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The drug industry is experiencing one of the longest market downturns it has ever seen, and the effects are now reverberating down to privately held startups, leading to fear and fraught conversations between executives and VCs.

The anxiety is translating into real-world consequences, investors told STAT. Private companies that had been hoping to launch an IPO in a year or two are getting more desperate for financing. Some companies are being told to raise funding at their previous valuation or a lower one — called a flat or down round — in a phenomenon that was virtually unheard of in recent years.


David Kabakoff, executive partner at Sofinnova Investments, said the market is “dramatically more challenging than it was six months ago.”

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