Here's Burrill's quarterly comments. Note that all biotechs combined are now at about 2x MRK's market cap.
Monday April 2, 7:05 am Eastern Time
Press Release
SOURCE: Burrill & Company
Biotech Financing Window Closes Amid a Market Downturn
Sequencing the Human Genome Not Enough
SAN FRANCISCO, Calif., April 2 /PRNewswire/ -- Following the year 2000, the most phenomenal year ever for biotech with the industry raising $32 billion during the year and $7.3 billion in the first quarter of 2000, year 2001 started at the opposite end, the least productive financing quarter for biotech in the last 8 quarters. ``With the biotech markets indices off 15 to 25 percent for the month and down as much as 80 percent from their mid 2000 high, investors waited by the sidelines watching the Dow and Nasdaq drive markets lower all quarter,'' said G. Steven Burrill, CEO of Burrill & Company. The March 2001 quarter end reflected an industry market capitalization of $330 billion, down from its spring 2000 high of $500+ billion. Investor enthusiasm for genomics following the spectacular announcement this quarter (February 12th) of the completion and the publication of the human genome sequence still couldn't stem the tide, as investors looked for liquidity and the highest of investment quality.
``Financings totaled nearly $2 billion for the quarter, still an amazing amount of funding for our industry, which raised only $5 billion/year in '96, '97 and '98. With the bar raised to $10 billion in '99 and $32 billion in 2000, it looks like a bad quarter,'' commented Burrill. ``But at a time when most think the equity market is dead, the industry still raised $2 billion.''
Financings
Financings were off dramatically for the quarter. Only 3 companies went public this quarter (raising $187 million versus $1.1 billion the same quarter last year):
Market
Amount Price at Cap at
Offering Raised Qtr End Qtr End
Company IPO Date Price (in $M) (3/30/01) %Change (in $M)
Exact Sciences
Corporation
(EXAS) 1/31/01 $14 $56.0 $7.62 -45.6 $143
Third Wave
Technologies
(TWTI) 2/9/01 $11 $82.5 $7.00 -36.4 $274
Seattle
Genetics
(SGEN) 3/7/01 $7 $49.0 $5.00 -28.6 $146
SUMMARY 3 IPOs Avg. Total Avg.
Offr. Raised: %.
Price: $187.5 Change:
$10.67 -36.9
The number of secondaries was also down significantly in the first quarter of 2001 compared to fourth quarter 2000: only $711 million was raised in follow-on activity this quarter, compared to first quarter of 2000's follow-on activity of $7.3 billion, biotech's biggest ever. ``A slowing economy and falling markets created an unreceptive environment for such deals to take place,'' commented Burrill.
First quarter 2001 secondaries included:
AMOUNT
RAISED
TICKER (in $US PRICE AT PRICE AT %
COMPANY SYMBOL Millions) SECONDARY 3/30/01 CHANGE
Aviron AVIR 200 $50 $41.56 -16.9
Charles River
Laboratories * CRL 86.5 $19 $24.75 30.3
Praecis
Pharmaceuticals * PRCS 186.4 $24.6 $19.94 -18.9
Regeneron
Pharmaceuticals REGN 162.5 $25 $22.19 -11.2
TOTAL FOR
Q1 01
($M) $635.4
* includes over-allotments
M&A and Alliances
``Traditionally when markets are tight and investors tentative, M&A picks up,'' commented Burrill. ``This quarter's blockbuster headline was Johnson & Johnson's $10.5 billion acquisition of ALZA, the biotech industry's biggest ever.'' ALZA will provide J&J with a significant number of revenue generating drugs and drug delivery systems applicable to current J&J products. J&J rival Abbott Laboratories attempted to acquire ALZA in 1999 for $7.3 billion, but was derailed due to antitrust concerns.
A summary of the major M&A in the quarter included:
Value
Aquirer Acquired ($US Millions)
Johnson & Johnson ALZA $10,500
ArQule Camitro 95
Charles River Laboratories Primedica 52
Bio-Technology General Myelos 35
Ilex Oncology Symphar 30
``While alliances also see upticks during periods of market uncertainty, it's too early to see that much activity,'' commented Burrill.
Selected biotech/pharma alliances this quarter included:
Value
Biotech Pharma Description ($US
Millions)
CuraGen Bayer 15 year obesity and diabetes $1,340
agreement expected to yield
12 candidates for clinical
development.
Millennium Abbott The companies will develop 250
Laborat diagnostics for obesity
-ories and diabetes
CuraGen Bayer Curagen will use its 124
pharmaco-genomics and
toxicogenomic technologies
to evaluate Bayer's early
-stage compounds
EpiGenesis Taisho Epigenesis licensed EPI-2010 100
Pharmaceuticals Pharmaceuticals Asia rights to Taisho, in
return for payment and co-
development
MorphoSys Johnson Morphosys technologies will 21
& Johnson be used to generate Abs and
perform target discovery for
J&J subsidiary Centocor
The Quarter's Product News
Immunex halted trials of its rheumatoid arthritis drug, Enbrel, for the treatment of congestive heart failure, after the drug wasn't shown to be effective against the disease.
Applera Corp.'s Applied Biosystems warned of slower mid-term growth. The Company blamed a slowdown in purchases of their highest-priced items, a stronger dollar weakening foreign sales and a slow down of manufacturing and sale of products currently undergoing life-cycle changes. Applied Biosystems stock (ABI) lost almost 50 percent of its value in a day.
THE BIG STORY
Of course, the biggest story of the quarter was the sequencing and publishing of the human genome. ``A thousand years from now when looking back over the millennia, this moment in time will standout as one of those transforming moments when we first fully understood the human genome and the benefits to human healthcare, wellness, agriculture, biomaterials and the environment,'' commented G. Steven Burrill.
Celera and the Human Genome Project published the results of sequencing the human genome in the March issues of scientific journals Science and Nature, respectively. Upon further analysis, both camps agreed there are far fewer genes than was previously predicted, estimating the number to now be around 30,000 rather than 100,000 as was once thought. Critics and companies who base their business models on the larger number, quickly pointed out that a small number of genes, as defined by the new guidelines, can still account for the previously estimated number of proteins, because one gene can code for more than one transcript/protein.
Genome sequencing is continuing and resulted in the completion and announcement of many key organisms. Celera announced completion of the mouse genome, an animal widely used in drug research. Infectious agent E. coli O157, often termed the ``burger bug,'' had its genome completed. Researchers hope a better understanding of this troublesome pathogen will facilitate the development of better diagnostics that will detect its presence in the food supply.
Other News of Note
Stem cell research took center stage as President George W. Bush declared he was against federal funding of research on fetal tissue or stem cells derived from induced abortions. But Bush reiterated his support of scientific progress by stating his support for adult-derived stem cells and stem cells taken from fetuses that died of natural causes. This ``battle'' between science/industry and abortion opponents is still raging.
Amgen won their patent litigation with Transkaryotic Therapies over erythopoietin. Judge William Young ruled that despite differing production technologies, Transkaryotic Therapies did not show their invention was different from Amgen. This ruling may have implications to those who intend to create ``generic'' competition based in non-fundamental changes to existing therapeutics or differing production techniques.
Burrill & Company |
