Biotechnology company Omega Therapeutics hit Chapter 11 bankruptcy in Delaware on Monday, listing more than $140 million in debt on its petition. The company also filed a form with the U.S. Securities and Exchange Commission (SEC), confirming it had entered a restructuring agreement with an affiliate of its controlling stockholder.

Debt Load and Restructuring Agreement

Omega, which focuses on developing mRNA-based medicines, reported $140.4 million in total debt and $137.5 million in assets in its court filings. The company stated it expects to have funds available for unsecured creditors.

On Feb. 3, Omega entered into a restructuring support agreement with Pioneering Medicines 08-B Inc., an affiliate of Flagship Pioneering Inc., its controlling shareholder. The agreement outlines a $1.4 million secured promissory note as a bridge loan, after which Pioneering Medicines will serve as the company's debtor-in-possession (DIP) lender. The DIP financing will roll up the bridge loan and provide additional new funding.

Sale Process and Wind-Down Plans

As part of its Chapter 11 strategy, Omega is moving toward an asset sale and wind-down. Pioneering Medicines has also agreed to act as the stalking horse bidder in the company's sale process. The SEC filing indicates that Omega is seeking court approval for the sale within 60 days.

Company Background and Legal Challenges

Based in Massachusetts, Omega was founded in 2017 by Flagship Pioneering and specializes in developing proprietary mRNA technology. Flagship controls Omega through stock ownership, director appointments, and licensing agreements, holding 53% of its outstanding shares, according to a Delaware Chancery Court lawsuit filed by investor Joel Newman last year.

Among Omega’s obligations is a $462,000 trade debt—its largest unsecured claim—owed to biotechnology company ATUM, according to the bankruptcy petition. The filing also states Omega has between 200 and 999 creditors.

Legal Representation and Restructuring Oversight

The company has appointed Jeffrey T. Varsalone as its independent restructuring expert director. Omega Therapeutics is represented by attorneys Eric D. Schwartz, Derek C. Abbott, Andrew R. Remming, Daniel B. Butz, Jonathan M. Weyand, and Luke Brzozowski of Morris Nichols Arsht & Tunnell LLP.

As Omega navigates Chapter 11, the focus remains on securing a successful sale and determining the future of its mRNA technology assets.