WHERE ARE WE TODAY?
We predicted at the beginning of 2010 that the general markets would be choppy and that biotech companies would begin to
perform well in the second half of the year.It appears that this scenario has played out now that 2010 is over.
Table 1. The Burrill Biotech Select index almost 11% gain in 2010 has come mainly in the second half of the year.
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After surging 6% in October, the biotech industry came down to earth in November with the Burrill Biotech Select Index dropping
1.5%. The capital markets faired no better with Dow Jones Industrial Average closing the month down 1% and the Nasdaq Composite
Index down 0.37% (Table 1). Dragging on the markets was a concern that Europe's debt crisis will continue to spread and much
of the world's economy continues to sputter.
The Burrill Biotech Select index's almost 11% gain in 2010 has come mainly in the second half of the year. The biotech industry
has certainly benefited from a return of investor confidence. However, that confidence has not been distributed evenly across
the board. It has been linked to the stellar stock performances of companies such as Genzyme, Dendreon, Illumina, and Pharmasset.
Many of biotech's blue-chip companies, in fact, have had sub-par years with Amgen, for example, down 7% year-to-date and Vertex
Pharmaceuticals down almost 23% for the same period.
The unevenness in the capital markets also can be seen in biotech's newly minted public companies. This year, 16 new biotech
issues have debuted on the US market, but most of them have been plagued by lackluster receptions (selling fewer shares well
below the pricing range) and their average market performance at the end of November was down 13.2%.
PUBLIC COMPANY FINANCINGS REMAIN SOFT
Analysis in the Burrill Report shows that the US biotech industry was on track to raise more than $20 billion by the end of 2010, not bad in a year that
had its ups and downs. Follow-on financing and IPOs were down quarter-over-quarter and venture capital financing continued
to flow with $1.3 billion raised from about 90 deals announced in the third quarter.
Of the partnership deals that disclosed their financial terms, a whopping $9.6 billion was collectively raised in the third
quarter of 2010 by U.S. biotech companies–up 8% on the $8.9 billion raised through partnership deals in Q2 of 2010.
We are on pace to equal last year's record-setting total for partnership dollars, an incredible amount given the uncertain
economic environment. Big Pharma's appetite for biotech innovation continues unabated.
Going forward, we will see a much stronger industry evolve as companies implement their business strategies in response to
the new economic realities.
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, publications@b-c.com
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