A Florida-based medical device company with its manufacturing facility in Coon Rapids has emerged from Chapter 11 bankruptcy.
Biovest International Inc., which describes itself as a pioneer in development of personalized cancer vaccines, reported July 15 that it had successfully completed its restructuring and recapitalization through Chapter 11 reorganization.
And that will please both the city of Coon Rapids and the state of Minnesota.
When the high tech business wanted to renovate and expand its facility in Coon Rapids’ Evergreen Business Park in late 2010, the city’s Economic Development Authority, which comprises the seven members of the Coon Rapids City Council, approved a $103,000 loan and the state approved a $250,000 Minnesota Investment Fund loan for the project.
“This was done to keep the company in Coon Rapids because it was considering moving its manufacturing plant to Florida,” said Marc Nevinski, city community development director.
Biovest remodeled 3,000 square feet of existing, unused space at its Coon Rapids plant in a $1.1 million project.
In addition to the state and city loans, Biovest also received $750,000 toward the project from building owner, Jim Stanton of JMS Holdings, LLC.
The project has enabled Biovest to increase production of its vaccine for non-Hodgkins lymphoma, a form of cancer that originates in the lymphatic system, retain 24 existing jobs and create 14 new positions in the bioscience sector, Nevinski said.
But since the company filed bankruptcy in March, neither the city nor the state have received loan payments and the city keeps 20 percent of the state loan payment, he said.
Nevinski expects that to change now the company has emerged from bankruptcy because the city and state loans are secured debts and still subject to payment through the reorganization plan.
The lack of loan payments to the city did not impact taxpayers, according to Nevinski.
The city loan came from excess dollars from a tax increment district, which through state legislation at the time, the city was able to tap into to provide loans and grants to new and expanding businesses in Coon Rapids, Nevinski said.
That pot of money has assisted other businesses, he said.
The lack of loan payments means, however, that there has been less money available in that account right for other projects, Nevinski said.
The loan to Biovest was for a 10-year term amortized over 25 years with interest rates rising after the first two years to encourage payoff of the loan, he said.
“We definitely expect the debt to be paid back,” Nevinksi said.
Under the reorganization plan, Biovest eliminated some $48.5 million in debt, which has been converted into shares of the company’s common stock and represents its new common stock outstanding post-reorganization, according to a Biovest press release.
“These shares are being issued to secured and unsecured creditors,” the press release states.
These are the investors in Biovest who will get the shares in exchange for payment of debt, Nevinski said.
Biovest has also announced that Dr. Carlos F. Santos has been promoted to serve as new chief executive officer.
Santos will lead Biovest’s efforts to transition from the clinical-stage to the commercial-stage.
With Biovest’s balance sheet significantly strengthened and virtually debt-free, the company believes it is well-positioned to continue advancing its global regulatory strategy for BiovaxID™, including seeking European marketing approval, as well as supporting the development of its pipeline of patient-specific cancer vaccines, according to Santos.
“Biovest’s active immunotherapy platform heralds a new era in truly personalized immunotherapy,” Santos stated in the press release.
“Clinical trials have shown that our personalized cancer vaccine, BiovaxID, increases the duration of cancer remission in patients treated following chemotherapy.
“Once approved, this vaccine will offer patients with lymphoma who are in remission a means to guard against the return of cancer.
“I am very proud and excited to take the role of chief executive officer in leading our highly talented and capable team into the approval stage for BiovaxID.”
Samuel S. Duffey, Biovest’s former chief executive officer, will head a new Biovest-owned subsidiary that will be formed to create special opportunities based on the company’s proprietary biomanufacturing technology and to advance innovative anti-viral and anti-cancer new product development.
“We are extremely grateful for all of Mr. Duffey’s efforts to date on behalf of Biovest and are very excited that he has agreed to continue his involvement with the company,” Santos said.
In other organizational changes related to the board of directors, Biovest announced that current director, Ronald E. Osman, was elected chairman of the board and Eugene Grin was elected as a new addition to the board.
Grin is a principal of Valens Capital Management, LLC, a registered investment adviser based out of New York, which manages multiple private investment vehicles.
Peter Bodley is at [email protected]