The recent drop in the stock market is creating a difficult situation for biotechnology, Biotechnology Innovation Organization (BIO) President and CEO Dr. Michelle McMurry-Heath says in her latest I am BIO Podcast.
“Current market conditions present challenges for companies that need continued infusions of cash to develop products, products that might take decades to reach the marketplace and produce a return,” she said.
“A year ago, many of the companies in the biotech sector were worth 30, 40, or even 50% more than they are today. Now fundamentally, their science hasn’t changed or gotten worse. Fundamentally their programs haven’t failed. Fundamentally many of their programs have moved forward with successful milestones being achieved,” Bill Newell, CEO of Sutro Biopharma, says during the podcast. “And yet the overall sector is down. So even if you are operating and delivering on the clinical development strategy or the pipeline strategy that you have, you’ll find that investors are prepared to pay less today than they were in the past.”
No more ‘roller coaster’
On the bright side, Dr. Lisa Drakeman, a biotech entrepreneur, says there is still more stability than before. “In the early days of the biotech industry in the 90s, the industry really wasn’t proven and the investment climate was much more fragile than it is now. Antibodies were a product that no one believed in and didn’t think could treat anything very successfully,” she said. “They told me that antibodies would never treat solid tumors; of course, we know what happened with that. So when we compare that kind of environment with the current investment landscape, instead of a roller coaster where funding opportunities could disappear overnight, there’s been a really sustained financing opportunity over the past decade. Even though the market isn’t strong right now, I don’t think it’s as delicate as it was.”
