For the second consecutive quarter we have seen positive gains for biotech, fueling the notion that the worst of the economic woes that have assailed the sector may finally be over. While biotech’s year-to-date performance still lags behind the general markets, there have been some encouraging signs that investors are coming back. These include the tremendous stock gains of Human Genome Sciences (share value up 555% in the quarter) and Targacept (share value up 783% in the quarter), driven by positive clinical data from their lead drug product candidates.
With the comparative stabilization of the capital markets, we are also seeing some encouraging signs of good things to come. For example, the total that U.S. biotechs raised through follow-on financings in the third quarter is up over 100% of the total raised in 2008. This type of financing is generally a harbinger of the opening of the IPO window. In August, one biotech IPO did get out the door when Cumberland Pharmaceuticals raised $94 million. The specialty pharmaceuticals company has products on the market, including a new injectable treatment for pain and fever, which is one of the reasons why the deal got done.