Five years after its inception, a Research Triangle Park nutrition startup has filed for Chapter 7 bankruptcy liquidation.
Panaceutics Nutrition, part of the Launch Place portfolio, filed for bankruptcy protection on June 30. The bankruptcy filing, signed by CEO Staton Noel, shows the firm was pulling in revenue of $147,000 year to date compared to $217,000 for the full year 2022. But the debts became difficult to overcome without new capital.
The filing includes a resolution from the firm’s board stating that after considering Panaceutics’ “inability to continue operations at a level sufficient to satisfy outstanding and future obligations,” it had determined to liquidate its assets.
Noel sent out a notice to shareholders with slightly more detail, referencing “a number of challenges including obligated financing not following through and slower than expected customer adoption of our novel offering.”
“We still believe we built unique processes and products within the company to address the growing personalized nutrition and supplementation markets, and our dedicated team worked tirelessly to deliver exceptional products and services,” Noel writes in the letter, a copy of which was provided to Triangle Business Journal. “However, despite these efforts, the current financial obstacles and market conditions proved insurmountable, resulting in a significant shortfall in revenue and the inability to sustain operations.”
Disrupting health and wellness
Noel told TBJ that the newness of the personalized nutrition field created challenges – as the sector is primarily driven by software and wearables, not the kinds of products Panaceutics was pushing out.
“We just weren’t able to get our customers and clients to move with the voracity we needed them to move with,” he said.
Debts were mounting, and financing was difficult to come by. In May, the firm went through a furlough period as it worked to cut costs. But on June 2, the doors closed for good. At the end, the firm had just 10 employees.
Noel said he still has hope for the concept, which secured 12 patents.
“We built a lot of really cool equipment to do personalized nutrition – that’s one of the major assets still sitting there,” he said. “How that advances in the future, we haven’t really figured that out yet, but we’re looking at opportunities of how not to just scrap all that effort.”
The company developed a proprietary system that combined digital data and a robotic manufacturing platform to create individual blended formulas for clients. The system would combine multiple therapeutic and nutritional pills into a personalized “puree” for each client.
The bankruptcy filing makes mention of more than $3.8 million in liabilities, compared to just under $1.3 million in assets (including nearly $680,000 in machinery and equipment). The company values its intellectual property at nearly $8.1 million in the filing – and puts its total asset range estimate at between $1 million and $10 million – the same range it gives for its debts.
The filing also shows unpaid financing obligations may have contributed to its demise, as it lists a $300,000 past due funding obligation from Keen Growth Capital.
Noel declined to comment, referring TBJ to the filing.
The debts
Liabilities include a claim for $150,000 attributed to its landlord, Alexandria Real Estate Equities (NYSE: ARE). They also include $200,000 owed to Launch Place Seed Fund II and another $200,000 to local investor Worth Harris – both regarding security financing deals from March.
Debts also include more than $2.7 million owed in “trade accounts” and other property to a former partner, DSM.
A Panaceutics executive told TBJ in 2019 that a partnership with Dutch health care company Royal DSM – one that would allow for the commercialization of its nutrition products – could mark the turning point for the firm.
Edison Hudson, company co-founder, said at the time that the partnership signaled a larger readiness in the market for personalized nutrition and medicine.
“DSM is one of the first large companies to say they believe personalization will be the next wave in nutrition and wellness and medicine,” Hudson said at the time.
Panaceutics Nutrition, founded in 2018, is being represented by attorney John Northen of Northen Blue in Chapel Hill.
