Hawaii Biotech files for bankruptcy


POSTED: Saturday, December 12, 2009

Hawaii Biotech Inc., a privately held biotechnology company based in Aiea, filed for Chapter 11 reorganization in U.S. Bankruptcy Court yesterday.

The company, which conducts clinical trials for West Nile and dengue fever, claimed between $1 million and $10 million in estimated assets and liabilities.

Money is owed to more than 200 creditors, which include its landlord for more than $500,000 in unpaid rent, various law firms for unpaid legal fees and a mainland company for unpaid clinical trial expenses.

The filing comes on the heels of a potential shake-up by an Australian shareholder who sought to change the makeup of the company's five-member board.

Hawaii Biotech said the filing is intended to allow the company to continue its current and planned human clinical trials and keep its staff in place, according to a press release issued by the company. The company has a staff of 23.

Elliot Parks, president and chief executive officer of Hawaii Biotech, will continue to manage the company during the reorganization proceedings. Hawaii Biotech also plans to continue to pursue funding and protect current investors.

“;Our goal is to continue to build on our recent clinical successes and create value for all shareholders,”; said Parks. “;We believe that this reorganization is the best plan of action to attract additional capital, to keep Hawaii Biotech local and to continue progressing through our clinical trials.”;

Parks says Hawaii Biotech has lined up more than $2 million from local investors in post-petition financing.

Rob Robinson, Hawaii Biotech board member, said Parks was recruited by investors in 2008, and under his leadership the company moved successfully from research and development to clinical trials, building value for its future liquidity.

In 2008 Hawaii Biotech conducted its first human clinical trials with a West Nile virus vaccine, followed by a dengue virus vaccine candidate in August of this year being conducted at St. Louis University.

“;In addition, the current management and its product development, clinical and regulatory team has raised several million dollars in nonequity, nondilutive funding in the past two years,”; said Robinson, who is also co-founder of Kolohala Ventures.

Jerrold Guben, attorney for Hawaii Biotech, says many of the pre-petition equity investors are still willing to finance the company but will become debt investors.

Next week the company will file motions to assume all its clinical trial contracts,.

Hawaii Biotech, founded in 1982, recently completed a Phase 1 clinical trial of its West Nile vaccine in healthy human subjects.

It is currently in Phase 1 clinical studies with a dengue vaccine candidate, and is in pre-clinical development with a vaccine for tick-borne encephalitis. Hawaii Biotech is also working on vaccine candidates for malaria and influenza.