In the relatively quiet month of February, the biotech industry managed to outperform the markets with the Burrill Biotech Select Index up 4.5%, while the NASDAQ finished down 1% and the Dow up 1%. In addition, the biotech industry reached a significant milestone in its comparatively short history with its collective market cap topping the $500-billion mark for the first time.
“However, the unfolding story continues to be the excellent performance of the mid-cap biotech companies,“ said G. Steven Burrill, CEO of Burrill & Company. “The almost 30% gain, and 13% in February, in the Burrill Mid-Cap Biotech Index since the beginning of the year demonstrates that investors believe there is plenty of upside in these emerging companies.
“With U.S. spending on prescription drugs projected to more than double in the next decade, to $446 billion from $188 billion, according to the Centers for Medicare and Medicaid Services latest estimate, the future looks bright for these biotechs. Drug sales, bolstered by Medicare coverage, is expected to keep rising and biotechs will certainly capture a significant portion of this increase,“ noted Burrill.
“Even the biotech initial public offering market is off to a strong start in 2006,“ added Burrill. “The five new IPO companies have raised $231 million, and Q1 06 is well on pace to beat the amount raised in Q1 05.
“With three more companies adding themselves to the IPO runway in February all the signs indicate that our prediction of 30-plus biotech IPOs by the end of the year is on track.“
Hitting Wall Street in February: Valera Pharmaceuticals, Iomai, and Acorda Therapeutics, netting $34 million, $35 million, and $33 million, respectively. Of the three, Valera and Acorda, were up by 10% or more on their first trading day but were unable to maintain this momentum with Valera dropping 3% below its opening price before rallying late February to close the month at $9.84, up 9%.
Acorda, whose lead product candidate, Fampridine-SR, is in a Phase III trial for the improvement of walking ability in persons with multiple sclerosis, closed at $6.20, up 3%. For Iomai, it has been all downhill since its IPO debut. The company closed February at $5.41, down 22%.