US BIOTECH FINANCINGS
There is just a glimmer of an upward trend for biotech as evidenced by the performance of the Burrill Mid-Cap Biotech Index,
(Table 1). Overall, the members of this index have been particularly hard hit during this economic downturn, but for the past
couple of months, a few companies in the index, such as Cougar Biotech, Geron, and Dendreon, have been on a tear, pushing
the YTD performance of the index up a remarkable 16%, with a 5% jump in May alone.
Table 1. The Burrill Biotech Select index posted a modest monthly gain in May
Financings and partnering deals collectively brought in almost $10 billion for US companies in Q1 '09 with more than $5 billion
through financings and another $5 billion in partnering capital. The 47% increase in funds raised compared to the Q1 '08 total
shows that despite the market conditions and the lower valuations of public companies, capital is still flowing. However,
there were several outlier deals, including Amgen's $2-billion two-part sale of an oversubscribed debt issue. Remove this
transaction and it becomes clear that companies had a hard time with this form of financing in the first quarter of 2009.
Overall, public financing remained below last year's quarter levels with PIPEs and secondary offerings off by 18% and 17%
respectively (Table 2). Even though venture capital deals generated 77% more capital than in 2008, the number of deals rose
by 100% to over 200 and the average size of a deal fell from $20 million in Q1 '08 to $7 million in Q1 '09.
Table 2. Quarter comparisons of the number of financing events (in USD)
Partnering deal making generated almost $5 billion in Q1 '09. Contributing to this total was the potential $1.1 billion dollar
global collaboration that ZymoGenetics made with Bristol-Myers Squibb for PEG-interferon lambda (IL-29), a novel type 3 interferon
currently in Phase 1b development for hepatitis C. Bristol-Myers Squibb agreed to pay ZymoGenetics an upfront cash payment
of $85 million for the development and commercialization rights to PEG-interferon lambda, and to pay an additional license
fee of $20 million in 2009. ZymoGenetics could receive additional payments of up to $430 million based on pre-defined development
and regulatory milestones for PEG-interferon lambda in hepatitis C, up to $287 million in development and regulatory milestones
for other potential indications, and up to $285 million based on predefined sales-based milestones. Other notable deals are
included in Table 3.
Table 3. Notable deals in Q1 09
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, email@example.com