Dozens of biotech firms face funding barriers

Trump administration cuts across federal health agencies have sent shivers through a biotech industry already struggling through a prolonged downturn, increasing concerns they will have a harder time getting products approved, investors, company executives and analysts said.

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Mass firings at the US Food and Drug Administration are particularly risky for small- and mid-cap biotech companies that have innovative treatments in clinical trials but no products on the market to keep them afloat, these sources told Reuters.

Directives from President Donald Trump's administration to freeze grant funding from the National Institutes of Health may also discourage future talent and resources from flowing into the biotech sector, some of them said.

The S&P Biotech ETF index hit an 18-month low last week and is trading at less than half its 2021 peak. It is down about 20% this year.

A record nearly 30% of US-listed small- and mid-cap biotech companies are trading at or below cash, suggesting the market does not ascribe any value to their existing business or drug development pipeline, according to Jefferies analysts.

US Health Secretary Robert F. Kennedy Jr.says the layoffs that began last week are needed to streamline the nation's health bureaucracy and will improve agencies' work. But the ouster of top scientists at FDA and other institutions has raised questions over how they will fulfil their missions.