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Biotech Drops on Weaker First Quarter Drug Sales, But Broader Markets Remain on a Roll

SAN FRANCISCO, May 1 /PRNewswire/ -- April was Wall Street's best month in nine years, which analysts believe sends the strongest signal yet that the economy is about to begin a turnaround. The Dow Jones industrial average provided an encore performance up 7.4 percent in April, on top of a 7.7 percent gain in March and the Nasdaq was up a healthy 12 percent as investors were not phased by a World Health Organization warning that a flu pandemic was imminent. The strain of flu that's causing concern appears to be a mix of flu viruses derived from pigs, birds, and humans.

"Apart from those biotech companies that are linked to combating a potential flu pandemic, such as Gilead Sciences, Novavax and BioCryst Pharmaceuticals, biotech didn't fare as well as the general markets," said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based global leader in life sciences with activities in Private Equity, Venture Capital, Merchant Banking and Media, "with the Burrill Biotech Select Index down three percent in April.

"The first quarter 2009 financial results from biotech's elite companies did not inspire investor confidence and confirmed that the worldwide economic crisis is taking a tougher-than-expected toll on drug sales."

Amgen reported lower-than-expected Q1 09 earnings as sales of virtually all of its key drugs fell well short of Wall Street estimates and the company lowered its 2009 revenue forecast, blaming deterioration in the global economy. The company's shares closed down two percent in April. Other companies followed suite with Genzyme's shares dipping 10 percent in April; shares of Biogen fell almost 8 percent on weaker-than-expected first-quarter sales, although its per-share earnings beat Wall Street estimates. Celgene beat lowered first-quarter earnings expectations on weak sales of its cancer drugs but blamed its first-quarter financial shortfall on weakening demand for its cancer drugs, including Revlimid, due to the global recession.

"It is not just biotech that is feeling the pain of the economic downturn; IMS Health has reported that it now expects the global pharmaceutical market to grow by an anemic 2.5 percent to 3.5 percent in 2009, down 2 percentage points from the forecast it issued six months earlier, and the lowest growth rate in at least 25 years," noted Burrill.

Industry Market Cap

According to the latest Burrill Report, there are 342 biotechs that are publicly traded on major US markets at the end of April with an aggregate market cap of $287.4B (down one percent in the month). There are 43 companies that have market caps greater than $1B. Jumping into the "billion dollar club" was Dendreon whose shares doubled following the detailed study results for its prostate cancer treatment candidate Provenge, which met its goal of prolonging the survival of men with prostate cancer.

The Burrill Report also found that:

  • 135 public biotech companies are trading with less than one year of cash (42% of these have less than 6 months of cash)
  • 69 are trading below their cash level
  • 53% have market cap below $100M
  • Over 100 companies have announced a corporate restructuring by slashing staff and putting promising projects in the refrigerator.

The Burrill Report

The publication tracks the progress of the global biotechnology industry. It consists of a quarterly digital magazine focused on revealing the people, technologies, financings, and strategies behind the life sciences industry's next success stories. The May 2009 edition includes the Q1 2009 analysis of biotech on the capital markets as well as the financings, partnerships and M&A transactions completed. (

About Burrill & Company

Founded in 1994, Burrill & Company is a San Francisco-based global leader in life sciences with activities in Venture Capital, Private Equity, Merchant Banking and Media. (

SOURCE Burrill & Company
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