Biotech Outperforms the DJIA and NASDAQ by 2X for March

...and was just about even for the first quarter of 2003

San Francisco, CA - April 02, 2003

Public equity markets during March were driven primarily by expectations, then concern over the war in Iraq, while the economy and biotech took a back seat. As the U.S. and its allies alluded to war with or without a U.N. resolution, "uncertainty" became removed, causing the DJIA to post a 270 point gain, its largest in 5 months, on March 13. Moods however were tempered by the realization the war may take longer than first anticipated. The DJIA finished the month up a little over 1% and the NASDAQ closely followed, up a fraction of a percent. In contrast to these meager performances, the Burrill Biotech Select Index was able to post nearly a 4% gain for the month, biotech's best performance since November. "Better than expected results, good clinical news, and continued positive restructuring has brought investors back to the sector, even though public equity markets are still hostage to the Iraq uncertainty," commented G. Steven Burrill, CEO of Burrill & Company, a San Francisco-based life sciences merchant bank.

Though the war and the continued threat of terrorism played a role in drawing investor's interest to the field of biodefense, a new and not well understood illness in Asia reminded the public of the ever present risk of outbreaks caused by infectious disease, as well as the need to continue research and development into potential cures. Severe acute respiratory syndrome (SARS) appears to be caused by a previously unknown strain of coronavirus that is highly communicable, having spread across 13 countries and caused nearly 60 deaths in less than two months. Investors responded by bidding up the prices of two small cap biotechs conducting research in the space, ViroPharma and AVI BioPharma, with each gaining 32% and 9% during the month of March, respectively.

March was a good month for biotechs, reflecting relatively good news for the sector. Shares of ImClone were up as high as 40% during the month, ending up 24%, on news it had received a $60 million payment from its pharmaceutical partner Bristol-Myers Squibb and affirmation its European pharmaceutical partner, Merck KGaA, plans to apply for European regulatory clearance for ImClone's anti-cancer drug Erbitux by mid-year. After plunging 76% in 2002, ImClone's stock has surged nearly 60% year to date amid hopes the biotech firm will be able to successfully re-apply for U.S. regulatory clearance for Erbitux. Other strong performers during March were Abgenix and Ligand, advancing 51% and 37%, respectively. At the 61st annual meeting of the American Academy of Dermatology, Ligand presented data indicating its approved drugs Targretin® and Panretin® have beneficial effects in hand dermatitis, psoriasis, cutaneous T-cell lymphoma and photoaging. Shares of Gilead Sciences (GILD) closed up 24% for the month (24% YTD), reflecting investor interest in its European approval of Hepsera, a treatment for hepatitis. U.S. regulators previously approved the drug in September. Among other standouts in biotech this month, shares of Human Genome Sciences (HGSI) were up 26% for the month (down 3% YTD). The biotech firm said it had discovered an antibody-based drug that shows promise in preventing and treating the deadly anthrax bacteria. On the down side in March, shares of Isis Pharmaceuticals (ISIS) plummeted 20% for the month (down 46% YTD). Isis and its pharmaceutical partner Eli Lilly announced their experimental cancer therapy, Affinitak, failed to improve overall survival rates among lung cancer patients in a round of late-stage testing.

The Burrill Large Cap Biotech Index was up 3.65% for the month of March (4.14% YTD), reflecting enthusiasm for GILD and HGSI, up 32% and 24% respectively. In addition, Amgen (AMGN) was up 5%. HGSI expects its treatment for anthrax will enjoy a favorable clinical trial design due to the Bioterrorism Act of 2002, wherein the FDA specified products used to counter biological agents will need only to undergo human clinical trials to prove safety but not efficacy, when efficacy studies in humans are not feasible. A treatment for anthrax fits within this framework.

The Burrill Mid Cap Biotech Index posted a 8.35% gain for the month (but down nearly 11% YTD). ImClone and Abgenix were the largest drivers of mid-cap performance for the month, up 24% and 51%, respectively. Investors remain keenly interested in the prospects of Abgenix's lead product, ABX-EGF, an anti-EGFr monoclonal antibody in late-stage cancer trials.

The Burrill Small Cap Index was not far behind, rising 6% in March. The index leader, by far, was Geron, up a whopping 179%. Geron shares rose after announcing research results that indicate its telomerase cancer vaccine is effective in all cancer patients, even those with tumors that don't have any known tumor-associated antigens. The company is in the midst of a Phase I clinical trial utilizing a telomerase-based therapeutic vaccine for treatment of metastatic prostate cancer. Another strong performer was Aradigm (ARDM), ending the month up 58% after completing a $15 million private placement and releasing positive news relating to its aerosol-based drug delivery system for administration of insulin to diabetics. Results from a collaboration with Novo Nordisk show that the AERx® Insulin Diabetes Management System (iDMS) is safe, well tolerated and produces reproducible dosing in patients with asthma and smokers.

The Burrill Genomics Index also posted a gain of nearly 5% for March (down almost 2% YTD), reflecting better results from CuraGen Corporation (CRGN) up 20% for the month, Nanogen, Inc. (NGEN) up 23%, and the previously discussed rise in HGSI of 32%. After reaching a 52-week low of $3.02/share, Curagen was able to bounce back after receiving approval from the FDA to begin clinical trials of CG53135, a treatment for oral mucositis. Curagen claims preclinical studies indicate the drug's ability to reduce tissue inflammation and degeneration, and minimize the severity and extent of mucosal tissue damage.

The Burrill Agbio Index was flat for the month although Paradigm Genetics, Inc. (PDGM) was up nearly 60% for the month (81% YTD), reflecting investor enthusiasm for PDGM's move into human healthcare, validated by its significant agreement with National Institute of Environmental Health Sciences, and its impressive micro array deal with Agilent Technologies, Inc. (A).

An impressive 7% increase was reflected in the Burrill Diagnostics Index. Biosite was up 23% during the month after receiving clearance from the FDA to market its Triage Cardio ProfilER chest pain screen. Biosite expects to launch the product in the second quarter of 2003.

The Burrill Nutraceutical Index, up 6% for the month, reflected Martek's gain of 17% in share price. Martek posted 1Q03, ending January 31, 2003, revenues of $20.5 million, compared with $6.0 million for 1Q02. In addition, positive findings were published indicating expectant mothers who increased their intake of docosahexaenoic acid (DHA), produced by Martek, displayed improved pregnancy outcomes.

With the DJIA up just 1.28% for the month of March, and the NASDAQ essentially flat, biotech's relative performance was a standout.

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 biomaterials/bioprocesses.

Venture Capital
The Burrill family of venture capital funds, with over $417 million under management, includes the Burrill Life Sciences Capital Fund, the Burrill Biotechnology Capital Fund, the Burrill Diagnostics Fund, the Burrill Agbio Capital Fund and its successor-the Burrill Agbio Capital Fund II, the Burrill Nutraceuticals Capital Fund, and the Burrill Biomaterials/Bioprocess Capital Fund.

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Burrill & Company assists life science companies to identify, negotiate and close strategic partnerships providing access to resources, technologies or collaborations essential for executing their business plans.

We have completed more than 25 strategic partnerships with a value in excess of $1.5 billion.

For more information, please visit Burrill & Company's website at www.burrillandco.com.