debt restructuring.  

According to the legal application, the value of Proteus assets ranges from $ 100 million to $ 500 million, and liabilities are approximately $ 50-100 million. According to the experts, the company has numerous lenders (from 200 to 1000). Among the main Proteus investors, there are such well-known companies as Westport Office Park ($ 1,035,305), Romaco North America ($ 510,848), Otsuka America Pharmaceutical ($ 397,721), Workday ($ 288,000) and Xceliance ($ 215,616). The main stake of the company is owned by Spring Ridge Ventures.   

Proteus previously managed to attract venture capital of more than $ 500 million from a group of technology investors, well-known family business clans and pharmaceutical giants such as Novartis. In 2017, a partnership with the pharmaceutical corporation Otsuka Pharmaceutical was announced. As a part of the deal, Japanese business invested $ 88 million in development of Proteus.  

The cooperation with the Japanese corporation has been finally terminated in January this year.

In connection with upcoming bankruptcy protection procedures, the Board of Directors of Proteus appointed Lawrence Perkins as an interim executive director. He would become the main person responsible for the further restructuring of the company. Former CEO Andrew Thompson lost his position, remaining one of the co-founders.

The experts note that the Proteus Digital Health startup perfectly fits the new digital therapy space, expanding the possibilities of traditional medicine. For example, placing a special sensor in a pill and its subsequent activation with the help of gastric juice allows the doctors to accurately measure the patient’s health indicators, his condition, and the dosage of the use of drugs. The same applies to special “smart” patches that are attached to the patient’s skin and transmit information wirelessly to the mobile devices. Nevertheless, as many investors note, the attempt to combine historically unrelated pharmaceuticals and hi-tech is still a fiasco.