Bloomberg has reported that Biotech executives are in more pain as global uncertainty adds pressure to the already down-knocked industry.
Biotech Stocks Facing “Category 5” Hurricane, Stocks Falling by Up to 90%
Downturn in the biotech industry commenced long before the Russia-Ukraine war, and the current high inflation became the common news piece. The downturn of the industry stocks started accelerating late in 2021 and continued into this year. Few firms have been spared.
Most of the firms are coming to the terms with the fact that the situation is likely to get worse. During the BIO International Convention in San Diego last week, which was attended by more than 1000 scientists, executives, and investors, the issue of the harsh market was brought to the fore.
“Everybody right now is kind of holding their breath to see what’s next,” Joe Panetta, chief executive officer of the trade and lobbying group Biocom California, expressed.
Another executive, Mark Lappe, CEO of Inhibrx Inc., a San Diego-area biotech developing drugs for orphan diseases and cancer, likened the biotech business environment to a sort of Hurricane, a sort of Category 3 Hurricane.
“Then starting in January up to now, we went Category 5,” Lappe said when replying to queries in an interview. “It’s just been indiscriminate across everything in development-stage biotech,” he added. One example of the impact is the shares of Inhibrx, which have dropped by 80% this year.
Biotech Companies Already Laying Off Staff, Situation Likely to Worsen
If the tough market continues for another year, there is a danger of fundamental damage to research and drug development. Already, companies are narrowing their work and focusing only on the most pressing programs.
For firms with poor R&D news, the downturn simply added gasoline to a fast-spreading fire. For example, BridgeBio Pharma In., which ran an experimental therapy for a genetic heart condition failure last year, has seen its stock nosedive by 90%.
BridgeBio is not the only firm that is experiencing a worsening winter. About 54 more biotech companies have already implemented layoffs in 2022, according to data from BIO. Initial public offerings, venture capital for research-stage companies and follow-on offerings are all down from 2021.
The trend appears to have preceded what is happening in the crypto market, where the prices of most digital assets, led by Bitcoin, have plummeted by a huge margin.
The bigger problem, according to BridgeBio’s Kumar, is that no one knows when the “winter” will stop.