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Article Excerpt
SAN FRANCISCO, Dec. 18 /PRNewswire/ -- "Rising like a phoenix from the ashes, the biotech industry re-emerged in 2003 recovering from the massive devaluation that took place during the last three years," said G. Steven Burrill, CEO of Burrill & Company, a San Francisco-based life sciences merchant bank. While still way off from its market capitalization of nearly $500 billion at the height of the genomics bubble (spring 2000), the biotech industry's market cap at the end of November 2003 was $330 billion, up 32% since the start of the year. "The industry turned in a stellar performance on Wall Street, not only seeing dramatic price recovery but also raising more than $16 billion in financing. We also saw seven new companies enter the public equity markets," noted Burrill. "The FDA also approved more than 19 biotech drugs and, with the passage of the $400 billion legislation overhauling the nation's healthcare coverage, biotech has a new Medicare partner."
Since the start of the year, the Burrill Biotech Select Index has risen 59%, outperforming both the DJIA (up 17% YTD) and the Nasdaq (up 47% YTD). "But as fine as the industry's performance was in 2003, we have reason to believe that 2004 will be better still," he noted. "For one, there are no more of these 'boxcar' size issues looming in the wings that could get the industry off track. We've had the dot-com disaster, the technology bubble, the 9-11 bioterrorism phenomenon, the 'headless' FDA, the ImClone debacle and its ensuing ramifications, and the war with Iraq," he noted. "Now, as the economy continues in a positive direction and the industry is firmly on its feet, we'll see a very strong performance from biotech in the year to come," said Burrill. "Although we expect the IPO market to continue to be somewhat choppy during '04, we're nonetheless anticipating that 2004 will be the second biggest IPO year in the industry's history with 25-30 deals getting done," Burrill added.
"Although 2003 got off to a slow start with the clouds of war and the threat of SARS obscuring progress in the first quarter, Q2 03 was impressive for biotech. Eight new biotech drugs were approved in Q2 03, confirming FDA Commissioner Mark McClellan's leadership prowess and whetting the appetite of the investment community once again," explained Burrill. "By mid-year, the industry was clearly back on track," noted Burrill. "You could feel the intensity of the enthusiasm at the BIO 2003 convention in Washington, D.C. in June when President George W. Bush, the first president ever to address a BIO conference, said, 'My administration is committed to working with your industry so that the great powers of biotechnology can serve the true interests of our nation and mankind'. Also speaking to the 15,000 attendees at this year's BIO were Mark McClellan, HHS Secretary Tommy Thompson, Homeland Security Secretary Tom Ridge and Senate Majority Leader Bill Frist...a pretty spectacular line-up," noted Burrill.
The momentum continued and Q3 03 was the biotech industry's strongest quarter in three years with more than $8 billion raised. Then in October, after five consecutive quarters without a single traditional IPO (Neurochem began trading on Nasdaq in September but it was already listed on the Toronto exchange), Acusphere (ACUS), Advancis (AVNC), Myogen (MYOG), CancerVax (CNVX) and Genitope (GTOP) made their debut on Nasdaq. In November, NitroMed (NTMD) and Pharmion (PHRM) also went public. "Although both Neurochem and Genitope have done very well in their performance on the market, the rest of these companies are trading at discounts which has definitely dampened investors' spirits," noted Burrill.
"This situation also puts pressure on the rest of the companies lining up on the IPO runway. Indeed, since this somewhat fragile IPO window opened, three companies -- Aderis, Tercica, and TolerX have pulled their deals," said Burrill. "This is not to say that the biotech IPO market won't remain vital for some months to come, but the bar has been set significantly higher than in 2000 when some 67 biotech firms went public," explained Burrill. "The companies that have managed to go public in 2003...
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