4D Pharma Research Limited - Case Update

4D Pharma Research Limited (the “Company”), a subsidiary of 4D Pharma Plc, the parent company of a large pharmaceutical group whose shares were listed on the AIM until earlier this year, has entered administration after the group’s secured creditor refused to continue funding the group.

David Pike and James Clark of Interpath were appointed Joint Administrators of parent company 4D Pharma Plc in June 2022, after Jones Day, the lawyers advising the secured creditor at the time (Oxford Finance), advised that an event of default had occurred which allowed Oxford Finance to appoint administrators under its Qualifying Floating Charge.

Interpath then commenced a sale process for the whole group, contacting approximately 50 pharmaceutical companies and 19 financial investors specialising in distressed assets. The process ran for three months and resulted in three offers which ultimately could not be transacted. Instead, Oxford Finance agreed to assign its debt to Armistice Capital Master Fund.

Armistice advised the Administrators to pursue two strategies in tandem - a further attempt to sell the group, as well as the primary objective of exploring an administration exit of the parent which would be followed by Armistice converting their debt to equity and providing an additional equity investment of $15 million. Armistice provided further funding of $1.6 million to the group to explore the latter option, bringing the total funding to $15.6 million.

Significant progress had been made to pursue this strategy, but in January 2023, Armistice indicated that the equity raise would no longer be provided and that it would no longer fund the group. Shortly thereafter, 4D Pharma Plc ceased trading on AIM.

The Administrators then revisited a sale of the business of the group, which resulted in one binding offer for the IP assets of the group, which sit within the Company. Without additional support from Armistice, the Company was insolvent and was placed into administration by its Directors. James Clark and Blair Nimmo of Interpath were appointed Joint Administrators on 17 March 2023.

The Joint Administrators recently announced that the group’s IP was sold to CJ Bioscience. In a separate transaction, 100% of the share capital of 4D Pharma León, a Spanish subsidiary, was sold to Bacthera.

The Joint Administrators' proposals can be found HERE. They were assisted by Shepherd Wedderburn, who provided general legal advice ahead of the administration, and Jones Day, who provided legal advice in relation to the sale.