North American Scientific Inc. said Thursday it filed for Chapter 11 bankruptcy protection, because the buyer of its prostate cancer treatment is paying only half of what had been agreed.
In its Wednesday bankruptcy filing, the Chatsworth a developer of radio-isotopic cancer treatments, also cited financing problems, saying its bank had cut its ability to borrow.
North American listed assets and debts of up to $10 million each. Creditors include the Nordian division of Canadian health sciences company MDS Inc.
Best Theratronics Ltd., a Canadian company, terminated last month's purchase agreement to acquire the company's prostate brachytherapy product line. North American Scientific said under the new agreement it will receive $1.5 million at closing and the remaining $1 million in equal installments over the following 12 months.
Brachytherapy is a targeted cancer treatment that involves inserting metallic radioactive seeds around the tumor. The company sought to divest the prostate business to focus on its potentially more profitable breast cancer product, called ClearPath.
The company said Chapter 11 protection should enable it to conduct business operations as usual in both the prostate and breast device segments, and has petitioned the court for an expedited process to sell the prostate business.
''This filing should relieve the immediate pressure from our creditors, and provide us the time to complete the sale of the prostate business while we continue to gain clinical experience with our ClearPath product line," Chief Executive John Rush said in a statement.
North American Scientific shares were down 3 cents, or 44 percent to about 4 cents in morning trading on the Nasdaq.
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