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Biotech finishes down after turbulent quarter
April 01, 2009SAN FRANCISCO - April 1, 2009 – Although posting positive numbers in March with the Burrill Biotech Select Index up 3.7 percent biotech, along with the rest of the general markets, took quite a pounding in the first quarter of 2009.
“It was an extremely unusual period,” said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based global leader in life sciences with activities in Private Equity, Venture Capital, Merchant Banking and Media, “in which we saw wild swings in the stock market. The Dow, for example, posted its worst January performance ever and worst February since the Depression, then, this month its 7.7 percent hike in value was its best in about six years.”
The Dow closed Q1 ’09 down 13 percent, with the Nasdaq down three percent and the Burrill Biotech Select Index finished the quarter down 4.4 percent. In the midst of these market perturbations, approximately 25 percent of the biotech industry’s collective market cap was removed when Roche closed its acquisition of Genentech late March and this represented the end of an illustrious era for Genentech as it was the last trading day for its stock and one of the most well known tickers – DNA – ceased to be.
“This leaves Amgen as biotech’s top dog with a market cap of $52 billion,” noted Burrill, “and the industry’s market cap is now $293 billion, comparable to the industry’s total when it was experiencing its lowest ebb in 2002. As the April issue of the Burrill Report analyzes, the number of biotech companies with a market cap greater than a $1 billion is falling through acquisitions and eroding share values. On the flip side, the number of companies that have seen their market caps drop below $100 million is on the rise.
“Our prediction that biotech would face tough times during 2009 and into 2010 is, unfortunately playing out as financing and investor support remain in short supply…it certainly is a different world,” added Burrill.
Already, the list of companies that have announced a restructuring of some kind - slashing staff and putting promising projects in the refrigerator - since the beginning of the year now numbers 90, the Burrill Report finds. In addition, of the 344 publicly held biotech companies in the US today over half are also trading at less than cash value per share.
Biotech Indices
|
Index
|
12/31
2007
|
12/31
2008
|
1/31
2009
|
2/27
2009
|
3/31
2009
|
% change
Month
|
%
change
Quarter
|
|
Burrill Biotech
Select
|
331.52
|
300.33
|
298.00
|
276.85
|
287.12
|
3.71%
|
-4.40%
|
|
Burrill Large
Cap Biotech
|
437.71
|
379.7
|
375.57
|
351.02
|
375.01
|
6.83%
|
-1.24%
|
|
Burrill Mid-Cap
|
201.89
|
139.39
|
145.13
|
123.3
|
137.08
|
11.18%
|
-1.66%
|
|
Burrill Small Cap
|
137.6
|
78.35
|
77.27
|
66.68
|
73.27
|
9.88%
|
-6.48%
|
|
Burrill Genomics
|
104.29
|
59.69
|
55.88
|
41.58
|
45.8
|
10.15%
|
-23.27%
|
|
Burrill AgBio
|
198.83
|
127.72
|
139.59
|
133.12
|
147.19
|
10.57%
|
15.24%
|
|
Burrill BioGreentech
|
158.66
|
106.12
|
108.66
|
99.34
|
113.44
|
14.19%
|
6.90%
|
|
Burrill Diagnostic
|
159.43
|
138.3
|
139.99
|
124.73
|
124.1
|
-0.51%
|
-10.27%
|
|
Burrill Nutraceutical
|
593.04
|
369.24
|
338.48
|
292.6
|
314.16
|
7.37%
|
-14.92%
|
|
NASDAQ
|
2652.28
|
1577.03
|
1476.42
|
1377.84
|
1528.59
|
10.94%
|
-3.07%
|
|
DJIA
|
13264.82
|
8776.39
|
8000.86
|
7062.93
|
7608.92
|
7.73%
|
-13.30%
|
|
Russell 2000
|
766.03
|
499.95
|
443.53
|
389.02
|
422.75
|
8.67%
|
-15.44%
|
|
Amex Biotech
|
786.5
|
647.15
|
634.56
|
596.42
|
640.85
|
7.45%
|
-0.97%
|
|
Amex Pharma
|
338.52
|
272.84
|
258.17
|
226.38
|
244.08
|
7.82%
|
-10.54%
|
US BIOTECH FINANCINGS 2009
Financings and partnering deals collectively brought in almost $10 billion for US companies in Q1 ‘09 with over $5 billion through financings and $5 billion in partnering capital. “This 47 percent increase in funds raised compared to the Q1 ’08 total certainly shows that despite the market conditions and the lower valuations of public companies that capital is still flowing,” noted Burrill. “However, there were several outlier deals including Amgen’s $2 billion two-part sale of an oversubscribed debt issue. Remove this transaction and it becomes clear that companies had a hard time with this form of financing in the first quarter of 2009.”
Overall, public financing remained below last years quarter levels with PIPES and secondary offerings off by 18 and 17 percent respectively. Even though venture capital deals generated 77 percent more capital than in 2008, the number of deals rose by 100 percent to over 200 and the average size of deal fell from $20 million in Q1 08 to $7 million in Q1 09.
Partnering robust
Partnering deal making generated almost $ 5 billion in Q1 09. Contributing to this total was the potential $1.1 billion dollar global collaboration that ZymoGenetics made with Bristol-Myers Squibb for PEG-Interferon lambda (IL-29) a novel type 3 interferon currently in Phase Ib development for Hepatitis C. Bristol-Myers Squibb agreed to pay ZymoGenetics an upfront cash payment of $85 million for the development and commercialization rights to PEG-Interferon lambda, and to pay an additional license fee of $20 million in 2009. ZymoGenetics could receive additional payments of up to $430 million based on pre-defined development and regulatory milestones for PEG-Interferon lambda in Hepatitis C, up to $287 million in development and regulatory milestones for other potential indications, and up to $285 million based on pre-defined sales-based milestones. Other notable deals included:
|
Company
|
Company
|
Value
|
Focus
|
|
ZymoGenetics, Inc
|
Bristol-Myers Squibb
|
1107
|
Hepatitis C
|
|
Santaris Pharma
|
Wyeth Pharmaceuticals
|
847
|
RNA-based medicine
|
|
Portola Pharmaceuticals
|
Novartis AG (Swiss)
|
575
|
Cardiovascular
|
|
S*BIO Pte Ltd
|
Onyx Pharma
|
550
|
Oncology
|
|
ImmuPharma plc
|
Cephalon
|
500
|
Autoimmune-Lupus
|
|
Idenix Pharmaceuticals
|
GlaxoSmithKline
|
450
|
Infectious--HIV
|
Financings
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 publisher of a range of bio-intelligence reports including the monthly Burrill Report, which tracks the progress of the global biotechnology industry and annual “State of the Industry” report the latest of which is Biotech 2009-Life Sciences: Navigating the Sea Change, the 23rd annual report on the industry. The 470-plus page book contains analysis and perspectives on the performance of the industry in 2008 and projections for 2009 and beyond.
Contact: Peter Winter, Editor-in-Chief, The Burrill Report
pwinter@b-c.com tel: 415-591-5474