The "V-shaped” stock chart performance of biotech in 2009 mirrored largely what happened in the general capital markets, according to an upcoming Burrill annual report. From their lows in March 2009, the markets, as measured by major indices such as the Dow and S&P 500, gained about 50%. In the final analysis, the Dow closed the year up 19% and the Nasdaq did even better, up approximately 45% and the S&P 500 index closed up 24%, its strongest performance since 2003. The Burrill Biotech Select Index, a price-weighted index tracking 20 of biotech's "blue chip” companies, closed the year up 4% in value.
"We have to thank a strong closing month for the Burrill Biotech Select Index, posting a strong 5% gain, as the reason for it finishing in the black at year end,” said G. Steven Burrill, CEO, Burrill & Company (San Francisco, CA, USA), a life sciences investment company with activities in venture capital, private equity, merchant banking, and media. "The Index's fourth quarter performance, by contrast, was lackluster as a consequence of residual investor nervousness about the relative strength of the economic recovery, fears over health care reform and continuing concerns about a mounting backlog of drug approvals at the U.S. Food and Drug Administration [FDA]. Also weighing down on the industry was the performance of some ‘blue-chip' biotechs in 2009,” noted Mr. Burrill. "Both Amgen [Thousand Oaks, CA, USA] and Genzyme [Cambridge, MA, USA] saw their share values decline and finish in negative territory to close the year down 1.7% and 26%, respectively.”
Amgen's shares took a hit in the final quarter after the FDA said it wanted more information on the potential osteoporosis treatment Prolia. Genzyme shares were impacted as manufacturing problems slowed sales of its drug Cerezyme used to treat Gaucher disease.
"On the plus side, several companies saw their share values increase dramatically,” added Mr. Burrill. "Leading the charge was Affymetrix [Santa Clara, CA, USA] whose share value almost doubled benefiting both from an improvement in its quarterly sales performances and a general resurgence of interest in genomics and tools companies during 2009. The specter of personalized medicine is gaining traction due to big pharma adjusting their business models from discovering blockbuster drugs to developing targeted medicines,” said Mr. Burrill.
Despite the tough economic environment, the biotech industry in the United States raised, through public and private financings and partnerships, over US$55 billion in 2009--setting a new record. "Partnering was on a tear through much of the year with the industry raising almost $37 billion in total deal values--a record for the industry. With $55 billion raised, this will go down in history as our industry's largest financing year, albeit during one of the most difficult financing environments ever,” explained Mr. Burrill. "The message--when companies have to raise capital, companies do, even when the cost of capital is unfavorable. It also reflects the urgency that big pharma's places on accessing biotech innovation, as their ‘patent cliff' gets ever closer. The number of deals inked in the year is unprecedented. What did come as a surprise to many was that they did not acquire biotech companies at the rate that was predicted.”
Mr. Burrill's predictions on what lies ahead for biotech in 2010: The worldwide financing environment in 2010 will be more robust but uneven and selective at times. The environment favors risk mitigated companies rather than earlier stage development companies. Capital markets in the US and globally will continue to strengthen, building on a return of investor confidence. Much of the global economic recovery has so far been driven by stimulus funding and, as a result, real economic growth will remain uncertain.
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