North American Scientific Inc., which filed for Chapter 11 bankruptcy this month, said it has agreed to sell its last remaining product line, a breast cancer treatment, to an affiliate of the Northern California private equity firm that is its largest shareholder.
If the sale disclosed in a Monday regulatory filing is approved by the bankruptcy court, the Calabasas medical device company essentially will be liquidated, resulting in the loss of around 70 local jobs.
“The markets are in a state of turmoil and we’re not the only company having to make hard choices,” Chief Financial Officer Brett Scott said Monday.
North American Scientific a few years ago sold off its other products so it could focus on its brachytherapy treatments for prostate and breast cancer. But the company was tripped up by last year’s credit crunch, which left it with few financing options to develop its products.
Buying the ClearPath breast cancer treatment is Portola Medical Inc., an affiliate of Three Arch Partners, a Portola Valley company that now controls 49 percent of the company’s shares. Portola Medical, which made a $1 million debtor-in-possession loan to the company after the Chapter 11 filing, has agreed to acquire the rights to ClearPath in exchange for paying off $400,000 of that debt.
Brachytherapy treats cancer by placing small radioactive rods or “seeds” inside or next to the tumor, limiting the damage to the rest of the body. North American Scientific last month thought it had a buyer willing to pay $5 million for its prostate line. But that company, Best Theratronics Ltd. in Ottawa, Canada, came back to the company and offered only $2.5 million. North American has not announced whether that revised purchase agreement has closed.
The lower offer, combined with the unwillingness of lenders to extend the company more credit, led North American Scientific to file for bankruptcy protection on March 11.
Under the deal with Portola, North American Scientific will be able to seek higher bids for ClearPath before closing the deal.
