Biotech startups in Scandinavia have 460 MEUR at hand – but burn is up – and runway the shortest in 3 years

As the market continues to fluctuate and geopolitical issues continue to impact the economy, it’s important to take a closer look at the state of pre-commercial life science companies. At Sunstone, we assisted companies in our portfolio with listings and refinancing, and we’re often consulted on the topic of PIPEs in Scandinavia.Recent data shows that pre-commercial life science companies currently have 460 MEUR at their disposal but burn rates have increased and runway is at its lowest point in 3 years. Among the 73 companies classified as “Biotech Industry” on the stock exchanges in Copenhagen, Helsinki, Oslo, and Stockholm, we’ve analyzed the last three years of 51 pre-revenue companies with a market cap less than 200 MEUR.

Quarterly reports indicate that while the average cash position increased during 2021, cash reserves are now back to pre-COVID levels. Mid-2021 was undoubtedly positive for these companies, allowing them to strengthen their cash positions without significant dilution to existing shareholders. However, the situation has changed drastically as the market has cooled and retail investors have retreated.

Moving into 2023, it will be interesting to see how many of these companies will need to raise funds to maintain their activities. By combining cash positions with the latest burn rates (from public quarterly reports), we see that the average burn rate has increased since mid-2021 and is now higher than burn rates from Q4-2019 to Q4-2020.

As burn rates have risen and cash positions decreased, the average runway of these 51 listed pre-revenue companies has dropped to just 17 months, the lowest in at least 12 consecutive quarters. Since cost of cash is at a high, it seems prudent to reduce costs to accommodate for the climate – but how much can costs be reduced in companies that are in the midst of lengthy clinical trials?

These are challenging times, and it will be interesting to see how companies and investors navigate the coming quarters.

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