Allen, BHH 18 11/16 now! LOL. Thanks for the link. There's a bunch of dogs in there...don't you think?
Btw
>December 27, 2000
In the world of biotechnology, 2000 was the undisputed Year of the Genome.
Or, to be more precise, The Year Biotech Companies Cashed In on the Genome.
Science achieved a historic milestone -- and biotechnology companies and Wall Street shamelessly milked a major public relations coup -- with the completion in June of the first rough map of the human genome.
Anticipation and fulfillment of that accomplishment, coupled with a cooling toward high-tech dot-coms that sent investors scurrying to the life sciences, prompted an unprecedented investment frenzy in biotech.
The Nasdaq Biotech Index rose 70 percent during the first three months of 2000. By March -- the peak of this year's biotech boom -- the index had skyrocketed more than 230 percent above where it had been in March 1999.
Though the frenzy eventually turned to extreme volatility, and, along with the rest of the market, a major downward correction, the biotech index was up almost 24 percent for the year at the close of regular trading yesterday, compared with a 39 percent loss for the Nasdaq composite index overall.
Biotech investors ended the year either flush or bust, depending on when they purchased their biotech shares. But biotech companies undeniably came out ahead: The sector raised a record $35 billion through venture capital investment, initial public offerings, private placements and secondary offerings.
While the early and mid-1990s also saw big biotech surges, experts agree that those peaks can't compare to the amount of cash flung at biotech this year. During the first three quarters of 1999, public and private biotechnology companies raised about $867 million. In contrast, they raised nearly nine times that amount, or $7.7 billion, during the first quarter of 2000 alone.
"The human genome story really put biotech back on the front pages of newspapers, where it hadn't been in a while," says Emily Hall, a biotech analyst with Morningstar.com. "Genomics company stocks got a lot of coverage, people became interested, people started investing in (biotech) mutual funds, and that led to even more investment."
With the completion of the first rough draft of the human genome -- an effort led by rivals Celera Genomics and the government-sponsored Human Genome Project -- scientists were given their first peek at the exact sequence of an estimated 3.5 billion pairs of chemicals that make up DNA.
Arranged in different ways, that sequence creates the 100,000 or so human genes that carry instructions for all the body's complex processes. And, not coincidentally, 100,000 appears to be roughly the number of genomics companies that came into being to exploit the flood of genomic data.
Well, OK, not really. But it sure felt like it, according to analyst John McCamant, editor of the Medical Technology Stock Letter in Berkeley.
"There were too many genomics companies doing the same thing with the same lack of a sustainable business model," McCamant says. "At the same time, they raised lots and lots of money. But it was on a long, long promise."
A pricey batch
This year saw the birth of biotech's priciest batch of public companies. As of mid-December, about 65 made it out of the gate nationwide in 2000. The companies, many of them genomics "tool" companies that supply lab techniques, information databases and screening tools to traditional drug developers, raised a total of $23 billion.
San Diego mirrored the national trend in red-hot initial public offerings. Between February and August, six new San Diego biotech companies made their IPO debut and netted about $695 million. The companies -- most billed as "post-genomic" tool or drug development companies -- are Sequenom, Diversa, Applied Molecular Evolution, Arena Pharmaceuticals, Discovery Partners International and Illumina.
Though six might seem sparse, compare it to 1999. Then, Invitrogen was the only San Diego biotech to go public, raising $52.5 million. At the time it was the largest IPO by a local biotech in two years.
In contrast, this year Diversa netted about $184.9 million; Sequenom, $144.7 million; Arena, $99.2 million; Illumina, $88 million; Discovery Partners, $83.7 million; and Applied Molecular, $94.5 million.
G. Steven Burrill, chief executive of Burrill & Co., the San Francisco investment bank, predicts that "2000 will end up having been biotech's 'finest hour' in IPOs."
Filling the coffers
New public companies in San Diego weren't the only ones that did well, however. By mid-December, older, established public companies in San Diego raised an estimated $1.2 billion through secondary offerings, private placements, convertible debt deals and other financings, according to a survey by Roth Capital Partners, an investment bank in Newport Beach.
Private biotech companies in San Diego also filled coffers at record rates, according to a survey by PricewaterhouseCoopers. Through September, the latest figures available, San Diego start-ups raised $250 million from venture capitalists -- compared to $90 million raised in the whole of 1999.
All told, San Diego biotechs -- both public and private -- raised more than $1.9 billion in 2000.
So how can biotech companies possibly top the heady year 2000? The short and not-so-sweet answer is that it probably won't. Analysts and industry insiders agree that 2001 will be a more cautious, selective year for investors, many of whom are already ailing from their biotech binge.
Signs of wariness became apparent this fall: the major biotech indexes have given up most of their early gains, biotech stocks have experienced a major correction, and IPOs have slowed to a trickle.
A banner year
Experts say the very factors that drove biotech to its banner year -- genomics and investor greed -- may now be what comes back to bite the sector in 2001. Though biotech valuations have fallen, many remain too high to justify, they say.
That could translate into more investor disillusionment and falling values, says Lisa Walters-Hoffert, managing director of the San Diego office of Roth Capital.
"Companies with a genomics-platform received so much interest in 2000, but the question that always has to be answered is, 'How do they ultimately make money?' " she says. "If a company is trading at 20 times their revenue numbers, they are vulnerable in terms of valuation."
The good news is that the biotech sector is in the best cash position it has experienced in years, Walters-Hoffert says. Companies can use their new wealth to bring products to market, or buy their way into a more robust business plan and new products through mergers and acquisitions.
"The companies that raised money are sitting on very decent cash positions," Walters-Hoffert says. "They have the means to put their heads down and execute their business plans." |
