Biotech posted its strongest monthly and quarterly performance in several years in what was hailed as the most robust September rally for equities in more than 70 years. The Burrill Biotech Select Index gained 7.8% in the month and 13% in the third quarter. The significant rise of share values was fueled by an easing of investor concerns about a double-dip recession as well as hopes for a better economic outlook. Biotech is now up 6% year-to-date and is well positioned for a strong fourth quarter.
There will be a significant number of news stories to keep investors engaged in the biotech industry for the rest of year. Already we have seen research into stem cells enter the legal arena once again. Fortunately for the industry, federal funding for embryonic stem cell research will be allowed to continue while the federal government appeals a lower court injunction that would ban such financing.
The recent ruling by the U.S. Court of Appeals in Washington overturns U.S. District Court Judge Royce Lamberth’s August ruling that all funding should be suspended while its legality is challenged in the courts.
In M&A land, the resolution of Sanofi-Aventis’ bid to acquire Genzyme will continue to unfold after its first offer, valued at $18 billion, was rejected. The fall will also be a very busy time for U.S. drug approvals with over 20 marketing applications to be decided before year’s end by FDA regulators.