Some newly public biotech companies are trading below cash. Is it as bad as it looks?

More than one in four biotechs that went public in 2020 are trading below cash, according to a new STAT analysis of data from the financial database provider Sentieo.

The indicator — which means a company has more cash on hand than its overall public valuation — seems like further, glaring evidence that too many biotechs raced to market in 2020, a favorite hypothesis among investors whose life science portfolios have plummeted this year.

“For a company to trade below cash is like the investing equivalent of having a very bad credit score. It is a sign that investors believe you are headed towards trouble and are at a risk of being unable to create any value for your investors,” said investor Brad Loncar.

STAT+ Exclusive Story

Already have an account? Log in

This article is exclusive to STAT+ subscribers

Unlock this article — plus daily coverage and analysis of the biotech sector — by subscribing to STAT+.

Already have an account? Log in

Individual plans

Group plans

Monthly

$39

Totals $468 per year

$39/month Get Started

Totals $468 per year

Starter

$20

for 3 months, then $399/year

$20 for 3 months Get Started

Then $399/year

Annual

$399

Save 15%

$399/year Get Started

Save 15%

11+ Users

Custom

Savings start at 25%!

Request A Quote Request A Quote

Savings start at 25%!

2-10 Users

$300

Annually per user

$300/year Get Started

$300 Annually per user

View All Plans

To read the rest of this story subscribe to STAT+.

Subscribe

Log In