as Funding Squeeze Drags On
The biotech
(EQRX) announced
to lay off more than half of its 300 employees, abandoning the idea of developing low-cost alternatives to blockbuster medicines on which it was founded. On Tuesday morning, the Covid-19 vaccine developer
(NVAX) said it
to cut a quarter of its staff.
Those job losses are just the latest in a long list of layoffs to hit the sector this year. Recent entries on the list include a 25% head count
at
(SELB) in early May, a 27%
to
’s (SGMO) U.S. staff in April, and a layoff of 60% of the San Francisco-based workforce of
(NKTR), also
in April.
The problem is that the 50% drop in the XBI since early 2021 is making it hard for biotech companies to raise enough money to keep funding their drug- development programs.
Biotech companies that lack near-term data to excite investors, or a big-ticket business development deal with big pharma partners, have few options.
With interest rates high, meanwhile, investors have little appetite for speculative bets like early-stage biotechs. Higher interest rates reduce the current, discounted value of earnings that are expected to roll in years from now.
