FOLLOW US

Biotechnology investor Apple Tree Life Sciences Inc. and affiliated entities filed for Chapter 11 bankruptcy protection in Delaware on Tuesday, days after a Chancery Court judge ordered Russian billionaire Dmitry Rybolovlev to provide $97 million to support Apple Tree’s struggling medical portfolio.

In its petition, Apple Tree reported $1 billion to $10 billion in assets and only $100,000 to $500,000 in debt, highlighting the unusual scale of its financial structure. The filing follows months of turmoil after a fractured partnership with Rybolovlev pushed several Apple Tree portfolio companies to the brink of insolvency.

Dispute with Russian Billionaire

Rybolovlev and co-founder Seth Harrison, both medical doctors, launched the Apple Tree fund in 2012 to finance biotechnology ventures, according to Delaware Chancery Court filings. Rybolovlev, who amassed his fortune in the Russian fertilizer industry, initially committed over $1.4 billion to the fund through his family trust, Rigmora, promising further contributions starting in 2020.

However, their partnership began to unravel in 2022 amid market downturns in biotech and geopolitical instability following Russia’s invasion of Ukraine. Rigmora scaled back capital injections and imposed strict conditions, leaving Apple Tree’s ventures scrambling for funds.

By May 2024, Apple Tree alleged that Rigmora had reneged on its commitments, prompting a lawsuit to enforce capital calls totaling $101.1 million for 10 portfolio companies developing treatments for cancers, obesity, and other medical conditions.

Court Orders Funding but Companies Struggle

Delaware Chancellor Kathaleen St. J. McCormick ordered Rigmora to comply with nearly all capital calls but rejected Apple Tree’s requests for budgets Rigmora had previously denied. While the ruling provided essential funding, portfolio companies had already laid off roughly 70% of staff and scaled back research programs to survive the financial squeeze.

“The negative impacts of a funding default for early-stage life sciences companies are severe,” the Chancellor noted.

Founders and Bankruptcy Filing

Rybolovlev, who gained controlling interest in Russian fertilizer giant Uralkali and netted approximately $5 billion from its public sale in 2010, is central to the dispute. Harrison, a former New York City surgeon, emphasized the bankruptcy filing is designed to protect stakeholders.

“Apple Tree filed for bankruptcy protection to serve the best interests of our limited partners, our portfolio companies, their employees and founders, and ultimately, the patients who stand to benefit from everyone’s dedication and risk,” Harrison said in a statement.

Alongside Apple Tree Life Sciences, the entities ATP III GP Ltd. and ATP Life Science Ventures LP also sought Chapter 11 protection. The case has been assigned to U.S. Bankruptcy Judge Laurie Selber Silverstein.

Apple Tree is represented by Quinn Emanuel Urquhart & Sullivan LLP and Potter Anderson & Corroon LLP.