And a down-beat story leading in to H&Q:
Biotech Firms Limp Into Big Conference
- Jan 6, 2003 08:50 AM (AP Online)
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It was here last year at an annual investors conference that
Samuel Waksal, then the chief executive of ImClone Systems
Inc., famously understated: "We screwed up."
And it's here, at the 21st annual J.P. Morgan H&Q
Healthcare Conference that starts Monday, where investors,
executives and analysts gauge the prevailing mood for the
industry's coming year _ a sort of biotechnology Groundhog Day
that lasts all week.
The prognosis is not good.
"The publicly traded biotech companies got creamed in 2002,
sustaining one major blow after another," said G. Steven
Burrill of investment bank Burrill & Co.
As ImClone crashed, coming under fire last year for botching
its Food and Drug Administration application to market its
cancer-fighting drug Erbitux, so too did biotechnology in
general. Waksal pleaded guilty in October to bank and
securities fraud related to his sale of ImClone shares.
Publicly traded biotechnology companies as a group have lost
more than 40 percent of their value in the past year, while
privately held companies are having trouble attracting venture
capital investment. While venture capital investment in
biotechnology increased to $3.2 billion in 2002 from $3 billion
the previous year, such investment dwindled to only $1.3
billion since June, said Ken Andersen, editor of
VentureWire.
"It was pretty remarkable how it cooled over the summer," he
said.
Much of the disillusionment with biotechnology occurred
because of high-profile flops such as ImClone.
The FDA approved just 16 new drugs last year, compared with
24 in 2001.
It takes some 15 years and $650 million to bring a single
drug to market, spooking many investors who are looking for
short-term gains and tangible products from their investments,
casting an even longer shadow over this year's conference.
"I think it's going to be a very skeptical audience," said
Brian Atwood, managing director of venture capital firm Versant
Ventures.
It's amid this climate that some 250 biotechnology companies
will stagger into this year's conference, one of the biggest
gatherings of its kind. The executives face the daunting task
of convincing investors, large and small, to loosen their purse
strings in 2003. Most biotechnology companies lose money and
need constant cash infusions to fund expensive drug
experiments.
"Biotech depends heavily on the capital markets, which were
very tough in 2002," Burrill said. "This had a devastating
effect on just about everybody."
Stock market delistings, layoffs and bankruptcy filings
swept through the sector in 2002.
In Vacaville, Calif., for instance, struggling Large Scale
Biology Corp. may be forced to scrap its research on a
promising cancer vaccine grown in tobacco if it can't find new
funds soon.
Its stock price hovers under $1 a share, which could get it
delisted from the Nasdaq Stock Market, and its cash supply has
dipped. Chief executive Robert Erwin will be pitching Large
Scale's attributes during a 30-minute presentation at the
conference Thursday.
Because of what happened at ImClone, analysts and
biotechnology executives said large pharmaceutical companies
are wary of making similar investments in small biotechnology
firms.
Bristol-Myers Squibb Co. invested $2 billion in ImClone in
September 2001, losing much of that investment after ImClone's
stock tanked a year ago. ImClone's stock has crashed from a
high of $70 a share to about $11 now.
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On the Net:
JP Morgan: jpmorgan.com
Peter |
