Biotech market 'sluggish' in June

Despite the fact that two of the most important meetings for biotech were held early in the month -BIO 2004 conference and the annual meeting of the American Society of Clinical Oncology - the biotech's industry's performance on Wall Street in June was lacklustre at best, according to Burrill & Company, a Life Sciences merchant bank.

'The media has been playing up the Iraq handover and the US interest rate increase which kept investors on the sidelines for much of the month,' noted Steven Burrill, ceo of Burrill. 'The early handover in Iraq, the 3.5% drop in oil prices, the rise in US personal spending in May, and the news that rates were up just 25 basis points, all good news, were not enough to kickstart what's been a sluggish market all month.

'Ironically, biotech is in better shape than ever with more companies, innovative products, clinical successes and scientific breakthroughs,' Burrill pointed out. 'The turnout at BIO 2004 broke all records and the news out of ASCO was tremendously exciting - but biotech is still deeply affected by general market conditions, which have been less than favorable lately,' he said.

'Although many indicators are improving, there is still uncertainty and that's likely to linger, at least to some degree, right up until election time,' Burrill predicted. 'But that doesn't mean that the value of this industry will stagnate,' he added. 'Drugs are still moving through clinical trials, FDA approvals are still being granted, new alignments are being forged, and IPOs are getting done, albeit on unattractive terms,' Wall Street saw four new biotech firms in June, Inhibitex, Metabasis Therapeutics, Senomyx and Momenta Pharmaceuticals.

Cambridge, MA-based Momenta, which increased 30% from its $7 IPO price to close the month at $9.10 a share, specialises in engineering complex sugars to improve versions of existing drugs as well as to create new ones. Senomyx, based in La Jolla, CA, has identified about 350 human receptor genes related to the detection of smells and tastes. The company went public on June 22 but the opening share price of $6.45 dropped 4% in June. Metabasis Therapeutics, based in San Diego has also seen a drop in value of 1% since its IPO on June 16. The company is developing drugs to treat liver and metabolic diseases and has drugs in Phase II testing for diabetes and hepatitis B. Inhibitex, which IPOd on June 4 at $7.00, gained 3% to close at $7.21. The Alpharetta, GA, firm is developing antibody-based vaccines and drugs to combat Staphylococcus infections and has five products in the pipeline including an antibody-based immunotherapeutic for low birth-weight infants.

'In the IPO market, investors aren't buying into companies so much as hoping to get a quick hit off the IPO. Save for a couple of notable exceptions such as Eyetech, which has gained 104% in value since it's IPO in January, the 2003-2004 IPO class has failed to stimulate the kind of frenzy that we saw in the 1999-2000 window,' Burrill said. 'In June, the Burrill Biotech 2003-2004 IPO Index fell 4%, but was up 6% for the quarter and 17% for the year, not bad for a year in which the Dow Jones Industrial Average and NASDAQ are nearly flat.'

'The 30 year old biotech industry is beginning to mature,' said Burrill. 'The growth at BIO 2004 in San Francisco attracting around 17,000 participants with representatives from 61 countries, 49 US states and 10 Canadian provinces is partial evidence. That's in contrast to the last time BIO met in San Francisco in 1995 when we considered the turnout of 2,700 to be an impressive one,' he noted. 'Regardless of the day to day vagaries of the market, biotech is thriving, and everybody wants a part of the action. 'More than 50 high-level officials from at least 15 countries outside the US attended BIO along with the governors of Florida, Iowa, Kentucky, Massachusetts, Minnesota, and Missouri - that says it all,' he added.

Biotech 2004/Burrill Datacentre

Burrill & Company's annual analysis of the "State of the Industry" has been an important part of the biotech industry's view of itself over the last 18 years. Biotech 2004-Life Sciences: Back on Track, is a perspective on where the industry has been and is going and was released Q1 04. In addition, the newly created Burrill Datacenter is an online resource for keeping up-to-date information from the biotech industry at your fingertips, including updated data from Biotech 2004. To order Biotech 2004 or to subscribe to the Burrill Datacenter Mandy Jones of Burrill & Company T +1 415 591 5405 F +1 415 591 5401, mandy@b-c.com http://www.burrillandco.com/