BOULDER — Fresh Tracks Therapeutics Inc. (Nasdaq: FRTX) holds an account with the failed Silicon Valley Bank, the Boulder-based pharmaceutical company formerly called Brickell Biotech disclosed to the U.S. Securities and Exchange Commission.
“The company maintains up to $1 million in cash deposits at SVB and approximately $3.7 million in a U.S. Treasury money market mutual fund purchased through SVB but managed by a third-party asset manager,” Fresh Tracks told the regulatory agency and its investors. “The company believes that the funds held in the money market mutual fund are not considered deposits. Therefore, the company expects to have access to the full amount of the funds held in the money market mutual fund, but the timing and process for accessing such funds is not clear as of (Monday afternoon).”
Additionally, SVB’s collapse appears to have affected the company’s financial maneuverability, at least in the short term.
Last week, Fresh Tracks, representatives of which did not respond to requests for comment Tuesday, told the SEC that the company raised $6.5 million in a stock sale, but “proceeds are being held in a money market fund at the selling broker until the company is able to open new accounts at another financial institution.”
Fresh Tracks is likely not the only company in the Boulder Valley and Northern Colorado scrambling to replace services previously provided by Silicon Valley Bank, a popular institution among technology firms and startups.
“Silicon Valley Bank has strong connections in our startup and entrepreneurial community, particularly in the tech sector,” Boulder Chamber president John Tayer told BizWest on Friday just as news of the Santa Clara, California-based institution’s collapse was seeping out. Local business groups, including the chamber, he said, are working to assess local impacts and offer support.
The U.S. Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. announced Sunday night that all depositors at the failed SVB, which was heavily involved in global venture capital, would have access to all their money on Monday morning. The extraordinary intervention also was extended to depositors of Signature Bank of New York, which state regulators closed on Sunday. Separately, in a move designed to stem a possible contagion and protect banks against financial risks caused by SVB’s collapse, the Federal Reserve said it was creating a lending facility for the nation’s banks.
“Things are still a little bit in flux, but hopefully the startups will come through this without significant losses,” Brynmor Rees, managing director of CU Venture Partners at the University of Boulder and associate vice chancellor for research and innovation, told BizWest on Monday. “Silicon Valley Bank was a central part of the ecosystem, but at least the depositors will have those deposits covered. Without that it could have been catastrophic.”
The 2022 rebrand of Fresh Tracks, which promoted a new CEO less than two months ago amid ongoing financial woes, occurred as the company seeks to pivot away from drugs that combat excessive sweating toward treatments for autoimmune, inflammatory and other debilitating diseases.
Brickell sold off the rights to sofpironium bromide, its excessive-sweating drug, for a $9 million upfront payment, last year to Botanix Pharmaceuticals Ltd., which pledged to make “additional success-based regulatory and sales milestone payments of up to $168 million and tiered earnout payments ranging from high single digits to mid-teen digits on net sales” of the gel, the company said in May.
Last week, Fresh Tracks, the stock price of which dipped below $1 per share on Tuesday, announced it had MTS Health Partners LP to explore its strategic options, which the company said could include “a financing, sale or licensing of assets, acquisition, merger, business combination, or other strategic transaction or series of related transactions.”
BizWest reporter Dallas Heltzell contributed to this report.