The recent, abrupt collapse of Silicon Valley Bank (SVB) has captivated the attention of not only the general public but pharma and biotech executives as well.
Closed on Friday, SVB is America’s sixteenth-largest bank and became the largest major bank to close since the 2008 financial crisis that sparked the Great Recession.
While the dramatic failure has mostly affected the venture capital business community in California, it has raised concerns about the broader health of the U.S. economy, especially in the banking sector.
In light of the ongoing situation, some biotech companies have rushed to clarify whether or not they have holdings in SVB.
Notably, several healthcare companies issued press releases over the weekend specifying they do not have any deposits, exposure or business relationships with SVB. These companies include Citius Pharmaceuticals, Autolus Therapeutics, Eton Pharmaceuticals, Healthcare Triangle, Northwest Biotherapeutics and MEI Pharma, among others.
Lantern Pharma said it has no exposure to SVB or two other embattled banks: Silvergate Bank and Signature Bank.
However, some companies still have ties to the embattled financial firm, which has prompted action from the Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) as well as the California Department of Financial Protection and Innovation.
In a joint statement Sunday afternoon, the Treasury, Federal Reserve and FDIC said that all insured depositors will have full access to their insured deposits no later than Monday morning.
Zealand Pharma, a Danish biotech, said in a statement Sunday it has approximately DKK 162.6 million ($2.3 million) in cash deposits in SVB. This represents 15% of the company’s total cash, cash equivalents and marketable securities.
Zealand said its deposits are insured up to the $250,000 limit, with its excess cash being uninsured. While the biotech said all uninsured depositors will be paid an advance dividend within the next week and receive a receivership certificate for the remaining amount of uninsured funds, the company does not know the extent of whether it will be able to recover all of its deposits in SVB or the timing of it.
However, in a followup statement Monday morning, Zealand said it expects to recover all of its deposits held at SVB on Monday.
Similarly, in light of the actions taken by the U.S. federal government, Pharming Group N.V. said it expects to have access to $26 million in deposits at SVB and the $19 million in deposits at Silicon Valley Bank UK Limited.
For its part, Agenus, a clinical-stage company, canceled its conference call Monday so its leaders can discuss its minority cash holdings in SVB.
Additionally, Jounce Therapeutics said it holds an operating account with SVB holding funds typically used to pay monthly operating expenses. The balance in that account as of Friday was $2.6 million, representing 1.37% of the company’s total cash, cash equivalents and investments as of the end of Q4 2022. Jounce also has a letter of credit of $1.3 million at SVB, acting as a sort of security deposit to its corporate headquarters facilities lease.
As part of the disclosure, Jounce said on Friday, it opened an additional operating account with TD Bank to fund its ongoing operations and payroll, further noting it doesn’t believe the issues faced by the bank will impact Jounce’s operations or liquidity.
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