Dialysis machine firm Aksys shuts down

Dialysis machine firm Aksys shuts down

By Mike Colias
Feb. 20, 2007
(Crain’s) — Aksys Ltd., the Lincolnshire-based maker of home-based kidney dialysis machines, has pulled the plug.

The 16-year-old company’s board of directors last month voted to shut down operations after trying for months to sell its assets or attract outside financing. In a filing with the Securities and Exchange Commission on Tuesday, Aksys said it owes $23.4 million on a loan from its majority shareholder, Durus Life Sciences Master Fund Ltd.

Durus, a hedge fund, had told Aksys it would not continue to fund the company without additional financing from a third party. Aksys lost $24.5 million during the first nine months of 2006, according to its last quarterly financial statement.

In 2003, Durus said it had become a controlling investor by “inadvertently” purchasing more than 70% of Aksys’ outstanding shares over the previous year, but had not disclosed the purchases as required by SEC rules.

Aksys shares declined steadily after that disclosure amid investor concern that the share price would crater if Durus dumped its stake.

Aksys sued Durus in August 2003, seeking an injunction and damages for what it alleged were securities violations for not disclosing that it had acquired large amounts of Aksys shares.

Durus eventually agreed to pay Aksys nearly $50 million and slowly sell its shares, a process that was expected to take a decade. Durus still owned 66% of Aksys’ outstanding shares as of December, when its stock was delisted from Nasdaq after failing to stay above the $35-million market-capitalization threshold.

Durus founder Scott Sacane last month was sentenced to three years in prison after pleading guilty to charges that he manipulated the shares of Aksys and another small biotechnology company, Esperion Therapeutics Inc.

A phone message left at Aksys’ headquarters Tuesday was not immediately returned. Its Web site was inactive.

A number for Durus Capital Management in Norwalk, Conn., is disconnected.

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