Response Oncology, Memphis, Tenn., bet the farm on high-dose outpatient chemotherapy treatments.
Acknowledging it lost the bet, the company announced that it had voluntarily filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Memphis.
Company officials were not available for comment by deadline. In a news release, Response Oncology said it "will continue to service its patients, affiliated physicians and customers" while it reorganizes.
Size of the company's assets, liabilities and total debt was not available at deadline. In its financial statements for the third quarter of 2000, Response Oncology said it had violated several covenants of a $41 million bank-lending facility, including a minimum cash-flow requirement. As of Sept. 30, 2000, the company owed $34.5 million on the facility. The company also reported that its lenders had terminated their obligation to provide more funds under the facility.
Response Oncology lost $1.4 million, or 11 cents per share, in the nine months ended Sept. 30, after earning $1.4 million, or 12 cents per share, in the same period in the previous year. Revenue fell 3% to just under $100 million. The company closed 31 outpatient cancer centers in 1999 and 2000, leaving it with 23 facilities, which it either owns, operates or runs as joint ventures with hospitals.
The fortunes of Response Oncology took a turn for the worse in May 1999 at the annual conference of the American Society of Clinical Oncology. Four studies released at the conference indicated that the high-dose chemotherapy treatments in which the company specializes did not significantly increase patients' survival.
Then, in March 2000, the oncology society released a statement recommending that breast cancer patients receive the "highly toxic" treatments only in "high-quality clinical trials" and that insurers cover the treatments only when they are undertaken in such trials.