Financially ailing PharmaKinetics Laboratories Inc. plans to file for protection from creditors under Chapter 11 of the Bankruptcy Code. The Baltimore-based company said yesterday it expected file today in the U.S. Bankruptcy Court for the District of Maryland.
"This step is being taken to ensure, as best possible, the conduct of business as usual in regards to our clients," said V. Brewster Jones, president and chief executive officer. He said -- the company intends to continue operations while it attempts to reorganize.
Last week, the company announced that plans to sell its key assets to a New Jersey company had fallen through. The deal would have brought the $4.8 million in cash and contingent payments of $2 million over a period of up to five years, and PharmaKinetics would have become a wholly owned subsidiary of Applied Bioscience International.
PharmaKinetics also announced last week that it had received notices of default from Maryland National Bank concerning its $2.5 million note and financing agreement and its revolving credit note. The company, which employs about 125 people, said it was in discussions with the bank.
The drug development company recently underwent a major reorganization of its top management. Jones, who had been president of the company's U.S. operations, replaced as president Steven A. Woodman, who assumed a business-development role.
David L. Beeghly, a securities analyst with Ferris, Baker Watts, said that if PharmaKinetics can keep customers happy during the reorganization period, "I think there's more than enough business around for them to keep their lights on.
"It's a great business," he added. "They just had too much debt in a slow period of the industry."
PharmaKinetics was hurt along with the rest of the generic drug industry by a government probe into falsified information submitted by several manufacturers, even though the Food and Drug Administration said PharmaKinetics is not one of the target companies.
The price of the company's stock has fallen from $5.50 a year ago to less than $1.
PharmaKinetics had a loss of $3.8 million, or 40 cents a share, in its fiscal year ending June 30, 1990.