“To the victor belongs the spoils,” goes the saying, but two emerging pharmaceutical companies, Epix Pharmaceuticals and Progenics Pharmaceuticals, show how difficult it is for smaller pharmaceutical companies to live up to that axiom during the financial downturn. Both companies earned a coveted prize in 2008, FDA approval of a new molecular entity (NME), and both have collaboration agreements with Big Pharma. But as is the case with many companies, restructuring and strategies for cash conservation are the order of the day.
Epix Pharmaceuticals, a biopharmaceutical company developing drugs to treat diseases of the central nervous system and lungs, announced this week that it is considering strategic alternatives for the company, including a recapitalization, a sale of some of its assets, a potential merger, or a strategic business combination. In December 2008, Epix received FDA approval for Vasovist (gadofosveset disodium), a contrast agent used in magnetic resonance angiography, and in April 2009 sold the US, Canadian, and Australian rights to the agent as part of a monetization strategy for the product. The company announced in March 2009 a workforce reduction of 50% and a narrowing of its research programs. Epix has development programs with GlaxoSmithKline and Cystic Fibrosis Foundation Therapeutics.
The biopharmaceutical company Progenics gained approval of Relistor (methylnaltrexone bromide), a drug to treat opiod-induced constipation, in April 2008. The drug was developed in collaboration with Wyeth. Progenics announced in March 2009 as result of the global financial downturn, it implemented cost-reduction measures. These measures included a planned 10% reduction of its workforce, a decrease in capital expenditures, and lower bonuses and benefits for its employees.
These companies are not alone in having to come to terms with the continual effects of the economic downturn. A recent analysis by Burrill and Company showed that as of the end of April 2009, 135 US public biotech companies are trading with less than one year of cash, and 42% of these companies have less than six months of cash. Fifty-three percent have a market capitalization of below $100 million, and 100 companies have announced corporate restructuring.
For the moment, the “green shoots” of economic recovery have seemingly yet to take root in the biopharmaceutical industry. It is still uncertain when, and to what degree, investors will again be willing to accept the longer time required to harvest returns from the drug-development pipelines of emerging pharma.