PRINT THIS PAGE Biotech has stellar January
26/07/2006. Source:Burrill & Company.
While 2005 was the year of biotech’s giant players, this year has been ushered in by the excellent performance of small biotech companies, says G. Steven Burrill, CEO of Burrill & Company. Small-capitalization biotech stocks outperformed their large-cap counterparts and set records. The Russell 2000 Index also gained 55 points during January, or 8.6 per cent, to 733.2, the first time it has exceeded 700. But more importantly, the Burrill Small Cap Biotech Index posted a remarkable 22 per cent gain by the close of the month. In stark contrast, the Burrill Biotech Select Index closed just above water (0.7 per cent) being outperformed by the NASDAQ, which posted a January gain of 4.5 per cent, and the Dow, which closed up 1.4 per cent.
Leading the small cap charge was AVI BioPharma (AVII) who had a great month. Its shares soared to close up 147% driven by news that its experimental avian-flu drug was effective in treating the H5N1 strain of virus.
“There were some very impressive gains in the emerging and growing biotech sector during January," said G. Steven Burrill, CEO of Burrill & Company a San Francisco based global leader in life sciences with principal activities in Venture Capital, Merchant Banking and Media. “During 2005, the biotech markets were driven by Amgen and Genentech and so it is a big change to see the markets being led by the smaller cap companies.” Shares of Amgen closed down 8% and Genentech down 7%. In addition, among the other large cap companies to post January losses were Affymetrix whose shares decreased 20% and Geron was down 11%.
“Helping the cause of some of the mid-size companies was the release of good clinical data by a number of companies at JPMorgan's 24th Annual Healthcare Conference, which was the largest event in its 24 year history held in San Francisco mid-month,” noted Burrill. “The record attendance of approximately 7,000 during the four day event had the opportunity to hear the presentations of almost 300 companies.”
Idenix Pharmaceuticals Inc., for example, announced positive 4-week data from a Phase IIb trial that used valopicitabine plus interferon as a therapy for Hepatitis C. The company’s shares closed the month at $22.75, up 33%.
The IPO market was mixed in January:
- Altus Pharmaceuticals staged a very successful IPO, pricing in the middle of its original expected range and then adding on another 20% in post-IPO open market trading. The company raised $105 million on seven million shares. Altus, which was spun out of Vertex Pharmaceuticals in 1999, uses a proprietary protein crystallization technology to develop new protein drugs. Its lead product is an enzyme replacement therapy for the treatment of malabsorption as a result of exocrine pancreatic insufficiency. At the close of the month, Altus was priced at $18.55 at months end, a rise of $3.55 or 23% from its IPO price of $15.
- SGX Pharmaceuticals Inc. was close to getting out at the end of January but expected its planned initial public offering of 4 million shares to price at $6-$7 well below its initial estimated price of $11 to $13 each. SGX focuses on discovering, developing and commercializing cancer therapeutics, including Troxatyl, which is in a clinical trial of acute myelogenous leukemia.
- Targacept, Inc. added itself to the IPO runway looking to raise $60 million. The company is working on drugs to treat multiple diseases and disorders of the central nervous system by selectively targeting a class of receptors known as neuronal nicotinic receptors, or NNRs.
- Valera Pharmaceuticals Inc., a developer of treatments for urological and endocrine conditions, set its planned initial public offering at 3.75 million shares for between $10 and $12 per share.
- Omrix Biopharmaceuticals Inc., which develops biosurgical and passive immunotherapy products, also said it is planning to issue up to $80.5 million in stock in an initial public offering.
- Novogen Limited’s US subsidiary Glycotex, Inc., focusing on discovering and developing a novel class of drugs for human wound healing and tissue repair, postponed its IPO.
INDICES
Burrill Biotech Select Index
Even though the Index closed up slightly at 0.7%, several companies reported positive gains. Vertex Pharmaceuticals continued its meteoric rise. After posting a 162% share price increase in 2005, the company’s shares closed January up 29% at $35.72. The gain was helped when it reported new Phase Ib data that showed its investigational oral hepatitis C virus (HCV) protease inhibitor, VX-950, dosed in combination with pegylated interferon alfa-2a (Pegasys®; peg-IFN), achieved a rapid and dramatic reduction in plasma viral RNA levels in patients with chronic genotype 1 HCV infection. Also performing well in January were Curagen (up 28%) and Gilead Sciences (up 16%).
Counterbalancing these gains, in addition to Amgen and Genentech down 8% and 7% respectively, were Affymetrix, whose shares closed down 20% after reporting a decline in fourth quarter earnings and Geron (down 10%).
Burrill LARGE-CAP Biotech Index
The Index closed down slightly at 0.7%. The loss could have been much greater had it not been for Human Genome Sciences Inc. The company’s share price closed the month up 29% and helped counter some of the losses posted by other large cap companies. Investors were obviously impressed with the company’s positive reports on their progress toward commercialization and plans for 2006 reported at the JPMorgan Healthcare Conference.
Burrill MID-CAP Biotech Index
Significant double digit gains from several companies in the group helped the index post a 16% gain in January. Top performers were Illumina, Inc. (up 52%), Pain Therapeutics Inc. (up 36%), Senomyx Inc. (up 34%) and Aspreva Pharmaceuticals (up 27%). Aspreva benefited from the news that it had received orphan drug status for CellCept, an anti-rejection drug used for patients receiving heart, kidney and liver transplants. Its shares closed the month at $19.96. Illumina launched new software tools to analyze DNA copy number changes and characterize loss of heterozygosity. These two conditions provide highly informative molecular signposts of cancer development and progression and offer potential to help researchers discover new diagnostic and therapeutic targets.
Burrill SMALL-CAP Biotech Index
The Index posted one of its largest monthly gains since its inception – up 22.5%. It was a great month for AVI BioPharma whose Neugene therapy, which is based on antisense technology, appeared to be successful in battling the H5N1 strain of influenza, commonly known as avian flu, in laboratory animals. The company plans to file with the FDA to begin human clinical trials of the drug for the treatment of strains of Influenza A, which includes the H5N1 virus. AVI
BioPharma Inc. also announced that it had entered into an agreement with Chiron Corp. for a nonexclusive license to Chiron's patents and patent applications for the research, development and commercialization of drugs that fight the hepatitis C virus (HCV). Its share price closed $8.32, up 147%.
Other companies posting stellar gains were recent 2005 IPO graduate Somaxon Pharmaceuticals (up 91%), Matritech Inc. (up 62%) and Sirna Therapeutics (up 40%).
Burrill Biotech 2003/4/5 IPO Index
The IPO class of 2003/4/5 performed very well in January with the index closing up 11%. Among the top performers was Genomic Health Inc. thanks to the fact that Medicare had agreed to cover the company's test for determining whether a woman with early breast cancer is likely to be helped by chemotherapy. Genomic Health said the contractor that administers Medicare programs in California had agreed to cover nearly all of the Oncotype DX test's $3,460 list price. The company’s shares closed the month at $13.78, up 51%. CombinatoRx, Inc. also posted a similar gain (58%). At the end of the month the company announced a collaboration with Fovea Pharmaceuticals SA for the potential development and commercialization of combination drugs to treat ophthalmic diseases. On positive cancer trial data, Accentia Biopharmaceuticals Inc. closed the month up 58% and Mannkind Corp.’s shares jumped 61% on a favorable analyst rating.
Founded in 1994, Burrill & Company is a 50-person San Francisco-based global leader in Life Sciences Venture Capital, Life Sciences Merchant Banking and Life Sciences Media. The Burrill family of venture capital funds, with over $500 million under management, includes the Burrill Life Sciences Capital Fund, the Burrill Biotechnology Capital Fund, the Burrill Agbio Capital Fund and its successor - the Burrill Agbio Capital Fund II, and the Burrill Nutraceuticals Capital Fund. For more information, please visit Burrill & Company's website at www.burrillandco.com.
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