Christopher Miller | Source | Partner at Troutman Pepper

“These companies are running out of money,” said Chris Miller, a partner with Troutman Pepper who works on private funding deals. “That’s a much bigger issue in biotech right now” than SVB, he added.
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“Finding new investors, or significant chunks of new capital, is very difficult,” said Miller. “That is still the big concern.”

A major reason for SVB’s centrality to the sector was its willingness to lend money to early-stage companies on “better terms than a traditional bank would offer,” said Chris Miller, a partner at the law firm Troutman Pepper, who works on private financing deals. SVB also had a “close connection” with investors, he said, so it became a preferred parking spot for the seed funding startups raised as well as the larger rounds they later received.
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That isn’t a sure thing. Miller noted how many biotech companies worked with SVB because of personal relationships. Key people behind those relationships may not be retained or could leave once SVB is sold. Their clients could follow them to their new jobs. The terms offered to startups by SVB’s acquirer might also be different from what SVB historically set.
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Companies’ biggest fear over the weekend was whether they could access their SVB deposits on Monday. The concerns sparked a “mad scramble” to secure short-term loans to replace the frozen funds, Miller said. In many cases, those plans were abandoned once the government intervened, he added.
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Biotechs that rely on those credit lines could still face a cash crunch, particularly in a market environment that’s made fundraising harder for small drugmakers. Even if they stick with SVB and a buyer is found, it’s not clear whether that acquirer would pick up their loans on the same terms. “Are [biotechs] going to have to refinance?” Miller said, and if so “what terms are they going to get?”