The biotechnology sector has faced a spike in bankruptcy filings over the last two years which has begun to carry over into 2025.
In 2024, 13 biotech companies filed for bankruptcy with six companies reorganizing and seven liquidating and going out of business, BioSpace reported. Bankruptcy filings were slightly higher in 2023, with the most recorded filings since 2010 at 14 petitions submitted.
💸💰 Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💸
Both years were almost 100% higher than the next highest year since 2010 with seven bankruptcy filings in 2019.
Related: Popular fast-food chain franchises file for Chapter 11 bankruptcy
Prominent filings in 2024 included Acorda Therapeutics (ACOR) , the Pearl River, N.Y., maker of Parkinson’s disease and multiple-sclerosis therapies, which on April 1 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
Also, biotechnology company Gamida Cell Inc., which develops stem cell treatments for several blood cancers and other disorders that include leukemia and lymphoma, on May 13, 2024, filed a prepackaged Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
Under the prepack, Gamida Cell Ltd. (GMDA) would convert debt owed to funds managed by Highbridge Capital Management into 100% of the company’s equity.
Gamida’s primary product is Omisirge, which is a blood-based cell therapy for blood cancers. It has the potential to be a stem cell donor source for patients with high-risk leukemia and lymphoma who require stem cell transplants and for patients with severe hematologic disorders such as aplastic anemia.
Omega Therapeutics files for Chapter 11 bankruptcy seeking to sell its assets.
Shutterstock
Omega Therapeutics selling assets at auction
Bankruptcy filings have already begun in 2025, as biotechnology firm Omega Therapeutics (OMGA) is seeking approval of bidding procedures for the sale of its assets to an affiliate of its parent Flagship Pioneering in a Section 363 auction.
Related: Distressed iconic food brand files for Chapter 11 bankruptcy
Omega, which filed for Chapter 11 bankruptcy on Feb. 10 with a restructuring support agreement, is heading to a March 12 hearing seeking approval of its bidding procedures that call for its parent affiliate Pioneering Medicines 08-B to be the stalking-horse bidder with a credit bid of $9.92 million in debtor-in-possession financing, a roll-up of about $1.5 million in prepetition debt, assumed liabilities and cure amounts.
More bankruptcy:
Popular breakfast dining chain files for Chapter 11 bankruptcyHuge national car wash chain files Chapter 11 bankruptcyTroubled trucking company files for Chapter 11 bankruptcy
The Cambridge, Mass., biotech firm already won interim approval of debtor-in-possession financing from the Pioneering Medicines affiliate on Feb. 11. The loan will be released in three distributions of $3.93 million, $2.81 million, and $3.07 million.
Omega filed its petition in the U.S. Bankruptcy Court for the District of Delaware after prepetition lender Banc of California declared a default on a loan and on Jan. 13 swept over $14.66 million from the biotech firm’s bank account.
Cash sweep disables biotech firm
The cash sweep left the company with inadequate liquidity to continue operating. It had also been informed by Nasdaq that its stock no longer complied with its minimum bid price requirement of $1 per share, which could lead to delisting.
The company, which was established by Flagship Pioneering in 2017, had been struggling in recent years, reporting losses of $102.7 million in the year ending Dec. 31, 2022, and $97.4 million in the year ending Dec. 31, 2023.
The clinical-stage biotech firm listed $100 million to $500 million in assets and liabilities in its petition.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
