This Biotech Exec Can't Buy A BreakJoan O'C. Hamilton
Most biotech executives complain that stingy capital markets don't appreciate the vast promise inside their labs. Synergen CEO Gregory Abbott has the opposite problem: He has a $135 million pile of cash but nowhere to spend it. On July 18, Synergen announced that it was deep-sixing work on its flagship drug, Antril, which was being developed to treat septic shock. Abbott made his decision after a second major study showed the drug just didn't work.
Wall Street analysts are dubious about other products in Synergen's pipeline, too, and in just one day the market halved the stock's value, to 4.37. That's quite a comedown from the 70s that Synergen was trading at just a couple of years ago. Abbott, whose company has been burning cash at the rate of $20 million per quarter, says he will reduce Synergen's 600-plus workforce by more than 50%, and he may also shop around for a buyer. Whatever else happens, the woes at Synergen are likely to spook bio-investors, who are already a wary lot. Indeed, biotech stocks are so depressed that, with $135 million in hand, Abbott might even be able to buy a competitor or two.