Biotech Survival Index 2: Boston Life Sciences Companies Squirrel Away More Cash for Long Winter
When I last crunched the numbers on the financial health of the Boston area’s public life sciences companies, back in November, I noted that 15 of them had more than $100 million stockpiled. These firms, I reasoned, were likely in a decent position to weather the economic storm. Now with quarterly financial reporting through December now in the books for most of the firms in the sector, I came to a surprising conclusion. There are now even more companies, 19, in that position of relative financial strength. Infinity Pharmaceuticals, Momenta Pharmaceuticals, Hologic, and Bruker are all newcomers to the $100 million club as of December 31.
Then again, in my review of the new numbers I also spotted 16 companies that likely had less than $50 million in the bank at year’s end (I say “likely” because three haven’t reported their numbers). That sign of thin reserves suggests those companies will face tough choices ahead.
Here’s the full rundown, in alphabetical order, of the 44 Boston-area life sciences companies for which I tracked down end-of-year financial figures.
—Abiomed (NASDAQ: ABMD). The Danvers, MA-based medical device company had $63.8 million in cash and investments at the end of December, and a $7.7 million net loss in the quarter. That’s more cash than it had socked away at the end of September—$50.6 million.
—Acusphere (OTCBB: ACUS). This biotech company has cut about two-thirds of its workforce, or 40 jobs, and consolidated all its facilities in a manufacturing plant in Tewksbury, MA. It has avoided making a formal financial report to the SEC, although it says the cuts will help it stretch its cash into the third quarter of 2009, which it hopes will buy enough time to come up with “financing alternatives.” The stock is down to 3 cents. Acusphere is a newcomer to the list, which I overlooked last time.
—Alkermes (NASDAQ: ALKS). This Cambridge, MA-based company has maneuvered itself into position of financial strength, with $423 million in cash and investments at the end of the year, and with a $112.3 million profit in the quarter. As I mentioned last month, Alkermes has potential for revenue growth this year if Eli Lilly and Amylin Pharmaceuticals win FDA approval for once-weekly exenatide for diabetes, which is based partly on a technology license from the Massachusetts firm.
—Alnylam Pharmaceuticals (NASDAQ: ALNY). This Cambridge, MA-based biotech company doesn’t have to worry about cash, with $512.7 million at the end of 2008, and a relatively skinny net loss in the quarter of $9.4 million. It expects to burn through no more than $77 million of its cash this year, ending 2009 with more than $435 million. Indeed, rather than fretting over finances, CEO John Maraganore is thinking about how to prioritize opportunities, as he told me last month.
—Altus Pharmaceuticals (NASDAQ: ALTU). Alarm bells must be going off at Waltham, MA-based Altus. This company used almost $90 million of its cash reserves in 2008, and closed the year with $48.6 million left in the bank. Even after cutting 107 jobs, or three-fourths of its workforce, Altus still expects to spend $50 million to $60 million for operations this year. It says it has enough cash to run “into the fourth quarter” and that it will try to raise more capital in the next three to six months.
—Antigenics (NASDAQ: AGEN). This Lexington, MA-based developer of an immune-boosting treatment for cancer, spent about $32 million on operations in 2008, and closed the year with $34 million left. The company cut one-fifth of its workforce in February, and eliminated cash bonuses and its 401k match program to conserve cash.
—Ariad Pharmaceuticals (NASDAQ: ARIA). This Cambridge, MA-based developer of cancer drugs burned through $48.5 million in cash in 2008, and closed the year with $39.1 million. It says it is tightening its belt this year, expecting to spend $20 million to $24 million of its cash in 2009. The company raised an additional $24.3 million from investors last month.
—AMAG Pharmaceuticals (NASDAQ: AMAG). This Lexington, MA-based company is still awaiting word from the FDA on whether it can get approval to sell its treatment for anemia in patients with kidney disease. But it doesn’t appear in immediate jeopardy of running out of money. It reported a net loss of $71.6 million last year, and had $215 million in cash heading into 2009.
—ArQule (NASDAQ: ARQL). This Woburn, MA-based cancer drug developer reported a net loss of $50.8 million last year, but not to worry, it had socked away $206 million in cash and marketable securities at the end of December. That ought to be enough to run the company for three years, the company says.
—Biogen Idec (NASDAQ: BIIB). The world’s largest maker of multiple sclerosis drugs, Cambridge, MA-based Biogen is seriously loading up for a rainy day, building its cash reserves up from $979 million at the end of 2007 to $1.34 billion at the end of 2008.
—Boston Scientific (NYSE: BSX). The Natick, MA-based medical device maker has had it troubles, but cash isn’t one of them. It had a $1.64 billion stockpile heading into this year, compared with $1.45 billion a year ago.
—Bruker (NASDAQ: BRKR). The Billerica, MA-based maker of scientific instruments is profitable, so there’s no great reason to tap cash reserves to fund operations. But its cash balance has dropped to $167.7 million heading into this year, down from $344.6 million a year ago.
—Caliper Life Sciences (NASDAQ: CALP). The Hopkinton, MA-based maker of scientific instruments reported $26.7 million in cash heading into this year, after reporting a net loss of $68 million in 2008. So earlier this month, it got an amended line of $25 million in credit from Silicon Valley Bank. Caliper says it has reduced its annual spending rate by $10 million.
—Celldex Therapeutics (NASDAQ: CLDX). The Needham, MA-based company had $44.3 million in cash heading into this year, which ought to be enough to finance operations through 2010, the company says. Last year’s comparable data is misleading because that was before the company acquired Avant Immunotherapeutics.
—Charles River Laboratories (NYSE: CRL). The Wilmington, MA-based maker of lab supplies maintained a pretty steady position on its balance sheet. The company had $243.6 million in cash and investments at the end of December, up slightly from $225.5 million a year ago.
—Clinical Data (NASDAQ: CLDA). This Newton, MA-based company just fattened up its cash reserves by raising $50 million in convertible debt. That will look like a savvy move if the company’s depression drug wins FDA approval and goes on to be a big seller, driving the stock up enough that the debt converts to shares, and doesn’t have to be repaid. But if the drug stumbles, Clinical Data will have to pay back the whole debt plus interest, which is why convertible debt has been known to strangle many a biotech company. Clinical Data wasn’t in a great position to argue for more favorable terms, though. It had just $25.7 million in cash heading into this year, and a net loss of $23.7 million in the quarter ended Dec. 31.
—CombinatoRx (NASDAQ: CRXX). The Cambridge, MA-based biotech has cut two-thirds of its workforce since its lead drug candidate failed in a clinical trial for osteoarthritis last fall. The company reported $51 million in cash left heading into this year, down from $112.6 million a year earlier. It is aiming to watch its remaining pennies carefully, keeping its cash spending rate down to $5 million to $10 million a year to keep the company running into 2012.
—Cubist Pharmaceuticals (NASDAQ: CBST). The Lexington, MA-based antibiotic maker reported $418 million in cash and investments heading into this year, and was coming off a profitable quarter. It had $398 million in cash and investments a year earlier.
—Curis (NASDAQ: CRIS). This Cambridge, MA-based cancer drug developer had $28.9 million in cash and investments heading into 2009, and had a net loss of $12.1 million during the past year. It recently got a $6 million milestone payment from Genentech, which, combined with reserves, ought to keep the company running into mid-2010.
—Dyax (NASDAQ: DYAX). This Cambridge, MA-based company had $58.5 million in cash and investments heading into this year, The company had a net loss of $66.4 million in 2008, so its stockpile essentially amounts to one year’s worth of operating cash. The company says it has enough money to operate “through 2009.”
—Epix Pharmaceuticals (NASDAQ: EPIX). This Lexington, MA-based company was unusually candid about its precarious finances. “Our key priority is improving the financial health of EPIX,” said CEO Elkan Gamzu in a statement last week. The company entered this year with $24.6 million in cash and investments, down from $61.1 million a year earlier. And it has a whopping $100 million in convertible debt on its books—to understand why that can be bad, see the entry on Newton, MA-based Clinical Data.
—Exact Sciences (NASDAQ: EXAS). The Marlborough, MA-based maker of a stool-based diagnostic test for colorectal cancer fought off a hostile takeover from San Diego-based Sequenom in January. The company, in a vulnerable position with its stock at less than $1, sold some intellectual property and 3 million shares to Genzyme for $24.5 million. It still hasn’t reported its fourth-quarter finances to the SEC.
—Genzyme (NASDAQ: GENZ). This Cambridge, MA-based company shaved 12 cents off its forecasted earnings per share this year after it failed to win approval from the FDA to make its Pompe disease treatment, alglucosidase alfa (branded in different contexts as Myozyme and Lumizyme), in 2,000 liter vats. The company isn’t hurting for cash, reporting $973 million on its balance sheet heading into 2009, although that’s down significantly from $1.46 billion a year earlier.
—GTC Biotherapeutics (NASDAQ: GTCB). The Framingham, MA-based company had a breakthrough last month when it became the first company to win FDA approval of a drug manufactured in genetically modified animals. But the company isn’t exactly flush. It entered this year with $11.6 million in cash and investments. It expects to spend $18 million to $22 million this year, so obviously it will need to raise more money to get through the year. (I overlooked GTC on the list in November.)
—Hologic (NASDAQ: HOLX). The Bedford, MA-based company, which makes diagnostics for women’s health, has been fattening up its cash reserves. The company had $171.5 million in the bank at the end of December, up from $95.7 million at the end of September.
—Idenix Pharmaceuticals (NASDAQ: IDIX). The Cambridge, MA-based company, a developer of drugs for infectious diseases like hepatitis C, reported $41.6 million in cash entering this year. That’s down from $48.2 million a year ago. The company says it has enough money to run at least another 12 months.
—ImmunoGen (NASDAQ: IMGN). This Waltham, MA-based company has gotten some momentum this year as its partner, Genentech, advances a more potent version of the breast cancer drug trastuzumab (Herceptin) into pivotal clinical trials. Yet the company still has to be careful because it only had $45.9 million in cash heading into this year, and it currently has about a year’s worth of cash on hand, CEO Dan Junius says.
—Indevus Pharmaceuticals (NASDAQ: IDEV). This Lexington, MA-based company agreed to be acquired by Endo Pharmaceuticals in January for $370 million, or $4.50 a share in cash. Endo has extended the offering period to shareholders until 5 pm Eastern time on March 18.
—Infinity Pharmaceuticals (NASDAQ: INFI). This Cambridge, MA-based developer of cancer drugs firmed up its balance sheet last fall through a partnership with Purdue Pharma. Infinity had $127 million in cash and investments heading into this year, and expects to end 2009 with between $122 million to $132 million, without counting what it can draw from a $50 million line of credit from Purdue Pharma.
—Inverness Medical Innovations (NYSE: IMA). This Waltham, MA-based diagnostics maker is sitting on a rapidly shrinking pile of cash, with $141 million on its books heading into this year, compared with $414.7 million a year ago. The company had a net loss of $35.7 million in 2008. The company has made some notable acquisitions with its cash in the past, including the May purchase of Marieta, GA-based Matria Healthcare for $143.9 million, plus stoc
—Molecular Insight Pharmaceuticals (NASDAQ: MIPI). This Cambridge, MA-based biotech company had $119 million in cash and investments heading into this year, up from $99.7 million a year ago. The company says it cut its cash spending rate by 10 to 20 percent for this year and 2010, which it says “provide us with the financial resources necessary to carry out our near-term development plans.”
—Momenta Pharmaceuticals (NASDAQ: MNTA). The Cambridge, MA-based company, which specializes in analyzing and engineering complex drug molecules, had $108.5 million in cash and investments heading into 2009, compared with $135.9 million a year ago.
—NitroMed (NASDAQ: NTMD). This Lexington, MA-based company agreed to be acquired by Deerfield Management in January for about 80 cents a share, or about a $36.8 million valuation. That meant it bailed out of previous agreements to merge with Cambridge, MA-based Archemix and sell its BiDil heart drug to JHP Pharmaceuticals.
—Panacos Pharmaceuticals (NASDAQ: PANC). This Watertown, MA-based biotech company has run so low on cash that it voluntarily chose to de-list its stock from the NASDAQ in February to save money. It hasn’t reported its fourth-quarter financial status to the SEC, but in a statement, the company said its “ability to continue operations into the second quarter of 2009 is in doubt.” (I overlooked Panacos last time).
—Parexel (NASDAQ: PRXL). The Waltham, MA-based clinical trial services company reported $63.8 million in cash heading into this year, compared with $51.9 million six months ago. It had a $5.2 million profit in the quarter ended Dec. 31.
—PerkinElmer (NYSE: PKI). This Waltham, MA-based maker of scientific instruments got whacked by Wall Street, to a 5-year low, after it said it forecasted revenues would decline in 2009. But the company is profitable, and still had $179 million in cash heading into 2009, although that’s down a bit from $203.3 million a year ago. CEO Rob Friel told me he may use that cash to buy up some companies or technologies on the cheap.
—RXi Pharmaceuticals (NASDAQ: RXII). This Worcester, MA-based developer of dugs based on RNA interference, or RNAi, hasn’t yet filed its fourth quarter financial report. But last month it reached a deal to offer new shares to YA Global Investments for as much as $25 million over the next two years.
—Sepracor (NASDAQ: SEPR). The Marlborough, MA-based maker of the sleep drug eszopiclone (Lunesta) had stockpiled $765 million in cash heading into this year, although that’s down from $1.06 billion it had a year earlier.
—Synta Pharmaceuticals (NASDAQ: SNTA). The Lexington, MA-based developer of cancer drugs suffered a catastrophic failure last month when it halted a Phase III clinical trial of its melanoma drug, elesclomol, after researchers saw an increased risk of death in patients on the drug. The company cut 90 jobs, about 41 percent of its workforce after the failure. It had about $65 million to $70 million in cash left at the end of 2008, CEO Safi Bahcall said last month. I overlooked Synta in last quarter’s Biotech Survival Index.
—Targanta Therapeutics (NASDAQ: TARG). The Cambridge, MA-based company failed to win FDA approval of its lead antibiotic in development last year, and in January it agreed to be acquired by The Medicines Company of Parsippany, NJ for $42 million.
—Thermo Fisher Scientific (NYSE: TMO). The Waltham, MA-based maker of scientific supplies has beefed up its balance sheet, with $1.28 billion in cash heading into this year, about double the $625 million it had a year earlier.
—Vertex Pharmaceuticals (NASDAQ: VRTX). The Cambridge, MA-based company had amassed a cash horde of $832 million heading into this year, and then, riding a wave of demand for its shares, decided to do a secondary stock offering last month that pulled in another $320 million. But it will need the loot. The company expects to spend $500 million to $530 million on R&D this year as it pushes its lead drug, the hepatitis C treatment telaprevir, through the final phase of development needed to win FDA approval.
—Zoll Medical (NASDAQ: ZOLL). The Chelmsford, MA-based medical device company reported $65.9 million in cash and investments heading into this year, down just a smidge from $69.1 million a year earlier. It’s profitable, so it has no need to burn through the reserves.