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Business Journals
23-04-2025
- Business
- Business Journals
Arch Therapeutics files for Chapter 11 bankruptcy protection
Arch Therapeutics Inc. has filed for Chapter 11 bankruptcy protection, citing 'capital market challenges' as a major factor leading up to the filing. Story Highlights Arch Therapeutics Inc. files for Chapter 11 bankruptcy protection. Company failed to list on major exchanges despite multiple attempts. Arch seeks $2 million loan to facilitate asset sale process. Arch Therapeutics Inc. has filed for Chapter 11 bankruptcy protection, citing 'capital market challenges' as a major factor leading up to the decision. The Framingham-based biotech is behind an FDA-cleared wound care product called the AC5 Advanced Wound System that is used to manage injuries such as pressure ulcers, venous leg ulcers, diabetic ulcers, and surgical wounds. Terrence Norchi, co-founder and CEO of Arch, said in an affidavit that the company previously traded on the OTCQB market, but was recently downgraded to the OTC Expert Market because it didn't have adequate capital to be compliant with listing requirements. In order to reach 'broader capital markets access,' Norchi said Arch tried to list on Nasdaq or the New York Stock Exchange multiple times. Sign up for the Business Journal's free daily newsletters. Download the free BBJ app for important news alerts on your phone. 'Despite substantial efforts, these attempts were ultimately unsuccessful. During this time, Arch entered into several vintages of convertible notes, which contained covenants requiring the debtors to continue pursuing an uplist. As uplisting remained elusive, the convertible instruments became increasingly challenging to secure, let alone service,' Norchi said. The chief executive added that these financial challenges 'compounded the difficulty of supporting even a modest commercial presence, despite the strong clinical and regulatory foundation of Arch's lead product, AC5.' The public markets have not been kind to companies looking to complete initial public offerings in the last few years. Six Massachusetts biotechs held IPOs in 2024. All of their stocks are down from their debut. Only one Massachusetts company has gone public so far in 2025. Norchi also detailed 'considerable efforts' to secure funding or find a strategic partner, none of which panned out. Norchi said Arch's financial position deteriorated to the point where it could not meet payroll or other obligations. The company now consists of a single full-time employee who is unpaid and support from a small number of consultants. Chapter 11 bankruptcy is typically used when companies attempt to reorganize their debts while continuing operations. However, Norchi said in the affidavit that with Arch's lack of sufficient funding, it's looking to sell its assets. In order to keep working toward that sale, Arch filed a motion to ask the court for permission to accept up to $2 million in a secured term loan facility from Vivex Biologics Inc. to pay necessary expenses. Don't miss out on Boston-area life science news. Subscribe to the Morning Edition or Afternoon Edition for free. Largest Life Science Companies in Massachusetts Mass. employees Rank Prior Rank Firm/Prior rank (*unranked in 2023)/ 1 1 Takeda 2 2 Sanofi 3 3 Moderna Inc. View this list
Boston Globe
03-04-2025
- Business
- Boston Globe
From Wayfair to Temu, Boston-based retail companies face gut punch from tariffs. But there's one that might benefit.
That leaves retailers with an unpleasant choice: hike prices and risk scaring off customers, or absorb the tariffs themselves and take a hit to profits. Related : Advertisement 'Wayfair and a lot of companies have been trying to maneuver their supply chain away from China,' Bentley University economics professor David Gulley said. 'But when the tariffs were announced [Wednesday], they were dramatically broader than expected, and hit basically every country we trade with. And then they were dramatically higher than what was expected.' And that appears to have taken some companies by surprise. As tariffs loomed on China in recent months, executives at Quincy-based women's clothing retailer had been saying the company does not import much from China. Indeed, its top overseas suppliers, according to securities filings, are India, Indonesia, and Vietnam. Advertisement 'For the most part, you feel like we're in a pretty good place,' chief financial officer Mark Webb said at an investor conference in January. 'Where it lands, we will be extremely interested in . . . We'll have to wait and see.' Trump announced tariffs on India, Indonesia, and Vietnam of between 26 percent and 46 percent. did not respond to a request for comment on Thursday; its stock price dropped 9 percent. Boston-based Wayfair has also emphasized the diversity of its suppliers beyond China, in response to questions about tariffs in recent months. 'We as a platform, because we have 20,000-plus suppliers, we work with all of these folks,' chief executive Niraj Shah told analysts in February. 'So we haven't like made a bet, hey, we're buying from these Chinese factories.' Still, on Thursday, while its stock price plunged nearly 26 percent, Wayfair sounded an optimistic note. The company said it remained 'well-positioned to continue offering customers the best possible combination of value, assortment, and experience,' adding that 'periods of disruption create opportunities for strong companies like Wayfair to grow market share by consistently delivering great options to customers.' Wayfair's stock price plunged nearly 26 percent. Andrew Burke-Stevenson for The Boston Globe It wasn't all gloom for retailers. One potential winner — at least measured by stock performance price — from Wednesday's news appears to be TJX. The Framingham-based parent company of Marshalls, and HomeGoods brands saw its shares increase by 1 percent while the rest of the market tumbled. Analysts pointed to the discount retailer's strategy of buying unsold merchandise on the cheap from other retailers that has already been imported and thus avoid additional tariffs as an advantage. Also, TJX's low prices could become more attractive to consumers feeling the pinch of higher prices from tariffs at other stores. Advertisement 'Among the better positioned in our coverage, we see off-price TJX . . . [as] trade down beneficiaries,' analyst Mark Altschwager at Baird Equity Research wrote in a report on Wednesday evening. Of course, the goal of the tariffs isn't simply to shift consumption around among competing companies. It's to entice more manufacturing back to the United States, Trump said Wednesday. 'These tariffs are going to give us growth like you've never seen before,' he said. 'It'll be something very special to watch.' But these New England-based retailers also illustrate why that will be harder than it might sound. For many products, building new factories will take years and cost billions of dollars. For simpler goods, like clothing, relying on more expensive US labor would cause prices to skyrocket. 'The problem with this strategy is that many of the goods sold by Wayfair and J. Jill involve labor-intensive production, which is why they are sourced in lower-wage countries,' Babson College emeritus economics professor Kent Jones said. 'It's difficult to comply with the new tariffs without resorting to production alternatives using high-cost labor.' Container ships wait to enter the Port of Los Angeles. ERIN SCHAFF/NYT Trump's new policies also include closing a tariff loophole that some online retailers had been using to sell cheap goods from China. The regulation, known as the 'de minimus rule,' allows a shipper to avoid tariffs on shipments worth less than $800. E-commerce sites such as Temu, with its US operation based in Boston, Advertisement Amid the plunging stock market and rising consumer concerns, economic experts questioned whether Trump's goal of shifting all manufacturing back into the United States 'We make almost nothing from scratch in America, almost everything requires at least some inputs from abroad,' said Jason Furman, a former top economic aid to President Barack Obama who now teaches at Harvard. 'Overall a few companies will gain but many more will lose — while virtually all consumers will have to pay more.' Aaron Pressman can be reached at
Boston Globe
01-04-2025
- Business
- Boston Globe
Retailers from T.J. Maxx to Temu sell cheap goods, and plenty of them. Under Trump's tariffs, that could change.
A reckoning is 'long overdue,' said Jeff Bornino, a former top supply chain executive at Giant Eagle and Kroger grocery chains who is now North America president for the TMX Transform consulting firm. 'It shouldn't have taken tariffs to come to this.' Advertisement The tariffs and supply chain disruptions just might force retailers to more carefully select what goods they offer consumers, Bornino said. Instead of trying to sell everything to everyone, the industry will perhaps narrow its merchandise to better-selling products or items that appeal to specific shoppers. Such a realignment could have big impacts on New England retailers such as Framingham-based TJX, which have thrived under the current system by reselling deeply discounted items that have quickly cycled through mainstream retailers' inventories. Already, Trump's plans have forced some manufacturers and retailers to alter course, whether boosting prices to offset rising costs or finding vendors who manufacture goods outside China, Mexico, and Canada, the primary targets of Trump's tariffs. For example, toy maker Hasbro, based in Pawtucket, R.I., in March indicated that it may raise prices to offset the cost of tariffs. Temu, the Chinese e-commerce giant headquartered in Boston, reportedly is now Advertisement Toy maker Hasbro, based in Pawtucket, R.I., in March indicated that it may raise prices to offset the cost of tariffs. Jonathan Wiggs/Globe Staff Temu did not respond to a request for comment. Analysts also suspect that retailers will order more goods up front this year to try to get ahead of additional tariffs. On the flip side, supermarkets might stop stocking some products that only generate modest sales. But these moves are only half measures, Bornino said. The problem, he said, is an industry that has long prized volume and market share over profits. Retailers don't want to lose any sale, so they tend to order too many products from low-cost factories in China, which leads to warehouses and stores filled with unsold merchandise in America. It's the reason why department store chains like Macy's hold enormous clearance sales despite absorbing big hits to profit margins. It's also the reason why TJX — which operates brands such as T.J. Maxx and Marshalls — But the global supply chain that makes this all possible first started to buckle in 2020 when countries, especially China, shut down factories to contain the coronavirus. The moves led to a widespread shortage of once-common items like toilet paper and cleaning supplies. The pandemic, along with rising conflicts between China and and the United States and its allies, have prompted companies to shift production toward South America, Europe, and southeastern Asia. Advertisement Last year, the American Chamber of Commerce in China released a report that showed 41 percent of its members are now considering relocating from China to developing Asian countries, compared to 29 percent in a previous survey. 'So, places like Cambodia, Indonesia, Thailand, Philippines, and Vietnam have grown as places where folks have factories and where our goods are coming from,' Niraj Shah, CEO of Boston-based Wayfair, recently told analysts. 'And that's been a growing trend.' 'In addition to that, there are places like India, Brazil, and Turkey that have really been growing as a source of goods,' he said. 'The supply chain has been diversifying. And there's production in the US, in Mexico and Canada.' But experts say Trump's tariffs — 10 percent on Chinese imports and a planned 25 percent on goods from Canada and Mexico — have been hugely disruptive. 'This is a time of significant uncertainty,' said Monica Gorman, managing director of Crowell Global Advisors and a former top official in the US Commerce Department. 'It's difficult to predict, including which players in the system will ultimately absorb the costs of the tariffs.' In its conference call with analysts, Shah said Wayfair is working its vendors on how to respond. People shop at Wayfair's first large-format store on its opening day in Wilmette, Ill., on May 23, 2024. Andrew Burke-Stevenson for The Boston Globe 'Our suppliers are doing what they can to optimize their business so that they can provide that price value to customers,' he said. 'Otherwise, they don't win… We try to help them by providing advice and guidance on what we're seeing, what we think is happening.' As for TJX, the situation is more complicated. In its annual report, the company notes among the risks to its business is that 'Many of the products sold in our stores are sourced in locations (particularly in China, India, and southeastern Asia).' Advertisement But in a recent conference call with analysts, CEO Ernie Herrman said its buyers don't consider tariffs when purchasing merchandise from vendors. 'Their strategy is not to factor in tariffs or any other costs that actually can play into the picture here,' Herrman said. 'It's really not up to them to have to worry about what the vendor is getting caught up with in terms of tariff or inflation or other costs.' But TJX has been increasingly ordering merchandise directly from manufacturers, not just retailers looking to unload inventory. And those manufacturers could simply pass the cost of tariffs to TJX. The most likely scenario, experts say, is that retailers will pass the cost to the consumer by raising prices. But one possible strategy is to specifically identify the reason behind the extra cost to consumers. 'Communication is key: companies can be transparent explaining tariff-related price hikes on their website or store signage to effectively manage customer perception,' according to a report by Grant Thornton. Still, any price hike might turn off consumers already used to low prices, especially on items like apparel, said Carol Spieckerman, president of Spieckerman Retail consulting firm. 'The floor for lower prices has never been so low,' she said. 'It's an impossible standard for apparel retailers. The expectations for value have never been higher.'
