Nov. 21 (Bloomberg) -- The global economic crisis has cut funding for biotechnology companies to the lowest level in a decade, triggering bankruptcies and threatening development of drugs based on biomedical breakthroughs.
In the past month, at least five biotechnology businesses have sought bankruptcy protection, according to company news releases, and others may be heading toward a similar fate. Those at highest risk have experimental compounds moving into costly human research. Peptimmune Inc., a 6-year-old closely held firm, says it’s struggling to pay for clinical trials of its promising multiple sclerosis drug.
The amount raised this year by biotechnology companies fell by $9.7 billion through September, or 54 percent, compared with the same period in 2007, according to Burrill & Co., a life sciences investment bank in San Francisco. That may mean work on dozens of potential treatments will stall or die as companies fire workers and shelve early research projects, industry executives and investors said.
“For the first time in the history of the biotech industry, you’re going to see unprecedented levels of bankruptcies and dissolutions,” said David Strupp, managing director in the life sciences group at Canaccord Adams, a research and investment bank in New York. “This all will play out in the next six to nine months.”

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“If the multiple sclerosis program doesn’t do well, it will be very difficult for this company to raise money,” Mathers said.
Peptimmune, with no products on the market, has raised and spent about $85 million. Biotech companies without products on the market, or those unable to access equity markets by selling shares, are the ones in most need of cash to fund clinical studies, investors and company executives said.
“We’re at a stage that a lot of companies are in, where it’s time to raise money but there’s no clinical data and you’re not a brand new company coming out of academia,” Andrews said. “I suspect there will be a number of companies that will go down this path.”

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