Companies with broader-based product portfolios have so far been able to ride out uncertain markets. Interestingly enough, investors have been choosing biotech's elite companies over Big Pharma companies in this tough economic climate. This is reflected in the fact that the Amex Pharmaceutical Index is down 11% since the beginning of the year. Although biotech's elite companies have so far weathered the market downturn, emerging companies have been less fortunate because they are perceived by investors as more risky. The Burrill Mid-Cap Biotech Index, for example, has dropped more than 21% since the beginning of the year and the Burrill Small Cap Biotech Index dropped 18% in April.
BIOTECH IPOs ON HOLDThe prevailing tough economic environment also took its toll on biotech IPO hopefuls; Biolex, Light Sciences Oncology, and Archemix all cancelled their planned offerings because of the market conditions. Only one company braved the market—Bioheart, a biotechnology company focused on using autologous cells to treat heart damage. It priced its revised offering of 1.1 million shares at $5.25; the company had originally filed for an offering of 3.6 million shares at a range of $14–$16.
Several companies, however, did file for an IPO in order to get in line and be ready to respond rapidly to complete their IPOs when the market improves. Examples include:
With only one biotech IPO completed since the beginning of the year and none in April, the window for biotech, while remaining open, is not finding any companies ready to go through it right now. The first half of this year will continue to be dominated by macroeconomic factors such as inflation, recession, and credit market turmoil. In the second half of the year, conditions will improve and we will see biotech offerings re-emerging.