Hopes and Cures

With Congress knee-deep in legislation to help stimulate the economy and arguing over the budget, things are starting to heat up for Small Business Innovation Research (SBIR) as well. The current credit crunch has made obtaining funding for biomedical research even tougher. Researchers are facing unprecedented challenges. Unfortunately for some in biotech, slow cash flow has started to mean shelving promising new therapies.

Here’s a snapshot of how small biotechnology companies are faring:

• From September 2008 to February 2009, over 28 companies shelved promising drug development programs in a number of therapeutic areas including: Alzheimer’s, Multiple Sclerosis, diabetes and various cancers
• 120 companies (30%) are now trading with less than 6 months of cash on hand. This represents a jump of 90% more companies that have less than 6 months cash on hand vs. 2007.
• By comparison with 2007, funds raised from IPOs in 2008 fell 97% and follow-on/secondary offerings fell 56%.
• More than 80 companies laid off over 5,000 employees in 2008. In 2009 alone, at least 21 small, public biotech companies have laid off over 1,177 employees.

For many companies, SBIR can be key to accessing critical financing, and as Patent Baristas recently noted:

The program is set to currently operating under a continuing resolution (CR) with re-authorization due for re-upping on March 20.  Now, the House and the Senate have reached a compromise on legislation that will amend PL 110-235 (the current CR) to extend the SBIR Program from March 20, 2009 to July 31, 2009. This means that there will be yet another urgent need for re-authorization in just a few months.

On another front, SBIR availability appears to have dodged a bullet after President Barack Obama’s stimulus package lacked support for the SBIR program. The current stimulus bill has a section granting $7.5 billion to the National Institutes of Health to fund research.

We will be keeping track of SBIR here, and also following other trends important for emerging biotech companies. We encourage you to comment, or contact us!