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Biotech buoyed by strong capital market performance in second quarter

July 01, 2009

SAN FRANCISCO - July 1, 2009 – Despite the fact that stocks moved lower on the last day of June after the Conference Board said its Consumer Confidence Index fell in the month, the market still had a stellar quarter, with the Dow Jones industrials up 12 percent and Nasdaq up 20 percent compared with a 3 percent uptick for the Burrill Biotech Select Index.
 
“The general markets have experienced three excellent months of gains as investors are betting that the worst of the economic woes are now behind us. This positive market trend has certainly spilled over to biotech,” 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. “It was a great month for biotech with the Burrill Biotech Select Index posting a solid gain of 6 percent, outpacing the Dow and Nasdaq, which closed the month of June down 0.7 percent and up 3 percent respectively.
 
“While biotech is not out of the woods yet and we will not return to ‘business as usual’ investors still recognize that there are a lot of good biotech companies out there with excellent late stage product candidates. Shares of Human Genome Sciences, for example, jumped a whopping 246 percent in the quarter after the company said its drug candidate Benlysta reduced lupus symptoms over a four-year period.”
 
Investors also rewarded Savient Pharmaceuticals whose shares soared 119 percent in June (180 percent in the second quarter) after the FDA said its drug Krystexxa appears to successfully relieve swollen joints and pain flare ups associated with gout, despite evidence of a series of safety concerns seen in clinical trials of the drug, including heart problems and allergic reactions. The FDA has been reviewing the company's drug application since December and has already delayed a decision on the drug once.
 
In addition, shares of Dendreon increased by a whopping 500 percent in the second quarter following the company first announcement of positive Phase III data that showed its lead product Provenge extended the lives of men with advanced prostate cancer by an average of 4.1 months. According to analysts, Dendreon should be able to file for regulatory approval during the fourth quarter 2009.
 
Cougar Biotechnology’s share value also closed up 33 percent in the second quarter thanks to Johnson & Johnson’s $970 million cash bid to acquire the company and gain access to compounds in development for the treatment of prostate cancer, as well as breast cancer and multiple myeloma.
 
June Biotech Indices 
 
Index
12/31
2007
 
12/31
2008
 
3/30
    2009
 
5/29
    2009
 
6/30
    2009
% change
Month
%
change
QTR
%
change
YTD
Burrill Biotech
Select
331.52
300.33
287.12
279.32
294.09
5.29%
2.43%
-2.08%
Burrill Large
Cap Biotech
437.71
379.7
382.21
398.06
424.71
6.69%
11.12%
11.85%
Burrill Mid-Cap
201.89
139.39
137.08
162.29
173.97
7.20%
26.91%
24.81%
Burrill Small Cap
137.6
78.35
73.27
81.04
82.51
1.81%
12.61%
5.31%
Burrill Genomics
104.29
59.69
45.8
59.93
65.73
9.68%
43.52%
10.12%
Burrill AgBio
198.83
127.72
147.19
149.35
135.12
-9.53%
-8.20%
5.79%
Burrill BioGreentech
158.66
106.12
113.44
134.05
133.21
-0.63%
17.43%
25.53%
Burrill Diagnostic
159.43
138.3
122.47
125.39
131.47
4.85%
7.35%
-4.94%
Burrill Nutraceutical
593.04
369.24
314.16
397.42
408.08
2.68%
29.90%
10.52%
NASDAQ
2652.28
1577.03
1528.59
1774.33
1835.04
3.42%
20.05%
16.36%
DJIA
13264.82
8776.39
7608.92
8500.33
8447
-0.63%
11.01%
-3.75%
Russell 2000
766.03
499.95
422.75
501.58
508.28
1.34%
20.23%
1.67%
Amex Biotech
786.5
647.15
640.85
648.69
697.17
7.47%
8.79%
 

Financings and partnering
“While it is still going to take many more months before biotech starts on the road to full recovery it is encouraging to see companies are still raising capital despite the tough economic conditions,” Burrill noted. The Burrill Report has recorded a significant 25 percent increase in total financings and partnering in 2Q ’09 compared to 1Q ’09. While financings were down quarter over quarter, the amount US biotech firms raised in partnering deals was up 68 percent.
 
“This increase reflects the fact that in a tight fiscal environment companies are devoting their energies on finding pharmaceutical and biotech partners to help build value of their lead product programs. It has become increasingly difficult to attract venture capital and this is reflected by the fact that the amount raised by biotechs in the United States in the second quarter was 43 percent down from the total raised in the first quarter,” concluded Burrill.
 
Some of the significant partnership deals in the second quarter described in the Burrill Report are:
Exelexis/Sanofi Aventis - $1 billion
Concert Pharmaceuticals/GlaxoSmithKline - $1 billion
Cardiome Pharma/Merck - $700 million
Cytokinetics/Amgen - $650 million
Catalyst Biosciences/Wyeth Pharmaceuticals - $500 million
GlobeImmune/Celgene - $500 million
 
Quarter comparisons of US biotech financings


By the Numbers
The monthly, subscription-based Burrill Report (www.burrillreport.com) provides ongoing statistics and analysis on the 343 biotechs that are publicly traded on major US markets. Among the current data the publication reports that at the end of the second quarter this group of companies had an aggregate market cap of $319 billion (up 7 percent for the month and 10 percent for the quarter). Also:
- There are 43 companies that have market caps greater than $1B
- 154 public biotech companies (44%) have a market cap below $100 million
- 68 are trading below their cash level
- Over 110 companies have announced a corporate restructuring by slashing staff and putting promising projects in the refrigerator
- YTD the Burrill Biotech Select Index is down 2 percent
 
 
 
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
 
 

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