The Northwest Biotech Survival Index 2: Companies Scraping By in Downturn

3/25/09Follow @xconomy

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It released impressive data on its “empowered antibody” for Hodgkin’s disease at a medical meeting in December, and has now, for the first time in its 10-year history, entered the ultimate proving ground in drug development—Phase III clinical trials. Seattle Genetics has the money to do this on its own, without giving away too much ownership to a partner. It had $160.7 million in cash as of December 31, meaning it burned through $27 million in the last three months of the year. But then it opened eyes around the industry in January, when it raised a fresh $55.8 million in a secondary stock offering, the first time that had been done in the industry since August. The company now expects to spend about $80 million to $90 million of its cash this year, and end 2009 relatively flush with $120 million in the bank.

SonoSite (NASDAQ: SONO). The Bothell, WA-based maker of portable ultrasound machines is consistently profitable, so it doesn’t need to tap its cash reserves to make payroll. The company had $279.7 million in cash heading into this year, but also had $144.7 million in long-term debt. That gives it a cushion of about $135 million in liquid assets. It’s cutting expenses by 5 percent this year to offset the slowdown in spending by U.S. hospitals, although it still expects to boost its revenues by 5 percent to 10 percent this year.

Targeted Genetics (NASDAQ: TGEN). This Seattle-based gene therapy company has been very quiet since founder and CEO H. Stewart Parker left in November. It had $9.2 million left in the bank at the end of September, which it said at that time was only enough money to run the business into the first quarter of 2009. Earlier this month, it handed off its manufacturing capabilities to contract manufacturers, and renegotiated its partnership with La Jolla, CA-based Celladon to give that company expanded right to make its AAV vector technology for treating heart failure. These moves apparently bought the company a couple more months, even though we don’t know for sure, because it still hasn’t released its fourth-quarter financial statement. Targeted says it has enough cash to keep operating “through the first half of 2009.”

Trubion Pharmaceuticals (NASDAQ: TRBN). This Seattle-based company burned through a little more than $25 million of its cash during 2008, and entered this year with $52.9 million on the books. It expects to use up $30 million to $35 million of its cash this year, and in order to keep from running too dangerously low, it cut expenses last month, laying off one-fourth of its workforce. The company got an additional headache in January when Pfizer bid $68 billion to take over its partner, Wyeth, meaning that top management at those companies will be more than a little distracted this year.

ZymoGenetics (NASDAQ: ZGEN). Seattle-based ZymoGenetics has done more than any local company to reverse its fortunes so far in 2009. Zymo went into the quarter needing a boost—it had just $81.1 million in cash left at the end of September, and was burning through it at a rate of $28.8 million per quarter. After tapping a line of credit with Deerfield Management, it had $89.9 million in the bank by the beginning of the year. Then during the JP Morgan Healthcare Conference in mid-January, things turned around. Less than a month into his tenure as CEO, Doug Williams inked a deal with Bristol-Myers Squibb that transformed the company’s balance sheet by bringing in $105 million in cash this quarter. The deal is expected to generate more than $200 million total for ZymoGenetics in 2009, providing some breathing room and a few quarters of positive cash flow. Still, all is not well. ZymoGenetics is struggling to pump life into its lone marketed product, recombinant thrombin for surgical bleeding. Williams suggested in his presentation last week at Invest Northwest that cost cuts could be on the way.

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