The 2012 Biotech Graveyard
This is the fourth installment of our "Graveyard Report" of company failures, and we're happy to report that biotech's boneyard has seen relatively little activity over the past year.
Someone recently told me that biotechs never die. And, in some cases, there's a degree of truth to this starry-eyed statement. For example, our Graveyard report in 2009 covered the demise of Biopure. The infamous blood substitute developer kicked the bucket after an SEC lawsuit and an ugly mess involving one of its executives who faked having cancer to avoid charges. Yet Hemopure, the fallen company's blood substitute, appears to live on today under the ownership of an outfit called OPK Biotech.
Fewer biotech outfits closed their doors this year than all previous years we've done the Graveyard report. Over the past 12 months we covered only 5 companies that seem to have crashed and burned, compared with 8 companies in last year's report, 8 failed outfits in the 2010 feature and 16 luckless ventures in our debut report in 2009. As readers may recall, 2009 was a nightmarish time for the industry and most of the economy.
While we're seeing fewer companies perish, there are a bunch of drug developers that have reduced their staffs after setbacks and exist today as downscaled operations. Yet two such companies, including Anchor Therapeutics (a 2010 Fierce 15 company) and Link Medicine, have both landed deals with drugmakers this year, Kyowa Hakko Kirin and AstraZeneca ($AZN), respectively, that offer the potential for their technologies to prosper elsewhere. And calling Anchor and Link "dead" might be a mistake at this point.
We're also excluding companies sold off for upfront sums that are less than the amount of venture money invested in them, which is an unglamorous end. This includes Virdante Pharmaceuticals, which sold off its sialic switch assets to Momenta ($MNTA) for $4.5 million in upfront money in December, fetching a fraction of the $48 million committed by investors in the startup's Series A round of financing. (But word is that Virdante actually burned through way less than $48 million.)
The odds are long that Virdante's investors will collect all of the potential $51.5 million in payments included in the deal from Momenta. But biotech is all about beating the odds, so we've spared Virdante from our Graveyard list. We've also excluded Nutra Pharma, the Florida provider of the over-the-counter pain med Nyloxin, even though its creditors this summer pushed to liquidate the company, according to a report in late August. Nutra touted a new distribution deal just last month.
Several operations on our radar have kept kicking after filing for bankruptcies. After filing for bankruptcy protection early this year, the troubled CRO company Cetero Research, which the FDA had slammed for years of misconduct, emerged in June with a new CEO, James Carlson, and name, PRACS Institute. Also, K-V Pharmaceutical ($KV-A) in August filed for Chapter 11 as the drugmaker works on restructuring.
Below is a list of companies that have at the very least taken a step toward the grave in a voluntary move to liquidate or to shut its doors. That said, in certain cases, their operations or, more likely, assets could rise into action at a later date. (Let me know via email whether we missed any that should be noted as perished operations for this year's Graveyard list.) -- Ryan McBride (email | Twitter)