G. Steven Burrill
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The biotech industry's report card for the year-to-date contains surprisingly good grades for its performance on the capital
markets and for partnering and venture capital (VC) deal-making, but other forms of financing haven't faired as well, particularly
biotech IPOs. Macroeconomic factors such as inflation, recession, credit-market turmoil, and escalating oil prices have taken
their toll and just one company, Bioheart, managed to eke out an IPO, raising $50 million.
Table 1. Biotech has outperformed the broader stock market indices through August
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Biotech has outperformed the broader stock market indices through August (Table 1). The Burrill Biotech Select Index was up
almost 10% in contrast to the Dow and NASDAQ—both down a whopping 13% and 11% respectively. In these times of economic uncertainty,
investors have clearly gravitated to biotech's elite companies and away from the traditional "safe havens" of Big Pharma.
Even during the traditional slow summer months of July and August, investors were fascinated by biotech. Their attention was
grabbed by the announcement that Roche had made a bid of almost $44 billion for the 44% remaining shares of Genentech it didn't
already own.
The biotech product "land grab" by Big Pharma, which intensified when they started feeling the pain of their own blockbuster
products coming off patent and facing the specter of increasing generics competition, has reached fever pitch. One or two
marquee biotech company acquisitions per year have been part of the biotech scene for at least 15 years but it looks like
the floodgates have opened and big takeover deals will be prominent in the second half of the year.
Our analysis has shown that since 2005, more than $60 billion has been invested in biotech acquisitions by the pharmaceutical
industry, taking into account the market cap of each company at the time of its acquisition. The potential acquisitions of
Genentech and ImClone could potentially add a further $106 billion in biotech value.
MARKET CAP
The industry's market cap closed in August at $507 billion, easing back from a record setting $520-billion mark posted mid-month.
Genentech's market cap closed at $104.2 billion; Amgen remained in the second spot at $66.5 billion; and Gilead Sciences
was at $48.5 billion.
PARTNERING AND FINANCE
After a slow first quarter, partnering deals picked up pace in the second quarter of 2008 to bring in more than $4.1 billion
for US biotech companies. Notable deals in the quarter included a potential $770-million partnership between Astellas and
CoMentis to develop products from CoMentis's beta-secretase inhibitor program, including the lead compound CTS-21166, which
is being developed as a disease-modifying treatment for Alzheimer's disease.
