The decision of when to raise capital sometimes becomes more of a macroeconomic issue than one based solely on the status of an individual company. Yet the macro picture remains hazy – some analysts think things will get better, while others think they will get worse.

"The markets have been reacting in a binary type trade: The world comes to an end, or the world does not come to an end," said Andrew Busch, global currency and public policy strategist at BMO Capital Markets.

In August, pessimism seemed to be at its worst after Standard & Poor's lowered its long-term credit rating on U.S. debt. (See BioWorld Insight, Aug. 22, 2011.)

But Busch is feeling more optimistic these days. "I believe the U.S. will continue to grow, and we'll continue to see faster economic growth than most people think we'll get."

There are still issues with European debt hanging over the global economy, but Busch contended the Europeans are moving in the right direction, albeit not at the greatest speed. "It's going to take quite some time to resolve the issues that are facing them, and that's problematic because the financial markets react with tremendous speed."

Biotechs need a confident economy, because when banks aren't confident, they don't loan money. "It sounds a little farfetched that macro issues can impact the bio-world, but the lack of certainty and the lack of confidence in the U.S. economy have a tendency to shut down lending to anything that seems risky or outside the norm," Busch said.

An unconfident economy also leads to a depressed stock market, which makes it difficult to raise capital publicly. But Busch said he sees the recent increase in initial public offerings and shelf filings as a sign that the capital markets are becoming a little less risk adverse.

Not everyone is so optimistic, though. Analyst Avik Roy, of Moness Crespi Hardt & Co., sees a second financial crisis coming from a domino effect started by the Europeans' inability to solve their debt crisis. If banks holding government bonds go under because the governments default on their loans, everyone doing business with the banks will be affected.

"There won't be as much of an appetite for highly risky companies in a risk-averse environment where everyone is panicking about government defaults," Roy said.

Roy contended biotechs without near-term catalysts that need to shore up their balance sheets should raise capital sooner rather than later. "Companies need to stop reading their own press releases and stop drinking their own Kool-Aid and raise money today in this environment because their stock could be down another 30 percent tomorrow."

If companies can't raise capital, the other option is to slow down the cash burn rate. Earlier this month, Geron Inc. stopped development of its human embryonic stem cell (hESC) program, and CEO John Scarlett blamed the uncertain economic conditions. He cited the lack of capital resources to fund trials for both Geron's hESC therapy and its telomerase inhibitor programs in cancer. (See BioWorld Today, Nov. 16, 2011.)

"In this environment, you've got to conserve cash. You've got to focus on the programs where you have the ability to move the stock and drive shareholder value," Roy said.