For large, global biopharma companies, unprecedented access to capital has built balance sheet strength and resiliency at a macro level. Companies with diversified therapeutic areas of focus have greater optionality and are able to hedge their strategies and resources. The transformation of operations will unearth new capabilities; collaborations and partnerships will open doors to new opportunities. As the global biopharma industry experiences new and unprecedented growth, bankruptcy filings for large companies in the space may continue to lag behind those in other healthcare sectors.

This growth and transformation trend, however, is not a uniform tide raising all boats. Companies that are unable to compete, are challenged by regulatory risks, or whose products fail to attract investor appetite could quickly face the prospect of insolvency. Smaller, venture-backed biopharma companies or specialty pharma companies in the middle market often have fewer layers of insulation and more narrow therapeutic portfolios. They often have tighter liquidity reserves and shorter operating runways and thus rely on subsequent rounds of funding to continue their pre-clinical and clinical research to reach commercialization. With later-phase trials potentially costing tens of millions of dollars, each step has a high economic hurdle. The simple stretch of a company’s operating plan or emergence of investor fatigue could be enough of a trigger to thrust such a business toward the zone of insolvency.

In such situations, maximizing value and minimizing risk are key. To that end, the preservation and reconstitution of the company’s intellectual property is often the most important lever to retain value.