Biotechs Crushed Now, Crushed Later By Legal Ruling.

It is hard to imagine a greater blow to the biotech industry. Federal District Judge Robert W. Sweet ruled that sections of patents held by Myriad Genetics which cover two breast cancer genes were invalid. The New York Times reported that “the invalidation of genetic patents could hit diagnostics companies, agricultural biotechnology companies and perhaps even traditional drug makers, though drugs are often protected by patents on their own chemical composition.”

The biopharma segment of the biotech industry is already troubled by a harsh environment for raising funds. Hundreds of biotech firms are balancing cash consumption against their ability to show that their FDA trials for new treatments are making progress. Sometimes that race is lost and the companies go under.

Even the bipharma firms that can raise money often dilute their shareholders so significantly that share prices are pushed down indefinitely.

The court’s opinion on the matter will raise the issue in many biopharma investor’s minds as to whether the patents their companies hold may be invalidated, destroying almost all the market value of some stocks.

A series of rulings like the Myriad Genetics one could jeopardize the ability to fund the entire industry to raise funds.

Douglas A. McIntyre