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Biotech Hit by Market Jitters in July

August 01, 2007

San Francisco, CA - August 01, 2007

“Biotech had to weather a bumpy ride in the wake of nervous investors and skittish general markets,” said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based global leader in life sciences whose principal activities are in Venture Capital, Merchant Banking and Media. “It was an unusual month to say the least with the Dow just breaking through the 14,000 mark before falling dramatically to finish at 13,212 as weak economic data and ongoing credit concerns overshadowed more positive news on the earnings front.”

The Dow closed the month down almost 1.5% and the NASDAQ down 2%. The Burrill Biotech Select Index held its own in July. Helping the cause was Vertex Pharmaceuticals, which closed up 14% following a positive announcement for its drug, telaprevir, or VX-950. Interim data from an analysis of a clinical trial that showed fewer than 10% of patients who had undetectable levels of hepatitis C virus after completing 24 weeks of therapy had relapsed by the end of 12 weeks of post-treatment follow-up. Illumina, a recent addition to the Burrill Biotech Select Index, also posted a healthy 12% gain in its share price following second-quarter earnings that beat Wall Street estimates thanks to product sales that more than doubled during the period.

Amgen’s share price dropped 3% in July and they are down 21% in value year-to-date as its blockbuster anemia drugs Aranesp and Epogen continue to come under pressure. In July, The Center for Medicare and Medicaid services established new rules for patients with chemotherapy-induced anemia limiting reimbursement for anemia drugs, including Amgen's Aranesp, for cancer patients. Genentech’s shares also continue to languish, dropping 2% (8% year-to-date). The company made a $5 million milestone payment to ImmunoGen Inc. The payment comes as a result of Genentech starting a Phase II study of cancer drug trastuzumab-DM1, which is in development for the potential treatment of a potential treatment of HER2-expressing metastatic breast cancer.

The Burrill Mid-Cap Biotech Index did show some signs of life in July with a jump of 2.5% thanks to Alnylam Pharmaceuticals Inc.’s 59% increase in its share price. This dramatic surge in price was driven by the company’s recent alliance with pharma heavyweight Roche, which could be worth as much as $1 billion. The deal gives the

Swiss pharma access to Alnylam's technology platform for developing treatments based on ribonucleic acid-mediated interference. Roche expects to start the first clinical trials with RNAi-based drug candidates within two years. These first human trials probably will aim at developing drugs for asthma and chronic obstructive pulmonary disease,

Alnylam also forged a deal with medical technology company Medtronic Inc. Under the terms of the agreement, Alnylam and Medtronic will focus on developing a drug-device combination for the treatment of Huntington's, an inherited disorder characterized by abnormal body movements. The product is expected to consist of a RNAi therapeutic, targeting the Huntington's disease gene, that will be delivered by Medtronic's implantable infusion pump.

IPOs slow

It was a slow month for biotech IPOs with only ImaRx Therapeutics, which is developing novel therapies for vascular disorders associated with blood clots, pricing 3 million shares at a revised price of $5 per share. The firm originally filed to offer 3 million shares at a price range of $6.50 to $7.50 per share. The company’s shares closed the month at $4.71.

Although RNAi has been hot of late attracting significant deal making by big pharma, it didn’t help the cause of Quark Pharmaceuticals, which develops RNA interference-based treatments for chronic and acute diseases. The company withdrew its filing for IPO on late July citing market conditions. On the plus side, three companies added themselves to the IPO runway:

  • WuXi PharmaTech, a China-based pharmaceutical and biotechnology research and development outsourcing company. The firm plans to offer 13.2 million ADSs, including 3.2 million from selling shareholders, at a price range of $11 to $13 per ADS.
  • Archemix, a biotechnology company focused on discovering, developing and commercializing aptamer therapeutics.
  • Talecris Biotherapeutics, which manufactures plasma-derived protein therapies to treat both chronic and acute diseases and disorders. Talecris hopes to raise $1 billion from the offering, which, if successful, will make it the largest biotech IPO ever.
Industry Market Cap

The collective market cap of the biotech industry dropped another 5.4% in July to close at $453 billion. Since hitting a record setting $513 billion at the end of April, the industry’s market cap has slid 11.9% since that time.


Peter Winter, Editorial Director
Burrill Life Science Media Group
Tel: 415-591-5474


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