Synova Healthcare Group Inc., a tiny women's health-care firm in Media that acquired the Today Sponge contraceptive, has filed for bankruptcy protection and plans to sell the business.
Synova made news earlier this year when it bought the popular Today Sponge over-the-counter contraceptive made famous in a
television episode about "sponge-worthy" men.
In documents filed in U.S. Bankruptcy Court in Wilmington, Synova sought relief to reorganize its finances under Chapter 11 of the bankruptcy code, listing assets of $21.3 million and debts of $26.8 million.
Synova said it had existed since 2005 primarily "on a series of note issues" and raised only $3.3 million out of a possible $5 million recently from the sale of 6.5 percent Series B notes.
"The failure to close the balance of the Series B notes created a liquidity crisis" because of the company's "historical inability to fund itself through operations," Synova chief financial officer Robert Edwards said in the filing.
"The company has been unable to rescue itself from these liquidity problems, and is left with no other option than to pursue an efficient sale of its business as a going concern," Edwards said.
In July, Synova announced a new advertising campaign, new packaging for the sponge, and a new Web site. The firm estimated it would spend $5 million to $6 million this year on magazine ads, and noted it had been working to let physicians and others know that the Sponge contraceptive was available again.
In 1995, the Today Sponge was withdrawn because of deficiencies at the manufacturing plant. The sponge's safety was never in question, but Wyeth, formerly American Home Products, quit making it rather than upgrade a factory cited by the Food and Drug Administration for various problems.
Between 1983 and 1995, about 250 million sponges were sold, and it was a favorite among some women. Annual sales were $20 million when it was pulled.
In 1995, the disappearing sponge was depicted on the television comedy
, when the character Elaine scoured stores for her favorite birth control and stretched her supply by setting "sponge-worthy" standards for dates.
In 1998, Allendale Pharmaceuticals Inc. bought rights to the Today Sponge from Wyeth. In 2006, the sponge had just under $2 million in sales. Last January, Synova Healthcare bought Allendale in an all-stock transaction valued at more than $16 million.
Synova, which is not profitable, reported revenue of $1.8 million in 2006.
Synova also sells over-the-counter diagnostic tests to help women detect vaginal infections and menopause. The company has been developing a noninvasive, portable and disposable fetal monitor.
Shares of Synova closed down 26 cents, or 86.67 percent, at 4 cents yesterday in over-the-counter trading.