Placeholder Banner

Cash on Hand for 3Q09 - Encouraging Trend

December 16, 2009
With 90% of public US biotech companies reporting for 3Q09, we are seeing a modest reduction in the % of companies with less than 6 months of cash left. Instead of 1 in 4, we are near 1 in 5 companies operating with 6 months of operating cash. The trend is encouraging.

However, as noted in my previous posts, the total number of companies is eroding – we have lost over 2o% of publicly traded  biotech companies. Thus, we must keep in mind that the percentages in the above chart may be attributed, at least in part, to survivorship bias. Rather than interpreting this as "things are improving", it might be better to state that "of the companies that have survived we are reverting back to steady state levels of cash on hand". Since 2005, about 15-20% of companies have operated with only 6 months of operating cash in the bank, relying on upcoming milestone payments, collaboration revenues, or other forms of financing to keep the research going.