Biotech Survival Index: Boston Life Sciences Companies Brace for Long, Hard Winter

11/25/08Follow @xconomy

Boston is the biggest center of life sciences in the Xconomy network, and by our analysis, the Bay State’s biotech sector is also the best equipped to survive the economic crisis.

I reached this conclusion by combing through public company filings of more than 70 life sciences companies in Boston, Seattle, and San Diego. For all those companies, I asked the two most important questions about their financial health: How much cash does the company have in the bank, and how fast is it burning through it?

The good news for Boston is that it has a lot of companies with a lot of cash. Of the 40 companies that reported quarterly financial results through the end of September, 15 of them had war chests with more than $100 million. A subset of that group—10 companies—are also quite profitable, including Genzyme, Biogen Idec, and Thermo Fisher Scientific, to name a few. By comparison, San Diego has 10 companies with more than $100 million in reserves, and just three companies that are consistently profitable. Seattle has two companies in the $100 million cash club, and just one profitable operation (Sonosite, the ultrasound device maker).

Of course, there’s plenty of misery and anxiety to go around in Boston, too, as you’ll see below. Here’s a rundown of the 40 companies I analyzed, in alphabetical order. It’s not a comprehensive list, so if you’d like to nominate an operation that was left out, please send us a note at editors@xconomy.com.

Abiomed (NASDAQ: ABMD). The Danvers, MA-based medical device company had $50.6 million in cash and investments at the end of September and a $6.3 million net loss in the third quarter.

Alkermes (NASDAQ: ALKS). This Cambridge, MA-based company burned through about $47 million of its cash in the first nine months, but it still had $425.8 million left at the end of September.

Alnylam Pharmaceuticals (NASDAQ: ALNY). The Cambridge, MA-based developer of RNA interference drugs doesn’t have any products on the market, but it actually has more cash now than it did at the beginning of the year because of partnership deals. Alnylam had $520 million in cash and investments at the end of September, and expects to close the year with more than $500 million.

Altus Pharmaceuticals (NASDAQ: ALTU). This Waltham, MA-based drug developer expects to use $80 million to $90 million in cash for operations in 2008. It had $70.3 million on hand at the end of September.

Antigenics (NASDAQ: AGEN). The Lexington, MA-based company had $40.9 million in cash at the end of September, and a net loss of $11.1 million in the quarter. It has clearance to market its first product, a kidney cancer treatment, in Russia, but it took months longer than expected to get an export license it needed before it could start selling.

Ariad Pharmaceuticals (NASDAQ: ARIA). This Cambridge, MA-based cancer drug developer burned through $36 million in cash and investments in the first nine months of the year. It had $52.7 million left at the end of September.

AMAG Pharmaceuticals (NASDAQ: AMAG). This Lexington, MA-based drug developer had stashed away $241 million in cash and investments at the end of September, while racking up a $23.6 million net loss. It is trying to satisfy the FDA’s questions about its application to market a drug for iron deficiency.

ArQule (NASDAQ: ARQL). This Woburn, MA-based cancer drug developer had $136 million in cash at the end of September, which doesn’t count $75 million more in upfront payments it got from two partnership deals with Japan-based Daiichi Sankyo. Its net loss was $11.1 million in the third quarter.

Biogen Idec (NASDAQ: BIIB). This Cambridge, MA-based company said it had $1.23 billion in cash and investments at the end of September, and another $717 million in what it called “marketable securities.” Even if they’re not really that marketable anymore, Biogen turned a $207 million profit in the third quarter, so cash burn is not a concern.

Boston Scientific (NYSE: BSX). The Natick, MA-based medical device company reported a $62 million net loss in the quarter quarter, but had stashed away $1.7 billion in cash and investments.

Bruker (NASDAQ: BRKR). The Billerica, MA-based maker of scientific instruments generated a $17.8 million profit in the third quarter, and had $87 million in cash at the end of September. It had $72.9 million socked away at the beginning of the year.

Caliper Life Sciences (NASDAQ: CALP). This Hopkinton, MA-based maker of scientific tools started the year with $19.4 million in cash, and had $8.9 million left on the balance sheet at the end of September. It had a net loss of $5.4 million in the third quarter. (Update: Caliper CEO Kevin Hrusovsky sent an e-mail adding that the company generated $18.8 million in cash on Nov. 10 by selling two product lines. “It helps our cash position immensely during the current troubled environment,” he wrote.

Celldex Therapeutics (NASDAQ: CLDX). This Needham, MA-based company had $42.7 million on hand at the end of September, which it says is enough to go into the second half of 2010.

Charles River Laboratories (NYSE: CRL). This Wilmington, MA-based maker maker of research tools had a $44.7 million profit in the third quarter, and $212.9 million in cash and investments on board at the end of September.

Clinical Data (NASDAQ: CLDA). This Newton, MA-based company had $52.1 million in cash at the end of September. It had $54.8 million on hand six months earlier.

CombinatoRx (NASDAQ: CRXX). This Cambridge, MA-based company has been hunkering down since its lead arthritis drug failed in a clinical trial last month. It cut two-thirds of its staff, bringing the payroll down to 55, so it can make its cash last four years. It had $69.5 million in the bank at the end of September.

Cubist Pharmaceuticals (NASDAQ: CBST). The Lexington, MA-based maker of a potent antibiotic is coming off a strong quarter. Its revenues climbed 40 percent, and it had accumulated a cash stockpile of $373 million. It turned a profit of $27.9 million in the quarter, although new competition could be coming soon from Theravance’s telavancin.

Curis (NASDAQ: CRIS). This Cambridge, MA-based company had $29.9 million in cash and investments at the end of September, and expects to spend just $2 million to $4 million of it through December. The company says it has enough cash to operate into the first half of 2010.

Dyax (NASDAQ: DYAX). The Cambridge, MA-based company had $74.5 million in cash and investments at the end of September. That’s enough to operate “well into 2009″ the company says.

Epix Pharmaceuticals (NASDAQ: EPIX).This Lexington, MA-based developer of an Alzheimer’s drug burned through $26 million of its cash in the first nine months, and had $34.5 million left in the bank at the end of September. It cut 23 percent of its staff last month, and has enough cash to run through the first quarter of 2009.

Exact Sciences (NASDAQ: EXAS). This Marlborough, MA-based company said it had enough cash to run through the end of June 2009. It had $6.1 million in cash on hand at the end of September.

Genzyme (NASDAQ: GENZ). The Cambridge, MA-based biotech company had almost $1 billion in cash at the end of September, and $119 million in profit in the quarter. It had another $646 million in long-term and equity investments on its balance sheet, so this company ought to be able to withstand a pretty strong jolt.

Hologic (NASDAQ: HOLX). This Bedford, MA-based medical imaging company had $99 million in cash at the end of September, almost identical to what it started the year with. It acquired Madison, WI-based Third Wave Technologies in the third quarter for $600 million.

Idenix Pharmaceuticals (NASDAQ: IDIX). The Cambridge, MA-based company had $60.1 million in cash and investments, and expects to finish the year with $45 million to $50 million. It started the year with $88 million.

Idera Pharmaceuticals (NASDAQ: IDRA). The Cambridge, MA-based drug developer had $59.1 million in cash and investments at the end of September, enough to run through the end of the first quarter of 2010.

ImmunoGen (NASDAQ: IMGN). This Waltham, MA-based company had $44.6 million in cash at the end of September, and has cut its cash spending rate in half from a year earlier. The company expects to get a milestone payment from its partner, Genentech, in the first half of next year when it starts a Phase III clinical trial of a souped-up version of trastuzumab (Herceptin) that uses ImmunoGen’s technology.

Indevus Pharmaceuticals (NASDAQ: IDEV). This Lexington, MA-based company is reporting third quarter financials today. It had $52.6 million in the bank at the end of June.

Infinity Pharmaceuticals (NASDAQ: INFI). This Cambridge, MA-based cancer drug developer “may never access capital markets again,” said Christopher Raymond, an analyst with Robert W. Baird, in a note to clients last week. That’s because Infinity struck a partnership with Purdue Pharma that brings in $75 million upfront, and fully covers development costs of several drugs in its pipeline. Infinity had $80.8 million in cash and investments at the end of September and a $12.4 million net loss in the quarter.

Inverness Medical Innovations (NASDAQ: IMA). This Waltham, MA-based diagnostics company is sitting on a much smaller cash horde than the beginning of the year. It had $154.2 million in cash at the end of September, compared with $414 million at the beginning of the year.

Molecular Insight Pharmaceuticals (NASDAQ: MIPI). This Cambridge, MA-based company had stockpiled $118.5 million at the end of September, although this figure includes long-term investments. It felt the need to tell investors it has money in U.S. Treasuries, in case anybody’s wondering whether the loot is safe.

Momenta Pharmaceuticals (NASDAQ: MNTA). The Cambridge, MA-based drug developer had $95.4 million in cash and investments, and a $16 million net loss in the quarter.

NitroMed (NASDAQ: NTMD). This Lexington, MA-based company has already taken drastic action, dumping its BiDil heart drug, and agreeing to merge with privately-held Archemix. The merged company will have $50 million to $60 million in cash and presumably better prospects than Nitromed had on its own.

Parexel International (NASDAQ: PRXL). The Waltham, MA-based clinical trial services company had a comfortable $13.6 million third quarter profit and $48.1 million in cash in the bank at the end of September.

Perkin Elmer (NYSE: PKI). This Waltham, MA-based maker of scientific tools turned a $51.9 million third-quarter profit, and had $188.8 million in cash and investments at the end of Septmeber.

RXI Pharmaceuticals (NASDAQ: RXII). This Worcester, MA-based company had $12.7 million in cash and investments at the end of September, and a net loss of $3.5 million in the third quarter. CEO Tod Woolf has gone on record saying he intends to sign a partnership with a pharmaceutical company to help pay his research bills.

Sepracor (NASDAQ: SEPR). This Marlborough, MA-based company, the maker of the sleep drug Lunesta, had more than $1 billion in cash at the beginning of the year, but its stockpile had diminished to $787.4 million at the end of September.

Targanta Therapeutics (NASDAQ: TARG). The Cambridge, MA-based biotech company was stunned this month when an FDA advisory panel said its lead antibiotic shouldn’t be approved for sale. The company had burned through about $46 million in cash during the first nine months, and had $42.6 million left at the end of September.

Thermo Fisher Scientific (NYSE: TMO). This Waltham, MA-based maker of pharmaceutical supplies had stashed away $1.25 billion in cash and investments at the end of September. It reported a profit of $221.5 million in the third quarter, so if anybody’s prepared to weather a downturn, it’s this group.

Vertex Pharmaceuticals (NASDAQ: VRTX). The Cambridge, MA-based drug developer had some great timing this fall. It raised $217 million in a stock offering underwritten by Goldman Sachs, which closed one day before billionaire investor Warren Buffett rescued the storied investment bank with a $5 billion investment on Sept. 23. Still, Vertex is running ambitious clinical trials for its hepatitis C drug, and is burning a lot of cash. It had $920 million in cash and investments at the end of September, and a net loss of $130 million in the quarter.

Zoll Medical (NASDAQ: ZOLL). This Chelmsford, MA-based medical device company is one of the rare birds that had more cash at the end of September than it did at the beginning of the year. It had $69 million at the end of September, and turned a $23.4 million profit in the third quarter.

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