BIOTECH GOES THROUGH WORST PHASE AS THE CRYPTO MARKET FALL DOWN
The biotech decline began long before Russia invaded Ukraine and the high inflation became the talk of the dinner table. In the biotech stock slide that has grown rapidly last winter and has continued in recent weeks, few companies have been saved. That includes those that came out publicly in 2021 - a record number - among the excitement caused by the epidemic in the industry.
Many of those similar companies are now facing the possibility that the situation could get worse. It is enough to create a significant sense of concern at the BIO International Convention in San Diego this week, where more than 10,000 executives, scientists and investors gathered.
"Everyone right now almost holds their breath to see what happens next," said Joe Panetta, chief executive of the commercial and lobby group Biocom California, in an interview with him at the conference. The Biotechnology Industry Organization, or BIO, the national team of representatives of the industry, hosted the conference, its first private conference in three years.
One official compared the surrounding area to a hurricane. Biotechnology firms are already facing a Category 3 storm, says Mark Lappe, CEO of Inhibrx Inc., a San Diego biotech site that makes drugs for orphans and cancer. Some companies were still in good shape when the market started declining late last year.
"Then from January until now we have entered phase 5," Lappe said in an interview. "There was no bias in everything at the biotech level." Inhibrx shares fell by almost 80 percent this year. (On Friday, the Nasdaq Biotechnology Index increased by 4%, in part on news that drugmaker Merck & Co. may buy oncology company Seagen Inc. The index is down 26% this year so far.)
If a tough market lasts for a year or more, it will wreak havoc on drug research and development, Lappe said. Companies are already reducing their workload on the most pressing programs, executives at the conference told Bloomberg.
And for companies with bad R&D news, the downturn has spilled fuel on fire. For example, BridgeBio Pharma Inc. late last year had a genetic test for heart failure and failed a critical test. The company's stock has dropped nearly 90% from its February 2021 peak, to about $ 7.65 since closing on Friday.
The clinical decline during the market downturn has created a "severe stress test" for BridgeBio and its model for the pursuit of multiple diseases at the same time, said the company's CEO, Neil Kumar.
A company based in Palo Alto, California raised $ 110 million by selling an important drug voucher for a major review and restructured its debt last month, while Kumar was at a conference looking for partners in some of his assets. But investors are more focused on how big money companies are and how long that money will last, Kumar said. His company has cut jobs twice this year, as well as other ways to save.
BridgeBio is not alone. At least 54 biotech companies have gone bankrupt this year, according to data from the BIO. Initial public donations, follow-up donations and start-up funding for research-level companies have declined sharply since last year, according to the BIO. The only light sources report increased licensing outside of the research phase assets and the acquisition of licensed companies.
Steve Bryant, head of global business development at Genmab A / S, compares the current environment with the market deregulation of 2000 and 2008, and a number of significant differences. There is - at the moment - enough money in the hands of big drug lords who can drive deals, and business firms that raise money and can continue to invest.
But that does not mean that money goes to where it is needed. Raising money through an IPO sounds unpopular with many, and almost everyone Bloomberg spoke to said getting cash from private investors was becoming increasingly difficult.
"We see a lot of companies coming up with assets that they can fund," Bryant said. It is very difficult, he said, especially in small companies that may have a promising science but have not yet shown the work with the most advanced research.
People are hopeful that a sharp decline in biotech stocks will prompt large pharmaceutical companies to start acquiring more companies.
Marianne De Backer, head of business development and licensing at Bayer AG in Germany, is looking forward to seeing the festival work progress. Last year, the competition was intense and Bayer had to come up with creative ideas to attract the beneficiaries. Now companies are bringing their own smart ideas to Bayer.
But that doesn't mean there will be a lot of stores just because things are for sale.
"It's not like shoes," he said in an interview.
And no one really knows when the storm will end. "That seems to be anyone's guess," BridgeBio's Kumar said.