At least 49 publicly traded bio/pharmaceutical companies took Paycheck Protection Program (PPP) loans from the US Government’s $659bn program despite official guidance that the money was not intended for large public companies, says GlobalData, a leading data and analytics company.

Peter Shapiro, PhD, PharmSource and Senior Director, Drugs and Business Fundamentals Databases at GlobalData, comments: “Of these 49 companies, 16 took out loans that totaled over $2m, which represents a potential risk to the company as these loans will have to be paid back. These loans come with significant restrictions for publicly traded companies including bans on paying dividends or repurchasing stock while the loan is outstanding. It is unclear how the US Small Business Administration (SBA) will enforce these rules.

“The rest took PPP loans under $2m, so if they choose not to return them there will be no repercussions from the SBA, as the SBA announced on May 13 that PPP loans of less than $2m will not be audited for eligibility.”

According to the SBA, companies involved in pharmaceutical preparation manufacturing are small businesses if they have fewer than 1,250 employees. A business could also qualify for PPP loans if its maximum tangible net worth is below $15m or its average net income after tax is less than $5m. Nevertheless, several lenders extended large loans to publicly traded companies.

A publicly traded company with a substantial market cap is unlikely to be eligible for a PPP loan, as stated in the SBA guidance. “The intent of this money was not for big public companies that have access to capital,” clarified US Treasury Secretary Steven Mnuchin at a White House daily COVID-19 briefing on April 21.

The pipeline company Wave Life Sciences (Singapore) has returned its $7.2m loan, the largest loan among public bio/pharma companies. There are to be no consequences for ineligible companies that took PPP loans and then repaid them by the safe harbor deadline of May 18.  GlobalData does not know which other companies gave back their loans at the time of publishing.