(Bloomberg) — They’re supposed to be on the cutting edge of medicine. Yet some tiny biotech companies, largely left behind in the stock market’s breakneck rally, are pursuing a new cure-all: Cryptocurrencies.
Shares of 180 Life Sciences Corp., now doing business as ETHZilla, tripled after the Peter Thiel-backed company said it had accumulated Ether tokens worth over $350 million. Less than two weeks later, the stock’s gains have been erased. In July, Sonnet BioTherapeutics Holdings soared 243% in one volatile session on plans to transform into a public crypto treasury while MEI Pharma Inc. initially doubled on plans to sell shares to fund a Litecoin treasury.
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Such about-faces are a tried-and-true formula for small firms when funds are low and shares are under pressure. For drugmakers it can be a sudden shift to chase after trendy new treatment targets, still other companies rebrand with buzzwords like artificial intelligence to juice returns. Now some biotech executives are using digital coins to pump new life into flagging shares. So far in 2025, at least 10 biotechs have announced a pivot into digital assets. The announcements frequently spark frenzied, but short-lived, spikes in shares.
“If they’re low on ideas, if they can’t find relevance in drug development, they’re going to try to justify their existence as management in another way,” according to Mike Taylor, lead portfolio manager of the Simplify Health Care ETF. “You have a handful of companies trying to reinvent themselves into some other tangent. And, most, if not all won’t work out.”
Sonnet BioTherapeutics and MEI Pharma didn’t respond to requests for comment.
At ETHZilla, Chairman McAndrew Rudisill said that shareholders were happy with the change in direction. The company will continue to fund its work on neurology drugs, but “the Ethereum business will probably end up being a bigger business over time.”
The crypto pivots come as biotechs with little to no revenue try to navigate still high interest rates and a stalled funding market. It’s been a yearslong letdown for a sector that was snagging billion dollar valuations at the height of the Covid-19 pandemic. The uncertainties from the Trump administration’s research cuts and trade war have further dampened enthusiasm in 2025.
The most widely watched gauge of the sector’s performance, the Nasdaq Biotechnology Index, has tumbled around 13% from its 2021 all-time high while the S&P 500 Index is up about 46% over the same span.
Typically, drug developers that have made little progress on bringing a new medicine to the market have to resort to reverse mergers or bankruptcies to return cash to holders.
“It’s clear that the CEOs and the boards see adding crypto as a way to boost the stock price, and in theory earnings because they think they’ll make a profit on crypto,” RIA Advisors portfolio manager Michael Lebowitz said.
‘Last-Ditch Effort’
Since the last US presidential election it’s only gotten harder for drug developers to raise cash through sales of new shares to public investors.
US-listed health-care companies have raised about $17.1 billion via sales of new and existing shares so far this year, compared to $29 billion over the same stretch last year, data compiled by Bloomberg show. IPOs are also continuing to lag in the sector, with new entrants on US exchanges raising $2.2 billion in the year to date, down by more than half versus the same period in 2024, the data show.
Monthly inflows into health-care funds have also stalled and are virtually non-existent compared to a nearly $6 billion peak in April 2020. Only four months since November 2022 have seen fund inflows, according to data compiled by Bloomberg Intelligence.
At Jefferies, veteran health-care analyst David Windley called the crypto-biotech hybrid “a last-ditch effort to reignite investor interest.”
While shares of the companies tend to surge after the changes in strategy, RIA Advisors’ Lebowitz said the firms risk losing the original investors who made their investment decisions based on the biotechs’ ideas.
“You turn off people that are looking to buy specific companies, specific industries, specific products, and you’re enticing people that all they care is that there’s crypto,” Lebowitz said.
Fading Fancy
To be sure, some companies have notched sustained gains after switching gears. Take Riot Platforms Inc., one of the first companies to make the pivot, when it changed its name from Bioptix Inc. and moved into the blockchain business in 2017. Riot shares are up more than 60% since then. Still, those gains trail the broader market and the stock is down over 80% from a 2021 peak.
There are other risks from shifting focus. It’s not just in biotech where companies are raising debt or selling equity only to sink the proceeds into digital tokens in the hopes of replicating the success of Michael Saylor’s Strategy Inc. The model has had limited success for Saylor’s imitators.
If crypto prices fall, the companies’ stock prices could decline in tandem. And as other small firms keep piling into crypto treasuries, investors are starting to look elsewhere.
Raising funds to buy digital assets also doesn’t necessarily help fund the businesses. If the company diverts too much of the proceeds toward the core biotech operations, or worse, if it sells off some of the accumulated assets, its appeal to investors seeking exposure to crypto comes under threat.
“While the crypto-biotech trend is intriguing, it may simply enable large crypto holders to offload coins while biotechs speculate on digital assets to grow cash reserves and attract attention,” Windley wrote in an August note.
