The financial condition of the biotech industry is looking very bad. The Wall Street Journal published an article today [subscription required; summarized on their blog] titled "Cash Dries Up for Biotech Drug Firms." Since November, 10 biotechs have declared bankruptcy and raising money is getting much harder -- and much more expensive for entrepreneurs, who may have to give up as much as 90% of their equity.
Burrill & Co's 23rd annual report on the industry is out, if you have $395-$695 to spare; there is a teaser with some statistics here. Of 356 public companies (down from 365 a year earlier):
- half have less than a year of cash remaining (180, up from 26)
- one-third have less than six months of cash on hand (120, up from 12)
Of course, a few people are doing well, including some Genentech investors, but they seem to be a fortunate minority. DNAPrint, a leading maker of forensic and ancestry-testing software, has shut down after Nanobac Pharmaceuticals failed to raise the cash to buy it out, and is facing at least one lawsuit. Altus Pharmaceuticals Inc. and Isolagen are said by the Journal to be close to bankruptcy; Akesis Pharmaceuticals Inc. filed in January. Even the California Institute for Regenerative Medicine (CIRM) is facing a "looming cash crisis" according to David Jensen of the California Stem Cell Report.
Quite what the full implications are is hard to say. Steven Burrill is quoted in the Journal as saying that 100 publicly traded biotechs will disappear this year:
"[w]e are clearly in unprecedented times. This isn't a 'This too will pass,' " he says. "The implicit assumptions that we've built the industry off of for 30 to 40 years have changed."
Previously on Biopolitical Times: