Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, May 7. In today's briefing, WeightWatchers has filed for bankruptcy as interest in its traditional diet programs wanes with the rising popularity of drugs like Ozempic as well as competition from free fitness apps and social media influencers. And energy installation and tech company Babcock & Wilcox is working with financial and legal advisers to restructure its $500 million debt through potential bond swaps and asset sales as it battles a declining stock price and litigation risks, people familiar with the matter told The Wall Street Journal.

WeightWatchers, whose dieting and wellness programs were once a central part of U.S. fitness culture, has filed for bankruptcy to adjust to the increasing use of drugs like Ozempic for weight loss.

WeightWatchers has been offering drugs as a complement to its legacy business model of providing food consumption and exercise plans, though the company’s clinical business hasn’t grown fast enough to offset the decline in subscriptions to its core programs as many women decide the drugs are all they need.

WeightWatchers has also struggled with the advent of free fitness apps and advice from social-media influencers, which have provided other channels for women who seek guidance to hit their weight-loss targets.

Energy installation and technology company Babcock & Wilcox is working with investment bank Evercore and law firm O’Melveny & Myers to explore options for its debt stack as it faces a slumping stock price and litigation risks, people familiar with the matter said.

The 158-year-old company has been negotiating with bondholders to trim down its nearly $500 million in debt, and is close to a possible deal that would include swapping some of the bonds for other debt instruments, the people said. The company also completed a small asset sale last month and is working on another larger asset sale transaction, the people said.

A Babcock representative said it is working with several advisers “to evaluate options, including asset sales, refinancing debt and other actions to strengthen our balance sheet and maximize shareholder value.”

Synthego, a gene-editing tools developer that has collaborated with AstraZeneca and dozens of other drug and biotechnology companies and academic medical centers, has filed for bankruptcy, after it struggled to service roughly $220 million in debt.

The Redwood City, Calif.-based company plans to sell its assets to secured lender Perceptive Advisors. The life sciences investment firm is providing up to $50 million in financing, including $12.5 million in new money, to see Synthego through its chapter 11, filed Monday in the U.S. Bankruptcy Court in Wilmington, Del. The financing and the proposed purchase are subject to court approval and better bids.

Venture firm 8VC is listed as the biggest equity owner with 12% of the shares. Other equity owners include Menlo Ventures, Wellington Management and Peter Thiel’s Founders Fund. Wellington and 8VC are also large unsecured bondholders in the company.

Synthego, founded in 2012 by early SpaceX employees, has raised roughly $400 million in equity financing over the years. Its flagship product gRNA acts like a GPS in helping scientists edit genes with precision, according to the company.

Its revenue increased rapidly over the years, but that growth fell short of the cost and investment needed to develop new technologies, leading to tighter margins and worsening losses.

“By the end of 2023, the company was still not generating positive cash flow and the interest burden had expanded” to 10 times what it was around 2020, Chief Restructuring Officer Allen Soong said in a sworn declaration. By early this year, cash flow still wasn’t enough to service its debt, he said.

Synthego has 150 employees and various facilities in its headquarters city.

–Becky Yerak

The electric-vehicle industry hit a pothole in April. Sales of EVs in the U.S. fell by around 5% during the month, according to estimates from the research firm Motor Intelligence, while the broader car market grew by 10%. Monthly EV sales in the U.S. have only declined three times since 2021.

The haphazard rollout of President Trump’s tariff policy threatens to put the Federal Reserve in a lose-lose scenario: Navigate a recession or manage a period of stagflation. How the Fed negotiates tricky communications around these trade-offs will be front and center at officials’ two-day policy meeting this week.

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