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"Despite a sea of red numbers for our other indices, the Burrill BiotechSelect Index recorded a credible gain of close to 4% in the month of March,"said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based globalleader in life sciences with activities in Venture Capital, Private Equity,Merchant Banking and Media. "This gain was in spite of the fact that thequarter was a bad one any way you sliced it. Investors have been shell shockedin the wake of not only surging oil prices (the declining dollar) and thehousing slump but also near chaos in the financial markets with Wall Streetalmost imploding in the wake of a massive global liquidity crisis.
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"While 'blue chip' companies such as Genentech and Gilead Sciences have sofar weathered the market downturn, emerging companies have been less fortunatesince they are perceived by investors as more risky," noted Burrill. "Forexample, the Burrill Mid Cap Biotech Index dropped over 23% in Q1 '08. This iswhy companies with broader-based product portfolios are able to ride outuncertain markets. Interestingly enough, investors have been choosingbiotech's elite companies over big Pharma companies. This is reflected in thefact that the Amex Pharmaceutical Index closed the quarter down 12% at 295.23,its lowest total since October 2004."
Biotech IPOs on hold
The prevailing tough economic environment also took its toll on biotechIPO "hopefuls" with Biolex, Light Sciences Oncology and Archemix cancellingtheir planned offerings because of the market conditions. Only one companybraved the market -- Bioheart, a biotechnology company focused on using cellsderived from a patient's body for treatment of heart damage. It priced its1.1 million shares offering at $5.25 the midpoint of a revised range. Thecompany had originally filed for an offering of 3.6 million shares at a rangeof $14-$16. The company's shares closed the month of March at $4, down 24%.
The tough economic environment kept other biotech IPO "hopefuls" groundedon the runway. Several, however, did file for an IPO in order to get in lineand be ready to respond rapidly to complete their IPO when the marketimproves:
Market cap
The industry's market cap closed at $442 billion, unchanged for March anddown 2% for the quarter. Genentech's market cap closed the month at $85B --the company's shares had a very good month (up 15.7%) and quarter (up 21%).Amgen shares slipped 10% in the quarter with the result that the company'smarket cap dropped to $45B. As a result, the company slipped one place incompany rankings by market cap with Gilead Sciences closing the quarter at$47.8B. Shares of Gilead hit a new 52-week high by month end following new ofstrong sales of its HIV drugs Truvada and Atripla.
Partnering and financing still continue, but at a slower pace
Financings and partnering deals tracked by Burrill & Company collectivelybrought in approximately $6.6 billion for US companies in Q1 '08 with over$3.5 billion through financings and $3 billion in partnering capital. Thistotal was the lowest raised in any quarter period since 2004.
The largest announced partnering deal in the quarter belonged to GenzymeCorp. and Isis Pharmaceuticals, Inc. They entered into a major strategicalliance in which Genzyme will develop and commercialize mipomersen, Isis'lipid-lowering treatment for high risk cardiovascular patients. Deal termscould add up to over $1.1 billion. Genzyme will pay Isis $150 million topurchase five million shares of Isis common stock and a $175 million up-frontmipomersen
