The Financial Turmoil of Biotechs
Biotech startups were responsible for 75% of innovations in recent years; also, 90% of them fail. With the markets in turmoil and investors becoming increasingly risk-averse, securing funding has become a monumental task for young companies operating in the field. In the words of Christopher Schaber, CEO of Soligenix, “over the last two years the investment climate has been difficult due, in large part, to the broader global market conditions. As you would imagine, this has not translated well for smaller, earlier stage biotech companies, where both development risk and capital need is higher. Coupled with the length of the drug development process that can take 10-15 years in order to achieve potential success, it can make for even harsher times.” It seems like the once-plentiful streams of capital have all but dried up, leaving many promising ventures struggling to stay afloat. A more dramatic example is that of M6P, a small startup with remarkable science that holds a strong promise to treat lysosomal storage disorders (LSDS) through enzyme replacement therapies. Hung Do and Cuong Do, M6P’S leadership team, tell us that “unfortunately, at the moment, the entire biotech investing market, especially for preclinical companies, is frozen, so we are now relying on existing shareholders to keep the development going.” Despite hardship, the biotech community has remained steadfast in their pursuit of medical innovation. Companies like Soligenix and M6P continue working against the tide, with a rich pipeline that promises much.
Now more than ever, it seems that collaborations and acquisitions between big pharma and biotechs are crucial in keeping the wheels spinning. Merck’s spin-off Organon is poised to change the landscape of women’s health. Its CEO, Kevin Ali, tells us that despite their being “a young company with a 2021 IPO” they ”have completed 8 deals in the past 18 months, and are rapidly growing.”
They are offering products such as the Jada device which addresses postpartum hemorrhage or abnormal bleeding in childbirth at a “90% plus efficacy rate and acts in under three minutes.” This is a big leap in an industry that has been underfunded and deprioritized in the past, treated as a niche, but as Duchesnay CEO Eric Gervais points out, “the four billion women in the world are not a niche percentage.”
Innovation hubs such as the Pennsylvania Biotechnology Center also bear good news, showing that the industry still stands strong in Pennsylvania, where “the last six years generated more than $7.3 billion worth of economic impact.” This is a testament to the resilience and innovation of the industry, as well as the vital role that biotechnology plays - and will play - in our society. Sekar Kathiresan is the CEO of Massachusetts based Verve Therapeutics, a company that fights heart disease through fascinating novel techniques such as gene editing, claims his company “has raised about $800 million in capital across three private rounds and two public financings. Since inception, Verve has spent about $250 million, so we have a significant amount (about $550 million) still left at our disposal to continue the development of this medicine.
”Perhaps the clearest sign that there is trust in the sector comes from companies such as EY, whose “pharma sector is currently the fastest growing sector at EY globally,” as Pamela Spence, Global Head Sciences leader, assures. Despite challenges such as funding cuts and regulatory hurdles, biotechnology companies and the life sciences in general continue to make significant strides, bringing cutting-edge technologies to market and making a real difference in the lives of patients.