The collective market cap of the industry hit an all time high of $510 billion on the final trading day of July eclipsing the previous record of $507 billion set in April 2007. In addition to Genentech, which topped $100 billion at month end, Amgen had an excellent run with its market cap finishing at $68 billion. The company’s shares surged following news that its osteoporosis drug candidate, denosumab, reduced the incidence of fractured vertebrae in postmenopausal women, meeting a late-stage study goal. Its shares received a further boost after reporting better-than-expected earnings on a rebound in sales of its anemia drug Aranesp. To cap it all off Amgen reported that it had licensed a fully human anti-nerve growth factor antibody for the treatment of chronic and neuropathic pain to Ortho-McNeil-Janssen Pharmaceuticals, Inc., a Johnson & Johnson company. The terms of the agreement include a $50 million upfront payment and the potential for $385 million in success-based milestones.

 

Biotech stocks were also helped by an improvement in consumer confidence as oil prices receded in July. But Wall Street could not shake off its worries about the overall economy and the Dow finished essentially unchanged, the NASDAQ closed the month up 1.4% while Burrill Biotech Select Index, a price-weighted index tracking 20 of biotech’s “blue chip” companies, finished up a whopping 14%.

 

“Biotech’s elite companies have spent most of July pushing higher, benefitting from a series of favorable headlines and merger fever in the air,” commented Burrill. “This translated into the substantial gain of over 16% in the Burrill Biotech Large Cap Index. But even more remarkable was the performance of the mid-cap companies, with the Burrill Biotech Mid-Cap Index jumping 18%. All year the market conditions have proved to be tough on these emerging biotech companies yet every one in the group posted positive gains in July.

 

“Is this the harbinger of a biotech rally? Certainly, as the financial markets settle down we will see biotech benefit from increased M&A activity. I would expect the next few months to be good ones for the industry and by the fourth quarter of 2008 we will begin to see a resumption of biotech IPOs getting done,” speculated Burrill.

Index	12/31 2007	6/30 2008	7/31 2008	% change Month	% change Year
Burrill Biotech Select	331.52	335.83	384.11	14.38%	15.86%
Burrill Large Cap Biotech	437.71	449.09	522.3	16.30%	19.33%
Burrill Mid-Cap Biotech	201.89	163.12	192.55	18.04%	-4.63%
Burrill Small Cap Biotech	137.6	120.93	119.5	-1.18%	-13.15%
NASDAQ	2652.28	2292.98	2325.55	1.42%	-12.32%
DJIA	13264.82	11350.01	11378.02	0.25%	-14.22%
Amex Pharma	338.52	290.79	303.72	4.45%	-10.28%