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Biotech drops back to earth in August

September 03, 2008

SAN FRANCISCO – September 2, 2008 – While the general markets managed to end August in positive territory as oil continued a sharp slide started in July, biotech came back to earth after its stellar performance in July closing in negative territory. The Dow finished up 1.5%, the NASDAQ closed the month up 1.8% and the Burrill Biotech Select Index, a price-weighted index tracking 20 of biotech’s “blue chip” companies, was down 5%.
 
“With the big pharma bids for Genentech and ImClone being considered in their respective board rooms, investors’ attention on biotech waned slightly in August,” said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based global leader in life sciences with activities in Venture Capital, Private Equity, Merchant Banking and Media. “While we haven’t seen the end of blockbuster M&A deals in biotech they won’t occur every month. In a quiet month for biotech news investors were left to ponder the uncertainties about the economy. We will continue to see these swings in the fortunes of biotech throughout the rest of the year. However, I expect that biotech’s performance to improve upon its current 10% year-to-date gain in the final four months of 2008.”
Pulling down the Burrill Biotech Select Index was Amylin Pharmaceuticals whose share price fell 30% in August following news that four more patients taking Byetta had died after bouts of pancreatitis. This followed two other reported deaths earlier in the month. Byetta, which is used to treat type 2 diabetes, already carries a warning on its label that has been associated with pancreatitis in some users. Amylin noted that diabetics in general also run a notably higher risk of developing pancreatitis than the general population. Amylin markets Byetta with Eli Lilly. 
Vertex Pharmaceuticals saw its share value drop 22% after Schering-Plough Corp. reported positive data from a trial of a hepatitis C drug, showing it could be a strong competitor to Vertex's drug candidate telaprevir. Acadia Pharmaceuticals also posted a 14% drop after reporting a wider-than-expected second-quarter loss and saying it would cut its work force by about half in a restructuring move. On the plus side, shares of Affymetrix jumped 9% in August. The FDA approved its product for in vitro gene expression diagnostic testing. The diagnostic platform, along with a test, made by Pathwork Diagnostic Inc., analyzes a tumor's genetic makeup to help determine the source of hard-to-identify tumors.
 
The Burrill Biotech Mid-Cap Index managed to remain unchanged in August following its 18% jump in July.
 
Market cap
The industry’s market cap closed August at $507 billion, easing back from a record setting $520 billion mark posted in the middle of the month. Genentech’s market cap closed at $104.2B; Amgen remained in second spot at $66.5 billion with Gilead Sciences at $48.5B.
 
 
Biotech Indices
 
Index
12/31
2007
 
7/31
2008
 
8/29
2008
%
change
Month
%
change
Year
Burrill Biotech
Select
331.52
384.11
363.59
-5.34%
9.67%
Burrill Large
Cap Biotech
437.71
522.3
505.26
-3.26%
15.43%
Burrill Mid-Cap
Biotech
201.89
192.55
192.55
0.00%
-4.63%
Burrill Small Cap
Biotech
137.6
119.5
119.21
-0.24%
-13.36%
NASDAQ
2652.28
2325.55
2367.81
1.82%
-10.73%
DJIA
13264.82
11378.02
11552.18
1.53%
-12.91%
Amex Pharma
338.52
303.72
303.96
0.08%
-10.21%
 
About Burrill & Company
Founded in 1994, Burrill & Company is a San Francisco-based global leader in life sciences with activities in Venture Capital, Private Equity, Merchant Banking and Media. The Burrill family of venture capital funds has over $950 million under management and its merchant banking business is one of the industry leaders in life sciences transactions.
 
Burrill is also the creator, sponsor and facilitator of over a dozen leading industry conferences worldwide and publishes a range of bio-intelligence reports including the monthly Burrill Biotechnology Report and annual “State of the Industry” report, the 22nd Edition is entitled Biotech 2008: Life Sciences – A 20/20 Vision to 2020.

Contact: Peter Winter, Editorial Director
Burrill & Company
Tel: 415-591-5474

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