Half of Small Biotechs Have Less Than One Year of Cash Left

The golden years for biotech startups may be nearing an end, according to an analysis by Jeffries & Co. and San Diego’s Xconomy.com. Small biotechs that are publicly traded but not yet profitable are drawing down their cash — and in some cases running out. Amylin, Somaxon, Arena, and Neurocrine are among the bigger names mentioned. This will make them much cheaper for large pharma companies to acquire.

Here’s the headline stat:

About half of the 248 unprofitable biotechs that are publicly traded have less than a year’s worth of cash on hand, according to an October report by Eun Yang, an analyst with Jeffries & Co.

Yikes! Xconomy writer Luke Timmerman then looked at the local shops in biotech hotspot San Diego:

Of the 23 publicly traded companies I analyzed in San Diego just three are what could be called consistently profitable: Invitrogen, Illumina and Genoptix. Of the 23 sampled, just 10 have more than $100 million of cash and investments socked away in the bank.

Here’s the bottom line on the bigger names mentioned up top:

• Amylin Pharmaceuticals: had $806 million in cash at the end of September, and says the cuts should enable it to preserve $80 million in 2009 and turn cash flow positive by the end of 2010.
• Somaxon Pharmaceuticals: had $22.6 million in cash and investments at the end of September, and ran up a net loss of $10.3 million in third quarter.
• Arena Pharmaceuticals: expects to end the year with $115 million in cash on hand after paying off some debt. It reported a net loss of $56.2 million in the third quarter. One worrisome stat: Arena started the year with $398 million in cash and investments.
• Neurocrine Biosciences: had $118.2 million in cash at the end of September, and expects to finish the year with about $100 million, the company said.

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