Biotech Gets A Much Needed Boost In April

San Francisco, CA - May 02, 2005

"After a dismal first quarter, largely suffering from the Tysabri fallout, biotech got a much-needed shot in the arm in April thanks mainly to Genentech, who have been on a tear recently and almost single handedly pulled the rest of the sector up along with it," noted G. Steven Burrill, CEO of Burrill & Company, a San Francisco based life sciences merchant bank. The Burrill Biotech Select Index ended April up a healthy 6%, compared to the NASDAQ which was, down 3.8% and the DJIA, down 3% for the month. In addition to Genentech, helping the industry's value growth and the Burrill Biotech Select Index, was Transkaryotic Therapeutics - following a whopping 36% jump in share value driven by the news that Shire Pharmaceuticals (SHPGY) was acquiring the company.

"It has been some time since biotech beat Nasdaq and the Dow by this wide a margin," said Burrill. "The parade of positive product news from Genentech, coupled with Shire paying a premium of almost 22% for Transkaryotic Therapies, Inc. (TKT)'s shares, couldn't have come at a better time for the industry."

Shire Pharmaceuticals Group's $1.6 billion acquisition of Transkaryotic Therapies, Inc. (TKT) in an all cash transaction valued at $37 per share leverages TKT's experience in the renal and hematology sectors with Shire's a relatively low risk development pipeline. It also adds two approved products, Replagal™, an enzyme replacement therapy for patients with Fabry disease with product sales of $77 million in 2004; and Dynepo™, an erythropoietin used for the treatment of kidney disease-related anemia. Transkaryotic also has two late-stage clinical development products, Iduronate 2 sulfatase (I2S), an enzyme replacement therapy currently in Phase III of development for the treatment of Hunter Syndrome and GA-GCB a glucocerebrosidase currently in Phase I/II for the treatment of Gaucher disease. Transkaryotic closed the month at $33.88.

Also on the M&A front, Beckman Coulter, Inc. says that it plans to acquire Agencourt Bioscience Corporation of Beverly, Massachusetts, a provider of genomic services and nucleic acid purification products in the biomedical research market. Terms of the agreement include a payment at closing of $100 million and up to $40 million of contingent payments through 2007. Agencourt's 2004 sales were about $27 million.

Despite the high profile Shire/TKT transactions, it was Genentech that dominated the news in April…reporting on several positive product developments. The first, mid-month, Genentech and Roche said that an interim analysis of a Phase III study of Avastin (bevacizumab) plus paclitaxel chemotherapy in first-line metastatic breast cancer met its primary efficacy endpoint of showing an improvement in progression-free survival, compared to chemotherapy alone. This was followed up with the news that Herceptin delivered a significant benefit to early stage breast cancer patients. The drug was so successful, in fact, that the Phase III trial was stopped early with preliminary data suggesting that Herceptin increases progression-free survival by more than 50%, resulting in survivals that are longer by years, not months. Genentech posted a 27% rise in its share price for the month (30% year-to-date) and this coupled with Amgen's flat performance in the month was enough to vault the company over Amgen for top market cap spot.

"Despite beating the street and posting first quarter earnings per share of 67 cents and total product sales up 24%, Amgen got no reaction from Wall Street. "As if that weren't enough, Amgen lost its status as the world's largest biotech company," said Burrill, "Genentech, with a market cap of approximately $74 billion, now can claim that title.

"It has been that kind of month in which we have had a sampling of almost everything…product successes and failures, a high profile M&A and the end of Amgen's reign as the world's top biotech company," added Burrill.

"Even, Biogen Idec's shares showed some life following the release of data from a study of Tysabri, the currently withdrawn MS drug from Biogen Idec and Elan showing that the drug clearly lessens the devastating impact of multiple sclerosis," Burrill said. The news has fueled speculation that the drug could make a comeback although both companies have been cautious in response and referring to the fact that comprehensive safety evaluations concerning Tysabri are still ongoing. Biogen Idec closed at $36.24 (up 5%)

"We are not out of the woods but these events could bring investors back off the sidelines," noted Burrill. "It looks as though the general market volatility over the weak economy, high oil prices and mixed earnings reports have already done their worst to biotech share performances. In addition investors appear to be moving into non-cyclicals from cyclicals and this will probably benefit pharma and even biotech companies with products on the market."

While there were no IPOs completed in April, several companies have been quietly lining up on the runaway - Coley Pharmaceutical Group is looking to raise up to $115 million; Prestwick Pharmaceuticals Inc. said it is seeking to raise as much as $74.75 million, and has also submitted a New Drug Application to the U.S. Food and Drug Administration for review and approval to market tetrabenazine for the treatment of chorea associated with Huntington's disease. Advanced Life Sciences says that it is looking to raise $86 million.

"It will be interesting to see how the market responds to these offerings with the IPO window essentially closed at present and the Burrill Biotech 2003/4/5 IPO Index down 8.35% this month and 27% YTD, said Burrill. "If they do manage to squeeze through, it may be a signal that a rally for biotech is in the offing."

Burrill Biotech 2003/4/5 IPO Index (down 8.35%)
While the performance of the over 40 companies that are in the Index wasn't quite as bad as the previous month, just over half of them still recorded drops in share price in April. "This group continues to be plagued by disappointing clinical trials results," Burrill commented.

Memory Pharmaceuticals Corp. (MEMY), for example, reported that Roche Holding AG decided to stop development of two neurological agents licensed under a 2002 agreement. The collaboration involved two PDE4 inhibitors known as MEM 1414 and MEM 1917. Memory said Roche decided not to pursue development of the compounds on its own and that the two companies have commenced discussions to determine the future of these two compounds. The collaboration continues to work on PDE4 inhibitor back-up compounds. Memory closed down 51% at $2.15

CancerVax Corp. (CNVX) lost over half its value (58%) after Swiss biotech company Serono SA said that it would discontinue two late-stage clinical trials. One trial involved the use of Canvaxin for the treatment of Stage IV melanoma, or skin cancer that has spread past the site of origin to distant areas or lymph nodes. Data showed that the treatment was unlikely to provide significant evidence of a survival benefit. Serono was developing the drug with CancerVax.

In December, Serono and CancerVax, the maker of Canvaxin, signed a deal to develop the treatment for melanoma and other indications. Under the agreement, CancerVax received $25 million upfront and sold 1 million common shares to Serono for $12 million. At the time, CancerVax said that it could receive up to $253 million in additional payments from development, regulatory and commercial milestones.

Burrill Biotech Large-Cap Index (up 6.57%)
The gains achieved by Genentech were responsible for the excellent monthly performance of the Index. Human Genome Sciences, Inc. (HGSI) shares were also up 12% at $10.32 following the news that LymphoStat-B (belimumab) met the primary efficacy and safety endpoints in a Phase II clinical trial in patients with rheumatoid arthritis. Celgene Corp. (CELG) reported that its first-quarter income grew to $48.2 million, or 26 cents per share, from $8.9 million, or 5 cents per share, a year ago. The company's shares finished the month at $37.91, up 11%.

The only company to post negative numbers was Chiron (CHIR) down 3% at $34.15. The company posted a loss in its first quarter financials. The results were adversely affected by having it Fluvirin vaccine pulled off the market last year due to manufacturing problems at its UK facility.

Burrill MID-CAP Biotech Index (up 4.39%)
Shares of Laval, Quebec-based Neurochem Inc. (NRMX) were hammered after the company reported that results of a phase II/III clinical trial, involving 183 patients treated for 24 months with lead product Fibrillex, missed its primary endpoint. The objective of the study was to determine the ability of Fibrillex to treat AA Amyloidosis, a disease that normally progresses to end-stage renal failure and death and for which no specific treatment exists, and to assess safety compared with placebo in the patient population with impaired renal function at baseline. The composite primary endpoint of the study included kidney function measurements and death and called for a 20% absolute difference in the number of patients stabilized/improved between the Fibrillex and placebo groups. Only13.4% patients remained stable or improved, compared with those taking a placebo. Neurochem closed at $7.25 (down 39%). However, the performance of Transkaryotic Therapeutics was able to balance out this loss and overall the Index performed extremely well.

Burrill SMALL-CAP Biotech Index (down 4.15%)
Investors still remain cautious on the small cap biotech sector. Any negative news such as with CancerVax (see IPO Index) is treated harshly. NeoRx Corporation (NERX), for example, closed down 36% after it was revealed that its 2004 financial statements included a "going-concern" qualification. Nasdaq's rules require Nasdaq-listed companies to publicly announce whenever a Form 10-K includes an audit opinion containing a going-concern qualification.

Again, like the April performances of the other indices, the losses were balanced out by comparable gains posted by such companies as Transgeomic Inc., (TBIO), which closed up 40% at $0.80. The company, which through its nucleic acids business segment provides specialty chemicals, including advanced nucleic acid building blocks and associated reagents used in the manufacture of synthetic oligonucleotides, did not report any major news. Shares of Dyax also closed the month up 24% thanks to their news that they were testing an easier way to administer lead drug, DX-88, a treatment for hereditary angioedema, a rare inflammatory disorder.

Burrill Industrial Biotech Index (down 4.46%)
The more established industrial companies tend to suffer more in periods of economic uncertainty. Such was the case with the Burrill Industrial Biotech Index with 75% of the companies that comprise the index posting negative numbers. Dutch chemicals group Akzo Nobel (AKZOY) says that it needs another two years to fix its ailing pharmaceuticals unit. The company closed at $41.04, down 11%. Dow Corning Corp. (GLW) reported consolidated adjusted net income of $132.6 million for the first quarter of 2005, an increase of 154 percent from net income of $52.2 million reported in the same quarter of 2004. This boosted the company's share price, which closed at $13.75 up 24% on the month.

W. R. Grace & Co. (GRA), also helped keep the Index loss down to single figures with its own 10% share price gain. Grace reported that 2005 first quarter sales totaled $603.2 million compared with $518.5 million in the prior year quarter, an increase of 16.3%. Revenue from higher base volumes and from acquisitions accounted for most of the increase, with selling price increases to partially offset inflation in the cost of raw materials and energy.

Burrill Agbio Index (down 6.23%)
Eleven of the 13 companies posted negative numbers in April, ending a solid performance of this group over the past six months.Shares in Archer Daniels Midland Co. (ADM), for example, fell dramatically after the maker of ethanol, sweetener and other products announced that its Q1 earnings fell far short of Wall Street's expectations. Profits in its bioproducts sector declined $42 million in the quarter due partly to lower ethanol sales. The company's shares closed out the month down 27% at $17.99.

Burrill Nutraceuticals Index (down 11.24%)
Like the Agbio and Industrial indices, the investor enthusiasm for nutraceuticals companies has finally run out of steam. Although the Index remains up 3% YTD, over 88% of the companies closed the month losing ground, many with double digit percentage drops in their closing share prices. Sharing the honors for the largest decline were Martek Biosciences Corp. (MATK) and Weider Nutrition International (WNI) at 34% respectively. Weaker quarterly sales for both companies contributed to the dramatic drop.

About Burrill & Company
Burrill & Company is a life sciences merchant bank, focused exclusively on companies involved in biotechnology, pharmaceuticals, diagnostics, human healthcare and related medical technologies, wellness and nutraceuticals, agricultural technologies, and industrial biotechnology (biomaterials/bioprocesses).

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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. Burrill & Company has commenced its Burrill Life Sciences Capital Fund III, a $300-$500 million fund, which it expects to become operational in 2005.

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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. We have completed 20 strategic partnerships with a value in excess of $1 billion. Service lines include:

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