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Boston Biotech goes on life support May 2, 2009

Posted by HubTechInsider in Biotech, Venture Capital.
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biotechFor Boston’s high-risk, cash-intensive biotech industry, it’s now-or-never time. Biotech companies have always been notoriously risky. They tend to burn through cash – to develop one drug can cost as much as $1 billion – and operate on a “pre-revenue” basis for years. Now the credit crunch is hitting the lab-coat crowd harder than most. For private outfits venture money is drying up on one end, and on the other there’s no easy exit in an IPO; on the publicly traded side, small and midsize listed companies are struggling to find enough funding to stay afloat. Life sciences research firm Burrill & Company says that one-third of publicly traded biotechs have less than six months’ worth of cash left – and he predicts that as many as 100 might go under or be forced to merge this year (10 have filed for bankruptcy since November). While that’s bad news for some companies, other companies may benefit from the available assets and skilled staff of these Boston biotech firms should they prove unable to bring their promising new drugs to market.

Oscient Pharmaceuticals, a Waltham, MA company working on drugs for high blood cholesterol and chronic bronchitis, and financed by Orbimed Advisors and Paul Capital Partners, has asked Broadpoint Capital to explore a possible sale after auditors warned the 213-employee company of an impending cash shortage.

Altus Pharmaceuticals, a Cambridgeport, MA company working on drugs for gastrointestinal and metabolic disorders, and funded by U.S. Venture Partners and Warburg Pincus, has pulled the plug on its drug for cystic fibrosis and cut more than 100 jobs. One of Altus’ VC board members resigned abruptly in April.

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