Lipella Pharmaceuticals’ ambition to develop the first treatment for an inflammatory mouth condition has reached the end of the road, with the biotech filing for bankruptcy.
The Pittsburgh-based company had been working on a liposomal oral rinse of the immunosuppressant tacrolimus to treat symptomatic oral lichen planus (OLP), a chronic inflammatory condition affecting the oral mucosa.
Back in September 2025, Lipella said its candidate, dubbed LP-10, had hit the key safety endpoint in a phase 2a study of 27 patients with OLP. The biotech reported at the time that pain and sensitivity “improved significantly, with patients reporting meaningful reductions on numerical rating scales.”
Based on the data, Lipella’s plan was to advance LP-10 into a phase 2b study, with the ultimate goal of scoring the first FDA approval in OLP.
But that dream died yesterday, when the company announced it had filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Western District of Pennsylvania.
The biotech plans to undergo an asset sale process to “maximize value for creditors,” according to a post-market March 30 release. Further, it expects to seek customary “first-day” relief that would allow the business to continue day-to-day operations in the near term.
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The writing had been on the wall for Lipella for a while, with Nasdaq rescinding the company’s listing in June 2025 over certain private placement transactions that the stock market claimed had violated its listing rules.
At the time, CEO Jonathan Kaufman, Ph.D., attempted to reassure investors that Lipella’s “underlying business remains strong.”
“We are advancing meaningful therapies through the clinical program previously outlined, maintaining full SEC compliance, and actively pursuing relisting,” Kaufman wrote in a June 2025 letter. “Our mission, leadership team, and long-term strategy remain unchanged.”
By September, Lipella’s cash reserves had dwindled to $1.8 million and the company was warning that bankruptcy loomed if the biotech couldn’t secure fresh funds.
