💥New Chapter 11 Bankruptcy Filing - Synthego Corporation💥
Fallen unicorn gene-editing company lands in the District of Delaware
On May 5, 2025, NorCal-based Synthego Corporation (the “debtor”) filed a chapter 11 case in the District of Delaware (Judge Walrath). Hmm, Northern California, vaguely-science-sounding name. Even need to guess?
You bet your a$$ it’s another “fallen unicorn” biotech sh*tco.*
Real talk, could all the biotech companies just get together, rip off the bandaid, and file their cases all at once? Because g-ddamn are we tired of watching the same story play out time and time again.
Anyway, this one’s in the CRISPR — short for “Clustered Regularly Interspaced Short Palindromic Repeats” — business.
Yeah, we’re right there with you. Here’s CEO Craig Christianson:
“Synthego is a leading provider of end-to-end CRISPR tools and solutions. CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) is a revolutionary technology that allows scientists to edit genes with precision, making it significant for advancements in medicine, agriculture, and industrial applications. Synthego supplies biopharmaceutical companies and research/academic institutions with certain tools that are essential to produce CRISPR technology, such as guide RNAs (gRNAs). Synthego supports and facilitates every step of a customer’s CRISPR workflow in the development of cell and gene therapies, from design to edit to analysis for use in applications from discovery to clinical use. The Company is recognized as the highest quality producer of gRNAs and the only American company providing both research and therapeutic grade gRNA.”
F*ck, we still don’t have a clue what he’s going on about. Wait, 💡; all the college kids cheat with AI nowadays, so let’s give that a whirl ourselves. Here’s Google’s actual English, CRISPR explanation:
“It's essentially a set of ‘genetic scissors’ that can cut DNA at specific locations, enabling them to edit, remove, or insert new DNA sequences.”
Damn, that was succinct and intelligible. Plus, the computer didn’t need to waste three years in law school.
Turning to the cap stack, founded in ‘12, the debtor historically raised capital through series funding …
… but investors like to see some prospect of a return, so by ‘22, that well had run dry. Enter credit and, more specifically, Perceptive Credit Holdings III, LP (“Perceptive”), which is owed $73.4mm as of the petition date under a secured term loan facility. Under that, the debtor also issued $23.4mm in convertible notes in August ‘23 and another ~$98mm in “non-convertible notes” — some might just call ‘em “notes” — in March ‘24 (of which Perceptive holds $78mm).
And Perspective ain’t done lighting cash aflame; it’s funding the DIP, which provides a headline $50mm term loan, composed of $12.5mm in new money ($5mm interim) and a $37.5mm roll-up of the term loan debt ($12.5mm interim requested; $10mm interim approved). It features a SOFR + 11.5% interest rate (PIK), a 1% closing fee (including on the roll-up), and, subject to final order per Judge Walrath, a 4% exit fee (ditto).
Prepetition-lender-cum-DIP-lender – y’all know what’s up next.
The debtor is …
… and Perspective is buying. Frankly, we’d just as soon assume they had that outcome in mind all the way back in ‘22. The proposed price? A credit bid of the DIP and the unrolled term loan less $1mm, or ~$84.9mm,** which the debtor hopes to get approved by July 2, 2025.
And if that seems tight to you – like faster-than-the-DE-challenge-period tight – don’t worry, Judge Walrath agrees. But rather than get into it too much at the May 8, 2025 first day, the debtor and Perspective opted for a second-day punt on timeline issues.
Not that the resolution will matter because (i) wherever the sale process lands, Perspective will live with it and (ii) ain’t nobody else showing to buy this company. The debtor bleeds cash and expects a net operational loss of $4.7mm during the first 13 weeks of the case, with another $7.5mm in non-operating disbursements on top. So come the bid deadline, we don’t expect anything other than a Notice of Cancellation of Auction to grace the docket.
The second-day and bidding procedures hearing will go forward on June 3, 2025 at 2pm ET.
The debtor is represented by Pachulski Stang Ziehl & Jones LLP (James O’Neill, Debra Grassgreen, Maxim Litvak, Malhar Pagay) as bankruptcy counsel, Fenwick & West LLP (Ethan Skerry, Brendan Montgomery) as corporate counsel, Paladin Management Group (Allen Soong) as financial advisor and CRO, and Raymond James & Associates, Inc. (Geoffrey Richards, Simon Wein) as investment banker. Craig Barbarosh, Robert Warshauer, and John Young are the debtor’s independent directors and compose its restructuring committee. Perceptive is represented by Morrison & Foerster LLP (James Newton, Miranda Russell, Ilayna Guevrekian) and Potter Anderson & Corroon LLP (Christopher Samis, Brett Haywood, Shannon Forshay) as legal counsel.
*In a throwback to a far less disciplined venture fundraising age (ZIRP!), Pachulski Stang Ziehl & Jones LLP’s Debra Grassgreen dropped this nugget during the first day hearing:
“This company had a valuation of over a billion dollars at one point. It's something that out here in Silicon Valley, we call a fallen unicorn.”
Over a billion dollars! LOL.
**In addition to customary assumed liabilities and leaving behind enough cash to give the debtor an okay burial, with up to $200k for GUCs.
Company Professionals:
Legal: Pachulski Stang Ziehl & Jones LLP (James O’Neill, Debra Grassgreen, Maxim Litvak, Malhar Pagay)
Financial Advisor: Paladin Management Group (Allen Soong)
Investment Banker: Raymond James & Associates, Inc.
Claims Agent: Epiq (Click here for free docket access)
Other Parties in Interest:
Prepetition Lender: Perceptive Credit Holdings III, LP
Legal: Morrison & Foerster LLP (James Newton, Miranda Russell, Ilayna Guevrekian) and Potter Anderson & Corroon LLP (Christopher Samis, Brett Haywood, Shannon Forshay)