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Biotech gets hot in July

August 02, 2010

SAN FRANCISCO - Speculation about a potential blockbuster biotech acquisition and positive second quarter financial data fueled a boom in biotech with the Burrill Biotech Select Index closing up 7.8 percent for the month. The Dow gained 7 percent in July, its biggest monthly percentage increase since last July, when it rose 8.6 percent. The Nasdaq followed a similar pattern, rising 6.9 percent for the month.

“After a rough second quarter, where the Burrill Biotech Select Index fell 13 percent, investor interest in biotech returned in July,” 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. “The continuing developments relating to Sanofi Aventis’ interest in Genzyme and strong second quarter financial results put a spark back in biotech, which had been dragged down by the tough capital markets.”

Genzyme’s shares jumped 37 percent in July on speculations that Sanofi will make a formal bid of as much as $18.7 billion for the biotech company representing $70 per share, to gain access to Genzyme’s portfolio of rare-disease therapeutics.

Stand out among the biotech companies reporting earnings in July was Celgene, which posted positive second quarter net income with sales of its cancer drug Revlimid rising 48 percent to $587 million. The company earned $155.4 million, or 33 cents per share, up from $142.8 million, or 31 cents per share, during the same period a year prior. Revenue rose 36 percent to $852.7 million from $628.7 million. The company’s shares closed the month up 9 percent.

Amgen’s shares rose 4 percent in July reporting a better-than-expected second-quarter profit. Gilead Sciences’ shares slipped 2 percent after missing analysts' second-quarter EPS estimates by 2 cents. Gilead also reported that it had completed the sale of $2.2 billion worth of senior debt. The company used about $248 million of the proceeds to repurchase common shares and expects to use at least another $752 million for the same purpose.

Biogen Idec posted a significant 18.5 percent gain in July on the strength of news that with Swedish Orphan Biovitrum it plans to advance a long-lasting, fully-recombinant factor VIII Fc fusion protein (rFVIIIFc) into a clinical trial in people with hemophilia A. The decision was based on promising data from a phase 1/2a open-label, cross-over, multi-center, dose-escalation study.

The Burrill Biotech Mid-Cap Index closed up 16 percent on the strength of Momenta Pharmaceuticals whose shares soared 81 percent in July following the FDA’s approval of its generic version of the Sanofi-Aventis SA injected blood thinner Lovenox. The Abbreviated New Drug Application for enoxaparin sodium for injection was developed under a collaboration agreement between Momenta and Sandoz.

Biotech IPO Activity

Three companies added themselves to the IPO runway in July:

- Mountain View, CA-based Complete Genomics, a life sciences company offering a DNA sequencing platform for human genome sequencing and analysis, filed on the last day of the month to raise up to $86 million.

- New York, NY-based Ventrus Biosciences, a specialty pharmaceutical company focused on late-stage drugs for gastrointestinal disorders, is looking to raise up to $20 million in an initial public offering.

- Trius Therapeutics, which postponed its planned IPO earlier this year, put itself back on the runway. The company is offering 6 million shares at an expected range of $12 to $14 per share.


BY THE NUMBERS
(Compiled by The Burrill Report*)

- The industry closed the month with a collective market cap of $343.03 billion (up 4.6 percent for the month and 1.7 percent for the year)

- Top five biotech companies by market cap are: Amgen ($52.34B, up 4.3 percent for July, down 3.3 percent YTD), Gilead Sciences ($29.38B, down 2 percent for July, down 22 percent YTD), Celgene ($25.42B, up 9.1 percent for July, down 0.4 percent YTD), Genzyme ($18.45B, up 37.2 percent for July, up 42 percent YTD), and Biogen ($13.52B, up 18.5 percent for July, and up 4.9 percent YTD).

- 55 biotech companies (18 percent) have market caps greater than $1B (compared to 49 companies at the same time last year)

- 98 biotech companies (32 percent) have market caps less than $100M compared to 39 percent (122 companies) at the same time last year.

-The Burrill Biotech Select Index is up 1.2 percent year-to-date.

(*The August edition of the subscription-based Burrill Report has a breakdown of the industry’s July 2010 performance together with complete details on the global financings, M&A and partnering transactions that took place in the month.)


Burrill Biotech Indices

 

INDEX

 

 

 

% CHANGE  (MONTH)

% CHANGE  (YR)

12/31/2009

6/30/2010

7/30/2010

Burrill Select

312.47

293.33

316.14

7.78%

1.17%

Burrill Large Cap

461.85

430.48

459.42

6.72%

-0.53%

Burrill Mid-Cap

166.01

149.59

174.26

16.49%

4.97%

Burrill Small Cap

88.12

75.39

78.6

4.26%

-10.80%

Burrill Genomics

159.87

142.05

153.36

7.96%

-4.07%

Burrill Diagnostics

147.96

130.82

126.36

-3.41%

-14.60%

Burrill Personalized Medicine

91.71

83.61

83.87

0.31%

-8.55%

Canadian Biotech

40.35

46.3

47.89

3.43%

18.69%

NASDAQ

2269.15

2109.24

2254.7

6.90%

-0.64%

DJIA

10428.05

9774.02

10466.1

7.08%

0.36%

Amex Biotech

941.92

1023.3

1059.63

3.55%

12.50%

Amex Pharmaceutical

309.21

276.29

280.57

1.55%

-9.26%

 

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