Archive for category: In the News

Christopher Elliott

Special to USA TODAY

April 9, 2024

If you’d told me a few weeks ago that flying cars will change the way we travel, I probably would have laughed at you. 

But when Elon Musk hinted there might be a flying Tesla soon, the internet started buzzing with flying-car news. And now people are talking.

“There’s absolutely a sense that the time has come,” said aviation industry investment banker Joey Smith at Cassel Salpeter & Co. “Numerous well-funded companies are racing to build a viable production vehicle, and they could take to the skies as early as next year.”

Check out Elliott Confidential, the newsletter the travel industry doesn’t want you to read. Each issue is filled with breaking news, deep insights, and exclusive strategies for becoming a better traveler. But don’t tell anyone!

What’s more, attitudes toward Advanced Air Mobility (AAM) – that’s a fancy term for flying cars and other personal flying vehicles – have shifted. A new study suggests Americans, and particularly younger urban consumers, are warming to the idea of flying to their next destination. Even so, the definition of a flying car is a little hard to pin down. I’ll explain in a minute.

Don’t expect to open your apartment window and see a scene out of a sci-fi movie like “Minority Report” anytime soon. (You know, lanes of flying vehicles lining the sky.) It’ll be a slow rollout, but it has the potential to change the way we travel like we haven’t seen since the introduction of the jet engine.

What kind of flying vehicles are out there?

Personal flying vehicles defy simple classification, which may be part of their allure. There are STOLs and VTOLs, quadcopters, octocopters and hexacopters. Some are electric, some are gas-powered. 

Don’t be confused by all the acronyms. I think it’s OK to just call them flying cars.

Right now, the ones generating the most noise are electric vertical takeoff and landing vehicles (eVTOLs). These aircraft take off and land like a helicopter. For example, Joby’s air taxi service in Manhattan plans to use its eVTOL, which looks like an oversized drone, to shuttle passengers from New York to John F. Kennedy International Airport next year.

My categorization is a little unconventional, but here’s how I see it: There are really just two types of flying cars. The first are cars that can drive on the road and fly, just like the ones in “Back to the Future.” 

One of the most high-profile of these is the Model A being developed by Alef Aeronautics. It’s an eVTOL that looks like a sports car. But once it takes off, the passenger cabin pivots and the vehicle flies sideways, which looks a little jarring but very cool.

The second type of flying vehicle doesn’t even bother with the road. For example, the Lilium Jet is a fixed-wing aircraft and an eVTOL. But you won’t see it on the highway unless it’s making an emergency landing – so technically, it’s not a flying car.

Like I said, these flying vehicles aren’t easy to categorize. And it hasn’t really mattered until now because you could find them only in aviation magazines and science fiction movies. But now there are serious discussions about flying cars, and developers have started taking orders. The future is almost here.

Flying cars aren’t cleared for takeoff – yet

Don’t get too excited. A few things still have to be worked out, experts say. For example, eVTOL manufacturers have struggled with several challenges. It’s not just how to design lightweight aircraft made from the right composite materials and with adequate battery life. It’s also piloting the flying car. Issues such as autonomous flight capability and pilot training have proven to be big barriers. 

There are also regulatory roadblocks. The Federal Aviation Administration, which has oversight of these new vehicles, has adopted a “crawl-walk-run” approach. And it’s still in “crawl” mode. Last year, it laid down some rules for flying cars. Among them: They have to use existing heliports and they must have a human pilot. But there are no special traffic lanes in the sky for these vehicles yet.

The U.K. is also preparing for flying cars. In March, the government said it envisioned eVTOLs taking to the skies within four years. 

Observers are skeptical of the proposed timeline. Charles Leocha, president of the consumer group Travelers United, has worked on regulations for low-level unmanned aerial vehicles for the last decade. He said the wheels are turning slowly.

“The FAA is at least a decade away from allowing or approving any kind of flying car,” he said.

All of that has made people reluctant to order a flying car – if they can afford one. Most vehicles can cost $150,000 to as much as $10 million.

“Prospective buyers are likely to hold off until regulatory barriers are dismantled,” said Francesco Cerroni, a mobility expert at the design firm Buro Happold.

Where to find personal flying vehicles now

If you want to see a flying vehicle for yourself, here’s where to find them (outside of the movie theater):

• Lift Aircraft, which manufactures a single-seat eVTOL called Hexa, is offering test flights on its single-seat Hexas this spring. It’s scheduled to be in Lakeland Linder International Airport in Florida in April and Austin in May.
• Early next year, you’ll be able to hail an air taxi from Abu Dhabi and Dubai on a four-passenger Midnight aircraft. The eVTOL, operated by UAE-based Falcon Aviation, will cover the 81-mile trip in just 30 minutes. By road, the drive can take a few hours in traffic.
• There’s even a flying car driving school. Netherlands auto manufacturer PAL-V will show you the ins and outs of flying a car. They even have a flying car showroom in Munich where you can buy your own gyroplane/car combination. (It’ll cost you about $550,000.)

Bottom line: Flying cars remain rare. But change is on the horizon.

How flying cars could change the way we travel

High prices and continued doubts about the viability of zipping around town like George Jetson haven’t stopped people from thinking about the future. Experts seem to agree that safe VTOLs with FAA approval could change travel forever.

“It would reduce congestion by removing some traffic on the road and create a new aviation sector, with new jobs,” said Raj Rajkumar, professor of computer engineering at Carnegie Mellon University.

Flying cars could dramatically cut the drive time between destinations typically served by short-haul commercial flights. So instead of catching a shuttle flight from Washington to New York, you’d just fly there in your own car in a fraction of the time it used to take to drive.

But that’s just the beginning. As these vehicles become faster and more affordable, they hold the promise of competing with commercial aviation. Imagine flying your family car from the suburbs of an East Coast city to Florida for your next vacation in less time than it would take you to go to the airport, get through security, wait for your departure, fly, land, collect your luggage and rent an earthbound car?

The thought of ditching airlines, with their awful customer service and addictive loyalty programs, may be the greatest promise of the AAV revolution.

If you’d asked me a few weeks ago if such a future was possible, I would have been very skeptical. Now, I’m just a little skeptical.

This is the second of a two-part series on the future of air travel.

Christopher Elliott is an author, consumer advocate, and journalist. He founded Elliott Advocacy, a nonprofit organization that helps solve consumer problems. He publishes Elliott Confidential, a travel newsletter, and the Elliott Report, a news site about customer service. If you need help with a consumer problem, you can reach him here or email him at chris@elliott.org.

 

February 13, 2024 11:00 ET | Source: Q.E.P. Co., Inc.

BOCA RATON, Fla., Feb. 13, 2024 (GLOBE NEWSWIRE) — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today announced it has entered into a definitive agreement to sell substantially all of the assets of its operating subsidiaries in Australia and New Zealand (the “ANZ Business”) to QEP Australasia Pty. Ltd. led by Bruce Maclaren and Tony Lei, in a transaction valued at approximately AUD 14.05 million. The transaction is expected to close by the end of the Company’s fiscal year on February 29, 2024, subject to certain closing conditions.

Bruce Maclaren has served as the Managing Director of QEP’s ANZ Business for 20 years including a period of three years as CEO European Operations for QEP based in the UK. Tony Lei has also been involved with QEP for over 20 years as a valued supplier to the ANZ Business and QEP’s other businesses around the world.

QEP’s Board of Directors appointed a Special Committee of independent and disinterested directors, to consider this transaction for approval by the Board of Directors. Cassel Salpeter & Co. LLC, a third party investment banking firm, is serving as financial advisor to the Special Committee for the transaction.

About QEP

Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-in-class flooring installation solutions for commercial and home improvement projects worldwide. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment. QEP sells its products throughout the world to home improvement retail centers, and professional specialty distribution outlets, under brand names including QEP®, LASH®, ROBERTS®, Capitol®, Premix- Marbletite® (PMM), Brutus®, Homelux®, PRCI®, and Tomecanic®.

QEP is headquartered in Boca Raton, Florida with offices in Canada, Europe, Asia, Australia and New Zealand. Please visit our website
at www.qepcorporate.com.

Forward-Looking Statements

All statements contained in this press release, other than statements of historical facts, may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning. Forward-looking statements include, but are not limited to, statements regarding the Company’s business following the sale. Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties, including those listed in the Company’s annual report, as such risk factors may be amended, supplemented or superseded from time to time by other reports and disclosures made by the Company. Forward- looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, manufacturing issues that may arise, patent positions and litigation, among other factors. The forward-looking statements contained in this press release speak only as of the date the statements were made, and the Company does not undertake any obligation to update forward-looking statements, except as required by law.

CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550

By Ana Mulero
Jan. 10, 2024

A total of 41 companies declared bankruptcy in 2023, according to SEC filings, an all-time high. And this is far from the only indicator of the industry’s poor financial conditions. The biotech industry is grappling with its worst bear market in recent memory, marked by challenges in obtaining fresh capital and cost-cutting measures such as layoffs.

In such a dreary funding climate, experts spoke with BioSpace about a paradigm shift in financial strategies, with increased use of royalty financing, spun-out assets and venture debt, among other nontraditional sources of cash.

There is a need to reevaluate conventional deals where companies sell common stock at market price or at a slight discount because “if you don’t and don’t get realistic, you’re going out of business; you’re going to run out of money,” said Ira Leiderman, managing director of healthcare at investment banking firm Cassel Salpeter & Co.

Growth in Royalty Financing

One of the alternatives that companies are increasingly turning to is royalty financing—funding based on future revenue-sharing agreements. Royalty financing looks attractive to companies, generally speaking, because these are non-diluted sources that do not affect their equity value, experts explained to BioSpace. In contrast, venture capital funding, angel investors, IPOs, convertible notes, stock options and warrants, rights offerings and secondary offerings all typically dilute equity.

Royalty financing has “carved out its place in the market,” said Brad Sitko, chief investment officer at XOMA, because “you’re selling economics,” not shares.

Historically, royalty financing has been dominated by three firms—Royalty Pharma, HealthCare Royalty Partners and Blackstone. They made up an average of 70% to 80% of the royalty dollars over the last couple of years, said Cody Powers, a partner and principal of portfolio and pipeline at management consulting services company ZS Associates. But now, more and more companies are adopting royalty financing. “There are more players now, and even more people are trying to get in,” Powers told BioSpace.

There are risks, however. If the company gives up too much upfront in a royalty deal and receives too little of a product’s revenue down the line, it can have serious financial consequences. “But given the choice between developing nothing and developing something, a lot of companies right now are just saying, ‘We’ll just deal with lower profitability,’” said Powers, adding that “it’s hard to imagine” the royalty financing space would not continue growing moving forward.

Ravi Samavedam, chief innovation officer at quality and compliance solutions company Azzur Group, also noted a growing trend among early-phase startups constrained by limited capital: offering future royalties in exchange for a firm’s services. This allows them to conserve funds for scientific endeavors, with the expectation of one day making payments based on the revenue generated by their assets.

Yet Leiderman cautions that licensing deals, including royalty financing, can take too long to help the company stay afloat. “Doing a licensing deal takes six to nine months minimum,” he said. “If you’re relying on that to pay the rent and make payroll, it’s pretty dangerous.” So, in some cases, companies may want to consider other options, he added.

Alternative Funding Strategies

Recent layoffs have depleted companies’ expertise, leading to a trend of transferring less mature programs to other entities through licensing agreements or partnerships, Samavedam told BioSpace. Besides royalty funding, companies can consider mergers and reverse mergers, or sharing the license with another firm to co-market therapies in specific geographic locations.

Another funding option is venture debt. Instead of selling ownership stakes in exchange for capital, companies access non-dilutive financing through VC loans. This, however, can be challenging for biotechs without a clear repayment plan, according to Sitko.

Grant financing is yet another avenue, but its unpredictability make it an unreliable solution for many companies, Sitko said.

Lain Anderson, managing director and partner at strategy consulting firm L.E.K. Consulting, also brought up the hub-and-spoke model, which he called “an emerging trend.” This approach involves dividing a portfolio into distinct entities and fundraising for them separately, he said. It caters to investors who may prefer to invest in specific assets, seeking transparency about the allocation of their funds within the portfolio.

In general, Sitko said the right advice to companies is to use the fishing analogy and have as many lines in the water as possible. “You don’t know what is going to turn over and be the positive financing event you’re seeking and will allow you to continue.”

Keep Valuations Reasonable

Whether pursuing traditional or alternative investments, appropriate company valuations are important, experts told BioSpace. A company’s valuation directly influences the terms on which it can secure funding, and many companies these days make the mistake of overvaluing their worth, said James Cassel, chairman and co-founder of Cassel Salpeter.

“It may be that the seller has to give some consideration to taking earn-outs, milestone payments and other types of structures because what they really need is the buyers coming into the finance process moving forward, and some people are unrealistic about this until it’s too late,” Cassel told BioSpace. “No one has gone out of business from dilution, and it’s better in many cases to keep a smaller part of your company funded than own 100% of your company that goes out of business.”

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on X.

 

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NEWS PROVIDED BY
Bird Global, Inc.
20 Dec, 2023

Bird has sufficient liquidity to meet financial obligations to city partners, vendors, suppliers, and employees during and after the restructuring process, and will operate as usual Agreement has unanimous support of first- and second-lien lenders Apollo Global Management and second-lien lenders to provide $25 million in DIP financing

MIAMI, Dec. 20, 2023 /PRNewswire/ — Bird Global, Inc. (OTCQX: BRDS), (“Bird” or the “Company”) a leader in environmentally friendly electric transportation, today announced its entry into a financial restructuring process aimed at strengthening its balance sheet and better positioning the company for longterm, sustainable growth. Bird will operate as usual during this process, maintaining the same service for its riders and upholding its commitments to partner cities, fleet managers, and employees.

“This announcement represents a significant milestone in Bird’s transformation, which began with the appointment of new leadership early this year,” said Bird Interim CEO Michael Washinushi. “We are making progress toward profitability and aim to accelerate that progress by rightsizing our capital structure through this restructuring. We remain focused on our mission to make cities more livable by using micromobility to reduce car usage, traffic, and carbon emissions.”

During and after the restructuring process, Mr. Washinushi will continue as Interim CEO, supported by Board Chair John Bitove, President Stewart Lyons, and CFO Joseph Prodan. Last week, Harvey L. Tepner joined the Board of Directors as an Independent Director, and Philip Evershed resigned from the Board of Directors.

The Company’s first- and second-lien lenders have also entered into a comprehensive restructuring support agreement (the “RSA”). To implement the RSA, and access $25 million in new debtor-in-possession financing from MidCap Financial, a division of Apollo Global Management, and the company’s existing second-lien lenders, Bird has commenced a voluntary Chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the Southern District of Florida. The Company will use the court-supervised process to facilitate a sale of its assets, and has entered into a “stalking horse” agreement with the Company’s existing lenders, which effectively sets a floor for Bird’s value. The bid is subject to higher and better offers, and is aimed at maximizing value for all stakeholders. Bird expects to complete the sale process in the next 90-120 days.

Bird Canada and Bird Europe (dba as “Bird Rides Europe B.V.”) are not part of the filing and also continue to operate as normal. Since its inception, Bird riders have traveled over 300 million miles globally, offsetting an estimated 90 million pounds of carbon emissions from avoided car trips, and playing a pivotal role in hundreds of cities’ sustainability goals while making alternative transportation convenient, efficient, and fun.

Bird has filed with the Court a series of customary “First Day Motions” to facilitate a smooth transition into bankruptcy. These filings provide for payment of wages and benefits to employees, and make other provisions to enable Bird to continue operating as usual. Bird expects the Court to approve these requests in short order, which are expected to minimize the impact of the restructuring process on its city partners, riders, employees and other key stakeholders.

Additional information related to the proceedings is available at http://dm.epiq11.com/case/birdglobal/info. Stakeholders with questions may contact the Company’s Claims Agent, Epiq, at bird@epiqglobal.com.

BergerSingerman LLP is serving as legal counsel, Cassel Salpeter & Co. is serving as investment banker, Teneo Capital LLC is serving as financial and restructuring advisor, and Epiq Corporate Restructuring, LLC is serving as claims and noticing agent to the Company.

About Bird

Bird, the largest micromobility operator in North America, is an electric vehicle company dedicated to bringing affordable, environmentally friendly transportation solutions such as e-scooters and e-bikes to communities across the world. Bird and Spin’s cleaner, affordable, and on-demand mobility solutions are available in 350 cities, primarily across Canada, the United States, Europe, the Middle East, and Australia. We take a collaborative, community-first approach to micromobility. Bird and Spin partner closely with the cities in which they operate to provide a reliable and affordable transportation option for people who live and work there.

For more information on Bird, visit www.bird.co and for more information on Spin, visit www.spin.app.

Forward-looking Statements

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements other than statements of historical fact contained in this press release including, but not limited to, the anticipated impact on the operation of Bird’s business as a result of the restructuring process, Bird’s business strategy and plans, the anticipated timing of the transactions contemplated by the RSA, Bird’s expectations regarding the bankruptcy proceedings and outcome and timing of related motions filed with the Court. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forwardlooking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Bird and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to risks and uncertainties related to, among other things: the bankruptcy process, the ability of Bird and its subsidiaries to obtain approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Chapter 11 cases; the ability of Bird and its subsidiaries to consummate a sale and plan within the Company’s currently expected timeline or at all; the effects of the Chapter 11 cases, including increased professional costs, on the liquidity, results of operations and businesses of Bird and its subsidiaries; the ability of Bird and its subsidiaries to operate their respective businesses during the pendency of the Chapter 11 cases; the consummation of the transactions contemplated by the restructuring support agreement (“RSA”), including the ability of the parties to negotiate definitive agreements with respect to the matters covered by the term sheets included in the RSA; the occurrence of events that may give rise to a right of any of the parties to terminate the RSA, and the ability of the parties thereto to satisfy the other conditions of the RSA, including satisfying the milestones specified in the RSA; the ability to maintain relationships with Bird’s suppliers, customers, employees and other third parties as a result of, and following the Company’s emergence upon completion of, the Chapter 11 cases, as well as perceptions of the Company’s increased performance and credit risks associated with its constrained liquidity position and capital structure, which reflects a recently increased risk of additional bankruptcy or insolvency proceedings; the possibility that Bird may be unable to achieve its business and strategic goals even if the RSA and sale is successfully consummated; Bird’s ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness; developing, funding and executing Bird’s business plan and ability to continue as a going concern; Bird’s capital structure upon completion of the Chapter 11 cases; the comparability of Bird’s postemergence financial results to its historical results and the projections disclosed in connection with the transactions contemplated by the RSA; and attraction and retention of key personnel in light of the Chapter 11 cases. Other factors may also cause Bird’s actual results to differ materially from those expressed or implied in the forward-looking statements and such factors are discussed in Bird’s filings with the U.S. Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and subsequent reports filed by Bird with the SEC. Copies of Bird’s filings with the SEC may be obtained at the “SEC Filings” section of Bird’s website at www.bird.co or on the SEC’s website at www.sec.gov.

 

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By Ana Mulero
Oct. 11, 2023

Bankruptcy among biotechs is on the rise, with a spike in the number of cases in the past couple of years, highlighting struggles to secure financing and recover financially.

This year has seen a record high 28 biotech bankruptcies so far, SEC filings show. And more will come by year’s end, according to James Cassel, chairman and co-founder of Miami-based investment banking firm Cassel Salpeter & Co., which helps companies through bankruptcy processes. The most recent filing came from Infinity Pharmaceuticals on Sept. 28. The company entered a merger agreement with MEI Pharma in February to advance three clinical oncology candidates, only to have the agreement fail in July, which resulted in Infinity laying off 78% of its workforce and declaring bankruptcy.

Last year saw a total of 20 biotech bankruptcy cases, compared with 2021’s total of nine, which was consistent with historical trends.

Experts who spoke with BioSpace identified some fundamental drivers of the recent uptick, including the economy post-COVID-19, a shift toward data-driven financing activity and inflation rates, among others.

Cody Powers, a partner and principal for portfolio and pipeline at management consulting services company ZS Associates, pointed to the rapid rate of innovation and evolution as another factor. There are thousands of companies in today’s biotech space. In addition to facing so much competition, companies have to develop new technology to address increasingly difficult problems. For example, many problems in cancer are harder to solve than those addressed in the past, and the same goes for an autoimmune disease, among other conditions, Powers told BioSpace. Overall, he explained, biotechs are having to fund more types of programs to get the same number of approvals “compared to what we’re used to.”

To keep the same number of approvals coming, companies “need more dice rolls to get the same number of successes,” Powers said. And each of those
dice rolls requires funding.

Cassel emphasized the impact of interest rates. “As interest rates have risen, the ability to raise capital for biotech companies has become more difficult,” leading to more companies filing for bankruptcy and selling their assets over a lack of liquidity and available capital, Cassel said.

The most recent biotech bankruptcy for which Cassel was retained is that of Athenex, now pending in the Southern District of Texas. Athenex declared\ bankruptcy in May. Other cases include Aceragen, Avadel Specialty Pharmaceuticals, NephroGenex, Sancilio Pharmaceuticals and Statera Biopharma.

The bankruptcy protection allows companies to raise the cash needed to pay off creditors, while generally fending off enforcement action and suspending the statute of limitations to collect.

The trend is new for the biotech world. “Biotech is not a world where people are used to thinking about bankruptcy,” Powers said. This is because “bankruptcy means you can’t pay your debtors, and biotech is not majority debt-financed. Most of biotech is equity financed.” But since the start of COVID-19, companies have been more apt to take on debt, he noted.

“We’ve really never had something like this, but we’re probably going to two years of a consistent downward trend for biotech,” Powers said.

Funds Dry Up

The number of biotech bankruptcies ticked up to 13 in 2020, an increase from the two preceding years, which Powers called “a little surprising.” But his interpretation is that companies were forced to halt clinical trials because of the pandemic, and if they hadn’t raised enough money to see them through this lull and were on the hook for fixed costs, they struggled.

“When the money started to dry up off the back half of 2021, everything started to fall apart,” he added. “By the time 2022 rolled around, even in the first quarter, that’s when the layoff tracker started to tick up, and that was kind of a leading indicator of companies running out of money.”

But “it’s a terrible market to get financing,” Ira Leiderman, managing director of the healthcare practice at Cassel Salpeter & Co., added. “Companies are not getting financed, and they have no choice but to break the glass and push the bankruptcy button.”

Mert Zorlular, president and chief financial officer at Er-Kim, a regional pharmaceutical partner in Europe, has some insight on the situation since Er-Kim monitors the space for opportunities to secure deals with biotechs that can provide assurance of staying afloat.

“As [some] companies cannot viably provide financing through the regular models, we arrive at a situation in which we have numerous companies with many assets with a lot of potential, but no way to finance operations until these assets are commercial,” Zorlular said. “In such an event, the company either winds down operations, sells for scraps, or files for bankruptcy.”

In this situation, some companies resist selling themselves, seeing this as an admission of defeat, Leiderman said. Instead, they may wind up in bankruptcy.

The way Powers sees it, there are two overarching drivers in the scarcity of funds: an outbreak of economic malaise, and increased pragmatism among
biotech investors.

“Investors are much more hard-wired to what is actually generating value as opposed to what just looks innovative,” he said. “By extension, there are a number of parts of biotech that have been disproportionately punished.” He pointed to cell and gene therapies as some examples.

Bankruptcy is “a tool that was not necessarily in management’s and boards’ toolboxes in the biotech industry” before as much as it is now, Leiderman noted. It is a tool, as bankruptcy can allow the company to survive.

But Cassel argued that most companies in the biotech space are using bankruptcy to sell their assets and wind down rather than as a bid for survival. “They need money. They need the capital infusion to finish what they’re doing, so, as a result, what they’re doing is finding new homes for their assets,” Cassel said.

Powers said, “the mentality now is much more cash preservation and survival,” pointing to this year’s many layoffs as evidence. “Everybody is basically trying to give themselves the maximum possible runway in any kind of downside scenario to make bankruptcy the most remote possibility.”

Planning for Every Scenario

Every biotech has a plan to raise money, but they also need a plan to be acquired or merge, Leiderman said. In terms of winding down, if the company has an ongoing trial, he stressed the importance of stopping it in a way that the data are of value to sell.

Leiderman’s biggest recommendation is, “It’s the planning; not the plan.” Powers urged that companies “don’t think like 12 months cash. Think like 36 months . . . or more in cash to stay around as long as possible.”

Despite the current trend, Leiderman and Cassel remain hopeful for the future of biotech financing, in part due to the time and cost savings associated with the use of artificial intelligence in drug discovery and development.

To stay out of bankruptcy, Zorlular recommended that companies avoid conventional business models. “The biotech industry as we know it today never had to operate under a high inflation/high yields kind of environment,” he said. “Companies need creative ways to survive these challenging times.”

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on X.

 

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