Business struggles, significant debt and legal liabilities put some industry players at particularly high risk of declaring bankruptcy in the near future, including large drugmakers like Teva Pharmaceutical and Bausch Health as well as small biotechs including Clovis Oncology and Puma Biotechnology.
BioPharma Dive analysis identified several troubled biopharma companies that are at highest risk of going bankrupt in the next 12 months.
While rare in the drug industry, bankruptcy filings have ticked up in 2019, driven by growing legal, political and market pressures that could bring more companies to zero.
The metric rates thousands of companies, with a FRISK score of 1 representing the most financially vulnerable. CreditRiskMonitor incorporates risk indicators such as bond agency ratings, stock volatility, financial ratios as well as crowdsourced subscriber data.
The company says FRISK scores have been 96% accurate in predicting bankruptcy. Among drug companies that went bankrupt this year, the company had rated each one at a FRISK score of 1 or 2 beforehand.
Novavax in Trouble
The longtime vaccine developer saw its shares tank this February after the biotech disclosed a Phase 3 study of its RSV vaccine ResVax failed.
The experimental vaccine is the Gaithersburg, Maryland-based company’s lead clinical candidate. While the trial failed to reach the primary endpoint, company executives emphasized other data that showed the vaccine could help prevent some of the consequences of RSV, or respiratory syncytial virus.
Even with the failure, Novavax has vowed to plow ahead. R&D head Greg Glenn told BioPharma Dive then that “the vaccine is not dead” and that he anticipated it moving forward in some fashion.
Novavax is one of many so-called zombie biotechs — businesses that have been able to survive for years or decades despite lacking commercialized medicines and suffering repeat clinical failures.
Since its founding in 1987, Novavax has accumulated a $1.4 billion deficit. Over the past three years, the company averaged more than $200 million in yearly net losses.
Since February’s Phase 3 readout, the stock has dropped about 90%. In May, the biotech performed a one-for-twenty reverse stock split to bolster its share price.
The company had $76 million in cash and equivalents at the end of September, and has posted a net loss of $101 million through the first nine months of 2019.