Two issues critical for the biotech sector kept busy Capitol Hill on March 16: the collapse of Silicon Valley Bank (SVB) and Mexico’s biotech corn ban. New details emerged during the hearings to address them.
Earlier this week, companies reported they had no problem obtaining needed funds after the U.S. government intervened to protect depositors following the collapse of SVB, the bank of the choice for nearly half of U.S. biotech and life sciences companies.
Biotech startups need a new bank
Treasury Secretary Janet Yellen reassured the Senate Finance Committee yesterday that “the Federal Reserve is providing additional support to the banking system with the new lending facility. This will help financial institutions meet the needs of all of their depositors.”
“I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them,” she underscored.
Secretary Yellen, however, noted during the hearing that “shareholders and debt holders are not being protected by the government.”
Although U.S. regulators stepped in to guarantee that all deposits in SVB would be safe, things are still far from normal for both bank’s client companies and, above all, their investors.
This is especially important for early-stage biotech firms that often operate for years without revenue given the time and funds required to develop a drug, so they depend heavily on startup friendly banks for lines of credit to continue their research and development.
Up until now, SVB was their “best friend,” but the government still hasn’t found a buyer for SVB and no other alternative has emerged for these startups’ finances. Also, as BiopharmaDive underscored, “biotechs with lines of credit from SVB could still be in a tough spot [as] they aren’t allowed to draw on revolving loans while the government is running the ‘bridge bank’ it created to hold SVB’s assets.”
Safety of the biotech products to dominate talks with Mexico
The second hearing was focused on an issue the Biotechnology Innovation Organization (BIO) has long called for: the technical consultations over Mexico’s biotech corn ban between the U.S. and Mexico that the U.S. Trade Representative (USTR) requested under the U.S.- Mexico- Canada Agreement (USMCA) on March 6.
During the Senate Agriculture hearing yesterday, updates were requested with regard to the timeframe of the consultations as well as the specific items the Biden administration will be pressing Mexico on. Agriculture Secretary Tom Vilsack pointed out during the hearing that the safety of biotech products will be the focus of consultations.
“At the crux of [the President of Mexico’s] decree is this issue of safety, and we have to overcome that concern.”
“This is fundamental to our whole approach to trade,” he continued. “If it’s not science-based, if you can inject culture, if you can inject non-scientific factors into trade discussions, you will have a very difficult time having global trade.”
Vilsak stressed that the issue of safety was raised repeatedly by the President of Mexico during the preliminary conversations, but that the U.S. trade representatives tried to reassure him, citing “literally hundreds of studies on this.”