In a phone interview from the sidelines of the JPMorgan Healthcare Conference, Sabow said those alternatives could include private debt financing, partnerships, out-licensing agreements, or geographic licensing arrangements.

“There are things beyond equity that can finance innovation,” he said. “The importance of those alternatives increases as this shutdown goes on.” But those options might not work for every firm in every sector.

“There are not a lot of options,” says Carter Mack, president and co-founder of JMP Group LLC. “If you were planning on raising equity, you want to raise equity.”

Since the government shutdown began last month, just three follow-on offerings have raised a total of $811 million in the U.S. through Wednesday afternoon, according to data compiled by Bloomberg. Over the same period last year, 13 deals raised nearly $6 billion.

Other companies with market caps above $700 million, or those that issued $1 billion in debt over the past 3 years, can raise equity during the shutdown without SEC review because they qualify as a so-called “Well Known Seasoned Issuer.” That designation was created by the SEC in 2005 to make it easier for larger, more familiar firms to bring offerings. But these companies also have fewer reasons to raise cash in a shutdown, as acquisitions and drug trials remain in limbo.

Sabow says most companies remain optimistic that the shutdown will not last much longer: “I think people are heavily discounting any scenario where this becomes an intermediate- to long-term shutdown. If that happens, I wouldn't be surprised if we see a different sentiment out there.”

From: Bloomberg

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