Humanigen Downfall: FDA Rejection For COVID-19 Drug Triggers Financial Crisis, Bankruptcy

Humanigen HGEN has filed for bankruptcy likely as a result of the U.S. Food and Drug Administration’s (FDA) rejection of its COVID-19 drug, lenzilumab.

The company, previously linked with disgraced pharmaceutical entrepreneur Martin Shkreli, reported unsecured debts of $44.1 million against assets of $521,000.

The FDA’s refusal in 2021 to grant emergency-use authorization for lenzilumab significantly impacted Humanigen’s financial stability. 

Citing Henry Madrid, the Senior Vice President of Finance, the Wall Street Journal noted that the rejection was a key factor in the company’s financial troubles.

The regulatory body concluded that the drug’s potential benefits did not outweigh the risks, derailing Humanigen’s plans to market the medication.

However, post-FDA rejection, Humanigen faces multiple legal challenges, including lawsuits from manufacturers and marketers due to unpaid services. The company’s financial distress was compounded by a 2021 review by a U.K. regulator and a 2022 National Institutes of Health study, both casting doubts on lenzilumab’s efficacy.

"Unfortunately, the failure of the study did not relieve" Humanigen "from any of the manufacturing commitments it incurred in 2020 and 2021," Madrid said. 

Humanigen’s share value plummeted following these events, leading to its delisting from Nasdaq in October 2023. The stock, once trading around $20, has lost almost all value. 

The company now seeks bankruptcy court approval to use insurance proceeds for a pending settlement in a securities lawsuit. This move follows a series of legal challenges, including a class-action suit and a complaint alleging breach of fiduciary duty.

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