Biotech Continues Its Steady Improvement In May

San Francisco, CA - June 01, 2005

"While Genentech continued to impress with another excellent month, the whole sector performed well with hardly a negative number in sight," noted G. Steven Burrill, CEO of Burrill & Company, a San Francisco based life sciences merchant bank. The impressive 6.78% gain recorded by the Burrill Biotech Select Index in May matched NASDAQ, which was up 7.02%, and both indices outperformed the Dow by a wide margin, which closed the month up 2.7%.

Driving the gain, in part, was Corixa Corporation (CRXA) who became to latest biotechnology company to be acquired by big Pharma. GlaxoSmithKline Plc, plans to pay $300 million in a cash for stock transaction for the company. The transaction, which is expected to close in the third quarter of this year, gives GSK, among other assets, access to Corixa's manufacturing facility in Hamilton, MT, which produces Monophosphoryl Lipid A®, a novel adjuvant contained in many of the vaccines in GSK's pipeline. Corixa's shares closed the month up 38% at $4.25.

Vertex Pharmaceuticals Inc. (VRTX) also finished the month strongly at $13.92, up 46%. The market reacted favorably to the company's interim results that indicated that their investigational oral hepatitis C virus (HCV) protease inhibitor VX-950 was well-tolerated and demonstrated potent antiviral activity in a Phase Ib clinical trial. Based on the results of the study, Vertex said it plans to explore the development of VX-950 as monotherapy and in combination with other hepatitis C virus treatments.

"With the all the Burrill indices staging a general comeback in May, the capital markets are indicating a return to biotech." said Burrill. "You cannot point to any one event that has triggered the change in investor sentiment. However, the excitement following the stem cell research announcement that South Korea fertility experts had used cloning to transform skin samples taken from 11 sick or injured people into supplies of embryonic stem cells certainly helped," added Burrill. "The heated debate surrounding stem cell research funding in the U.S. has dominated the headlines since then keeping biotech fresh in everyone's mind.

"In addition to stem cells, cancer therapies have also been in the news with attention focused on the American Society of Clinical Oncology's (ASCO) annual meeting in Orlando, Florida," said Burrill. "The consensus was that Genentech stole the show even though they were only providing additional data to previously released interim results of their Phase III study of Avastin (bevacizumab) plus paclitaxel chemotherapy in first-line metastatic breast cancer, and reporting on their successful Herceptin breast cancer Phase III study. In addition to its excellent reception at ASCO, Genentech (DNA) also reported positive results in a trial of Lucentis for macular degeneration, which helped drive its stock up 12% for the month.

No IPOs were completed in May but two more companies added their names to the lengthening IPO queue. Avalon Pharmaceuticals Inc. who is working on small molecule therapeutics for the treatment of cancer filed its registration, and Reliant Pharmaceuticals is planning an initial public offering of as much as $300 million. Reliant, with over $100 million in revenues, focuses on marketing pharmaceutical products to the high prescribing primary care, cardiovascular and specialist physician markets in the U.S. Reliant also acquires rights to and develops product candidates in mid- to late-stage clinical development.

"Although the general markets continue to remain 'choppy', it appears that the worries over inflation and oil prices have eased," added Burrill. "However, the upward swing for biotech has not yet translated itself into an opening of the IPO window, though deals coming in June will challenge the markets again.

"But we'll need some positive gains for the Biotech 2003/4/5 IPOs over the next couple of months before investors feel confident enough to buy into new issues. The IPO companies as a whole are still trading significantly under water since the beginning of the year, down 24% year-to-date, but the 4% gain this month is an encouraging sign," noted Burrill.

Burrill Biotech 2003/4/5 IPO Index (up 4.26%)
The IPO Index clawed back some of its losses YTD thanks in large part to San Francisco-based Renovis, Inc. (RNVS), which recorded an 85% increase in its share price during the month. The company released a first analysis of data from a Phase III trial involving more than 1,700 patients conducted by its licensee, AstraZeneca on Cerovive (NXY-059), a neuroprotectant. The data showed a statistically significant reduction versus placebo on the primary outcome of disability after an acute ischemic stroke as measured by the Modified Rankin Scale (MRS). However, on the NIH Stroke Scale, there was no significant difference in measurement of change in neurological impairment between the treatment groups. Just before the holiday weekend the share price of Renovis was trading at 150% above its end of April closing value. However, despite announcing, May 31 that it had entered into a worldwide collaboration and licensing agreement with Pfizer Inc. (PFE) to research, develop and commercialize small molecules that target the vanilloid receptor, VR1, that was potentially worth $170 million, Renovis shares fell dramatically to close at $13.20.

CoTherix, Inc. (CTRX) gained almost as much - closing at $9.10, up 83% - on the strength of reporting net product sales for Q1 of $345,000, which represents the initial sales of its Ventavis® (iloprost) Inhalation Solution, for the treatment of pulmonary arterial hypertension (PAH), a debilitating and potentially fatal disease characterized by high blood pressure in the pulmonary arteries.

Momenta Pharmaceuticals Inc. (MNTA) a biotechnology company developing drugs based on proprietary sugar sequencing technology said that it is on target for an ANDA filing in mid-2005 for M-Enoxaparin a technology-enabled generic version of the low molecular weight heparin drug Lovenox. The company's shares closed at $11.41 up 46% on the month. These significant gains were enough to offset Eyetech Pharmaceuticals Inc.'s (EYET) 44% drop in share value following Genentech Inc.'s announcement that its experimental drug Lucentis was shown to significantly improve vision in patients with wet age-related macular degeneration. The South San Francisco, California-based company said approximately 95% of patients given monthly eye injections of Lucentis maintained or improved their vision after a year, compared with 62% of patients in the study's control arm. Eyetech is commercializing and further developing its drug Macugen (pegaptanib sodium injection) with Pfizer Inc. for the treatment of neovascular AMD. Macugen was approved in the United States in December 2004 and in Canada in May 2005.

Burrill Biotech Large-Cap Index (up 8.92%)
The returning investor confidence in well established biotech companies was evident with shares of Affymetrix Inc. (AFFX) rising 16% even though the company did not issue any news until late on the final day of the month. It was a significant announcement too. The company reported that it has entered into a definitive agreement to acquire ParAllele BioScience Inc., for $120 million to be paid in Affymetrix stock. The transaction, which is expected to close in the third quarter of 2005, is expected to be financially neutral to Affymetrix's operating results in 2006 and accretive to net income in 2007.

ParAllele is a privately held, South San Francisco-based company that provides assay technology for genetic studies. Initially applied to genotyping, these highly flexible assays have the potential to be used in a broad variety of microarray applications. This acquisition builds on a successful two-year collaboration between the two companies.

Chiron Corporation (CHIR) and Enanta Pharmaceuticals signed an exclusive agreement to develop and commercialize Chiron's portfolio of hepatitis C virus (HCV) protease inhibitors. Enanta also has been granted a non-exclusive license to Chiron's HCV technology to further enable the R&D of HCV therapeutics. Enanta will have exclusive rights to develop and commercialize Chiron's portfolio of HCV protease inhibitors. Chiron shares closed at $37.54, up 10%.

Burrill MID-CAP Biotech Index (up 8.77%)
Digene Corporation (DIGE), Gaithersburg, MD, which develops, manufactures and markets DNA and RNA testing systems for the screening, monitoring and diagnosis of human diseases led the gainers with a 32% jump in its share price. The company was the beneficiary of the improving market conditions rather than any specific event.

Cell Genesys, Inc. (CEGE) saw its shares close up 25% following the announcement of positive additional results from its second multicenter Phase II trial of GVAX vaccine for prostate cancer. The results to date for the 22 patients who received the highest dose indicate that the median survival has not been reached for this group of patients. Geron Corporation (GERN) also closed the month positively at $8.00, up 30%. The company has obtained FDA clearance to initiate clinical testing of its lead anti-cancer compound, GRN163L, in patients with chronic lymphocytic leukemia (CLL). GRN163L is a potent inhibitor of telomerase. The only damper on the Index was Enzon Pharmaceuticals Inc. (ENZN) whose share price fell 22% during May, the price reflecting disappointing third quarter financial results. The company reported a net loss of $4.6 million or $0.11 per diluted share compared to a net income of $5.1 million or $0.12 cents per diluted share for the third quarter of 2004. Burrill SMALL-CAP Biotech Index (up 5.79%)
The small cap biotech sector has had a rough ride since the start of the year and the Burrill Small-Cap Index still remains down 25% year-to-date. However, thanks to some impressive double-digit gains by many of the constituent companies, the Index closed in positive territory for the month. Leading the way was Corixa Corporation (CRXA) with its 38% jump in share price and Xoma Ltd. (XOMA), which reported a sharp decline in its Q1 operating loss from operations - falling by 46%, from $20.0 million in the prior year quarter to $10.8 million in the first quarter of 2005. Xoma closed out the month at $1.40, up 17% Going in the opposite direction was Sirna Therapeutics, Inc. (RNAI) whose Q1 financial results reflected a widening net loss of $8.0 million, or $0.19 per share, compared to a net loss of $5.9 million, or $0.19 per share, for the same period in 2004. Sirna's shares closed at $2.20, down 23% since the start of the month.

Burrill Genomics Index (up 13.19%)
The stellar gain for the Index has brought it back to where it started at the beginning of the year. The genomics sector, which has been out of favor with investors for a long period, seems to be gathering momentum again on the escalating importance of pharmacogenomics, biomarkers and proteomics in drug discovery. Exemplifying this resurgence is Nanogen, Inc. (NGEN), whose shares closed up 53% at $4.08. The company is developing advanced diagnostic products, and was recently issued two US patents covering the ability to find appropriate biomarkers and improve the use of multiplexing in diagnostics. Nanogen's diagnostic technology can detect genetic mutations related to cystic fibrosis, arthritis, heart and liver diseases. CuraGen Corporation (CRGN), a genomics-based pharmaceutical company also posted a 34% jump in its share price during May. The company presented positive final Phase I results for a single-dose of velafermin (CG53135) for the prevention of oral mucositis (OM) in patients receiving high dose chemotherapy (HDCT) followed by autologous hematopoietic stem cell transplantation (AHSCT) at the ASCO meeting.

Burrill Nutraceuticals Index (up 12.28%) The Index was able to gain back all of the loss it experienced in April. Hansen Natural Corp. (HANS), a maker of alternative sodas, juices, iced teas and smoothies, led the charge with a gain of 32%, closing at $74.54. It reported quarter earnings that quadrupled, boosted by record sales of its Monster Energy drinks. Net sales increased 92% to $60 million from $31.3 million a year ago. Whole Foods (WHFI) share price also gained 19%. The company's sales are benefiting from the growing consumer interest in natural and organic foods.

About Burrill
Founded in 1994, Burrill & Company is a 50 person San Francisco-based global leader in Life Sciences Venture Capital, Merchant Banking and Media. The Company was a logical extension of G. Steven Burrill's over 36-year involvement in the growth and prosperity of the biotechnology industry. Mr. Burrill's respected reputation has positioned the firm as a prominent and preeminent venture capital firm and an industry "icon" in the life sciences. Burrill is a leading facilitator of partnerships, alliances and mergers, all of which foster a robust deal flow. Lending further support to the Burrill deal flow are: the scientific and business networks of Burrill's investment team; the nearly 40 person Advisory Boards; the strategic and financial network of its limited partners; and the close relationships developed with numerous life science companies and management as a result of Burrill's reputation and the firm's partnering, alliance and merger work.

Venture Capital
The Burrill family of venture capital funds, with over $500 million under management, includes the Burrill Life Sciences Capital Fund, the Burrill Biotechnology Capital Fund, the Burrill Agbio Capital Fund and its successor-the Burrill Agbio Capital Fund II, and the Burrill Nutraceuticals Capital Fund. The Burrill Life Sciences Capital Fund III, a $300-$500 million fund expects to become operational in 2005.

Merchant Banking
Burrill & Company assists life science companies to identify, negotiate and close strategic partnerships and merger and acquisition transactions providing access to resources, technologies or collaborations essential for executing company business plans. Twenty strategic partnerships and/or mergers with a value in excess of $1 billion have been completed to date.

Life Science Media
Burrill & Company's Life Science Media Group is involved in the organization and hosting of life sciences conferences worldwide and the publication of a wide range of industry reports and newsletters. The flagship is Burrill's annual book on the "State of the Industry", which has been an important part of the biotech industry's view of itself over the last 19 years. Biotech 2005-Life Sciences: A Move Towards Predictability is the latest in the nearly 20-year series. This 625-page book offers a perspective on where the industry has been and where it is headed. The Media Group's monthly and quarterly reports and publications and its Datacenter provide an online resource for the latest insight, intelligence and information regarding the biotech industry. To order Biotech 2005 or to subscribe to the Burrill Datacenter, visit www.burrilldatacenter.com or call 415-591-5400.