BridgeBio Pharma is digging in for a prolonged bear market. Since suffering a phase 3 flop late last year, the biotech has taken a series of steps to extend its cash runway, reflecting its CEO’s belief that markets could “stay pretty bad up until the end of next year.”
Neil Kumar, Ph.D., the CEO of BridgeBio, set out his thinking at an investor event early Tuesday morning. Asked about the “tumultuous events of the last several months,” Kumar detailed why he has taken steps to make sure the $633.5 million the company had at the end of March will support its “very, very busy late-stage pipeline” through to 2024.
“When we think about the overall runway that we'd like to have in place, we think these markets could stay pretty bad up until the end of next year, so we want to make sure that we can continue to prosecute the BridgeBio hypothesis in a manner responsible to patients if indeed it's going to be hard to access equity markets,” Kumar said.
Kumar said the cost of capital in biotech in general has gone “quite a bit higher,” and “certainly has gone quite a bit higher” for BridgeBio specifically given the failure of its phase 3 trial in a rare heart condition at the end of last year. Shares in BridgeBio have fallen more than 80% to around $7 since the data drop, driving the company to reconsider its priorities.
BridgeBio has undertaken two rounds of layoffs this year and begun looking for partners for a handful of programs. Kumar used the investor event to discuss how BridgeBio approached the question of which assets to partner.
“Can we afford to do some of the smaller programs that we're working on in the clinic? Given the elevated cost of capital, those NPV started to look considerably lower. It used to be that the marketplace would reward you for pretty good phase 1/2 data in a smaller marketplace. Now, oftentimes, especially at our market cap, you’ve got to take things all the way to revenue flow. You're talking about contrarian bets that take quite a bit of capital, just to see the upside on,” Kumar said.
In recent weeks, BridgeBio has generated $200 million through a licensing deal with Bristol Myers Squibb and the sale of a priority review voucher. The deals, coupled with debt restructuring and cost cutting, have strengthened the biotech’s financial position. The question now is whether the candidates BridgeBio is prioritizing for internal development can deliver positive data and drive the share price back up.