Kronos Bio's Post-S&P TMI Index Removal: A Cautionary Tale of Biotech Viability Amid Setbacks

The removal of a biotech firm from a flagship index like the S&P Biotech Pure Money Index (S&P TMI) is rarely an isolated event. For Kronos Bio (NasdaqCM: KRON), its exclusion in mid-2025 underscored deeper challenges tied to clinical trial failures, financial strain, and strategic pivots. This case study offers critical insights into how biotech companies navigate the fallout of index exclusion—and whether such firms can still hold long-term investment merit.

The Clinical Crossroads: Istisociclib's Downfall

Kronos Bio's stumble began in late 2024 with the discontinuation of its lead asset, istisociclib, a CDK9 inhibitor in Phase 1/2 trials for platinum-resistant ovarian cancer. Five of seven patients experienced severe neurological adverse events (involuntary movements, confusion, hallucinations), prompting three discontinuations and two dose reductions. The unfavorable benefit-risk profile forced the company to halt further development of this program, its primary pipeline candidate.

This setback triggered a cascading financial crisis. By Q3 2024, Kronos's cash runway had shrunk to just six quarters, with a quarterly burn rate of $18.1 million. The company's stock price plummeted, dropping from $1.80 in early 2024 to $0.57 by June 2025—a 69% decline.

Strategic Survival: From Index Exclusion to Acquisition

The S&P TMI removal in mid-2025 was likely a consequence of these financial and operational struggles. Index exclusion often reflects diminished liquidity, reduced investor interest, or failure to meet listing criteria—directly tied to Kronos's shrinking market cap and clinical stagnation.

Faced with limited options, Kronos's board opted for an acquisition. In June 2025, Concentra Biosciences agreed to acquire the company for $0.57 per share in cash, plus contingent value rights (CVRs) tied to future milestones. This move effectively ended Kronos's independent existence, with its stock delisted from NASDAQ shortly thereafter.

The Long-Term Viability Question: Lessons for Biotech Investors

Kronos's trajectory raises a pressing question: Can biotechs excluded from key indices due to clinical setbacks still offer long-term value? The answer hinges on three factors:
1. Pipeline Resilience: Does the company retain assets with unproven but high-potential programs?
2. Strategic Agility: Can leadership pivot effectively—via partnerships, asset sales, or mergers—to secure capital?
3. Index Dynamics: How does exclusion affect funding access, analyst coverage, and investor sentiment?

In Kronos's case, its preclinical pipeline (e.g., KB-9558 for multiple myeloma and KB-7898 for Sjögren's syndrome) held theoretical value, but without istisociclib's clinical data, these programs lacked near-term catalysts. The decision to sell underscores a harsh reality: biotechs with no near-term revenue or late-stage assets face existential risks post-index exclusion.

Investment Implications: Proceed with Caution

For investors, the Kronos story serves as a cautionary example:
- Avoid overvaluing early-stage pipelines: Assets in preclinical stages are speculative and vulnerable to funding gaps.
- Prioritize capital efficiency: Companies burning cash rapidly while facing setbacks are at high risk of delisting or acquisition.
- Monitor index dynamics: S&P TMI exclusion often precedes, rather than follows, strategic reorganization—marking a red flag for investors.

Conclusion: When to Consider the "Fallen Angel" Play

While Kronos's story ends in acquisition, not all excluded biotechs are doomed. Firms with:
- A single, late-stage asset nearing approval (e.g., a Phase 3 readout),
- Strong partnerships with Big Pharma, or
- A diversified pipeline with near-term catalysts

might recover post-exclusion. However, in cases like Kronos—where the primary asset fails and cash dwindles—the path to viability requires drastic measures.

For now, the lesson is clear: clinical setbacks are a death knell for biotechs lacking financial flexibility or strategic alternatives. Investors seeking "fallen angels" must dig deeper than headlines—they need to assess whether the company's remaining assets and leadership can outrun its liabilities.

In the case of Kronos Bio, the answer was no—and that's a verdict the market ratified with its removal from the S&P TMI.