Biotech Companies Deal with Silicon Valley Bank Collapse

On March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation (FDIC) as appointed receiver. Biotechnology companies made up a substantial part of the bank’s client base, with 12% of the bank’s $173 billion in deposits coming from life sciences and healthcare, according to SBV’s Q4 financial highlights (1).

SVB was also a critical partner for many startups and young biotechnology companies. Many companies have issued statements regarding their lack of affiliation with the bank. ONWARD Medical N.V. issued a press release statement on March 13, 2023, stating, “ONWARD has no business arrangements nor known exposure to SVB. All banks currently holding cash deposits and securities on behalf of ONWARD carry Moody’s Investors Service ratings of A1/P-1 or higher on long/short-term deposits,” (2).

Autolus Therapeutics issued a similar press release statement on March 13, 2023, stating, “Autolus Therapeutics…following recent events with Silicon Valley Bank, announced that the company has no business relationships with Silicon Valley Bank past or present,” (3).

According to a press release from the FDIC, “all deposits—both insured and uninsured— … [have been transferred] to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to protect all depositors of Silicon Valley Bank. Depositors will have full access to their money beginning this morning, [March 13, 2023], when Silicon Valley Bank, N.A., the bridge bank, opens and resumes normal banking hours and activities, including online banking.”

Some biotechnology companies who have had relations with SVB are beginning to reassess their approach, with Agenus announcing in a company press release that “it has cancelled its conference call on Monday, March 13 to discuss its minority cash holdings at Silicon Valley Bank in light of the government’s SVB deposit access announcement,” (4).

Ventyx Biosciences provided an update in a company press release, stating, “A portion of our cash is deposited in accounts with SVB and custodial accounts managed by SVB, and Ventyx may not have full access to these funds in the near-term. We do not see a material impact to our liquidity position or our ongoing operations as a result of this event,” (5).

References:

1. SVB. Q4 2022 Financial Highlights. Jan. 19, 2023.

2. ONWARD. ONWARD Does Not Hold Cash Deposits at Silicon Valley Bank. Press release. March 13, 2023.

3. Autolus Therapeutics. Autolus Therapeutics Has No Business Relationship with Silicon Valley Bank. Press release. March 13, 2023.

4. Agenus. Agenus Cancels Conference Call to Discuss the Company’s Minority Cash Holdings at SBV in Light of Government’s SBV Deposit Access. Press release. March 12, 2023.

5. Ventyx Biosciences. Ventyx Biosciences Provides Update on Silicon Valley Bank Financial Exposure. Press release. March 11, 2023.

Source: Federal Deposit Insurance Corporation