ANALYZING THE NUMBERS
Analyzing biotech's monthly and quarterly performance, the Burrill Biotech Select Index, a price-weighted index tracking 20
of biotech's blue-chip companies, finished the third quarter down 0.74%. In comparison, the Dow fell 4% for the third quarter
and the NASDAQ also dropped 10%.
For October, our indices reveal the magnitude of the fall off in the markets and they reflect the realities that investors
still have faith in the blue-chip biotechs but are staying well away from the more risky emerging biotech companies, with
the stock values of the mid-cap and small-cap biotechs taking a pounding (Table 1).
Table 1. A comparison of biotech indices through the year. Investors still have faith in the blue-chip biotechs but are staying
well away from the more risky emerging biotech companies.
The Burrill Biotech Select Index finished October down 10% whereas the Dow fell 14% and the NASDAQ took a 17% hit.
The collective market cap of the industry closed October at $417 billion, a drop of 10% for the month. Genentech's market
cap closed the month at $87.5 billion; Amgen was at $63.4 billion, and Gilead Sciences at $42.2 billion.
FINANCING: 3Q ANALYSIS
In terms of biotech IPOs, 2008 is shaping up to be one of biotech's worst in history with only one completed to date. Except
for venture-capital deals, which have remained at steady state for the past three quarters, generating about $1 billion each
quarter, all other forms of financing have fallen compared to the first quarter of 2008 and comparative 2007 figures.
Collectively, US biotech financings, both for public and private firms, raised $2.5 billion in the third quarter bringing
the year-to-date total to almost $8.2 billion (Table 2).
Table 2. US biotech financings ($ million). Collectively, US biotech financings, both for public and private firms, raised
$2.5 billion in the third quarter.
The industry is on pace to generate about $10 billion in the year. You have to go back to 1998 to find a smaller amount that
was raised by the industry.
PARTNERING REMAINS STEADY
While slipping almost $1 billion in Q3 2008 compared to Q2 2008, partnering deals did generate more than $2.9 billion for
US biotech companies in Q3. Notable deals in the quarter included a potential $820-million partnership between GlaxoSmithKline
and Valeant Pharmaceuticals and a $725-million deal that Pfizer inked with Medivation to develop and commercialize Dimebon,
the company's investigational drug for treatment of Alzheimer's disease and Huntington's disease.
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, firstname.lastname@example.org