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Biotech Survives Market Turbulence in November

SAN FRANCISCO, Dec. 3 /PRNewswire/ - Wall Street closed out a volatile month and although the Dow ended the final week of November with gains, it still posted a 4% decline for November. This was even in wake of its biggest percentage gain in four and a half years during the month. "Investors remained extremely nervous about inflation, oil prices and the weakness in the economy," said G. Steven Burrill, CEO, Burrill & Company, a San Francisco based global leader in life sciences whose principal activities are in Venture Capital, Merchant Banking and Media. "Although not totally immune from the market turmoil, biotech held its own and the Burrill Biotech Select Index was only down marginally, in stark contrast to the NASDAQ, which took a 6% hit in November.

"Biotech had a great deal of news to keep investors interested during the month... particularly on the M&A front with companies having their own version of the traditional consumer 'Black Friday' spree," noted Burrill.

Celgene Corp. vaulted itself into biotech's top five by market cap with its acquisition of Pharmion Corp. for $2.9 billion in cash and stock. The move is part of its drive to become a major global player in developing and marketing blood-cancer drugs.

"The deal reflects the intense competition among drug makers for acquisitions to improve their pipelines," explained Burrill. "M&A has become a staple in biotech land. There is pressure on the management of pharmaceutical and biotech companies to perform and increase shareholder value and M&A has become the tool of choice to do this. Not only are we seeing biotechs acquiring biotechs but the pending expiry of patents on a number of blockbuster pharmaceuticals has stoked demand by big pharma for small innovative biotechs that can be easily acquired and integrated. Sanofi-Aventis, for example, says that it plans to aggressively pursue biotech buyouts. As more big developers fill their pipelines with biologics, competition for the most promising biotech drugs will be intense.

"Among the glut of transactions during November was Glaxo's acquisition of privately-held Reliant Pharmaceuticals for $1.65 billion and Pfizer's acquisition of Coley Pharmaceuticals for $164 million. Reliant was planning $400 million initial public offering and its decision to be acquired provided a major premium for the company's investors.

"The environment for M&A is bullish right now... so much so that biotech's are planting 'for sale' signs on their lots," Burrill explained. "Following Biogen Idec, which put itself up for sale last month, Vancouver-based QLT said it was seeking potential buyers for some or all of its assets and MGI Pharma announced that it was looking at its options including a buyer."

Biotech IPOs

The uncertain capital markets weighed on biotech companies hoping to move off the IPO runway. In November only ARYx Therapeutics, which re-engineers commercially successful drugs to eliminate safety issues, priced a 5 million share offering at $10 -- significantly lower than its original $14 to $16 range.

Two other companies added themselves to the runway: Aegerion Pharmaceuticals, Inc. that is focused on development of small-molecule therapeutics to treat cardiovascular and metabolic disease; and ChemoCentryx, which is developing therapeutics targeting chemokine receptors to prevent autoimmune disorders and certain cancers.

Biotech Indices

"With one month to go the Burrill Biotech Select Index is up 16.6% year- to-date, well ahead of the Dow and Nasdaq. This is an excellent return considering the ongoing uncertainties in the general markets," said Burrill.

Major movers in the Biotech Select Index in November were Neurocrine Biosciences (up 41%) and Millennium Pharmaceuticals Inc. (up 25%). At one point shares of Millennium hit a new annual high amid a sharp rise in revenues for their cancer drug Velcade and upcoming Phase III trial data in multiple myeloma. Millennium's share value did take a slight hit after reporting that it was dropping development of its MLN3897 for rheumatoid arthritis after it was shown not to be effective in Phase II clinical trial.

Also stubbing their toes were Amgen Inc. and Vertex Pharmaceuticals. Amgen reported that interim results of a Phase III study of anemia drug Aranesp as a breast cancer treatment failed to show a significant difference between patients using the drug and those in control groups. The news came too late to effect the company's share price, which fell to $53 in after-hours trading, having closed the month at $55.25, down 5% (-19% year-to-date).

Vertex Pharmaceuticals Inc's shares closed the month down 21% after safety concerns prompted its partner Merck & Co. to suspend enrollment in their Phase II clinical trial for testing the leukemia treatment MK-0457. One patient was observed with a QTc prolongation, a heart condition that results in irregular heartbeat and could result in a heart attack.

Biotech Industry's Market Cap

The biotech industry's market cap dropped 1.2% in November to close at $484 billion.

Biotech Indices

Index 12/29/06 3/30/07 6/29/07 9/28/07


Biotech Select 303.96 317.03 319.5 348.75

Burrill Large Cap

Biotech 424.56 419.97 409.56 450.85

Burrill Mid-Cap

Biotech 171.55 179.02 183.23 199.75

Burrill Small Cap


143.6 144.44 142.06 137.03

Burrill Genomics 101.69 107.98 91.68 96.62

Burrill AgBio 124.52 141.8 171.3 179.11

Burrill Industrial 150.85 148.59 163.99 157.54

Burrill Diagnostic 122.79 136.76 149.77 169.72


Nutraceutical 629.56 639.2 613.86 677.58

NASDAQ 2415.29 2421.64 2603.23 2701.5

DJIA 12463.15 12354.35 13408.62 13895.63

Russell 2000 787.66 800.71 833.7 805.45

Amex Biotech 754.25 764.18 779.49 821.72

Amex Pharma 345.06 342.01 349.75 346.44

Index 10/31/07 11/30/07 % change % change

Month Year

Burrill Biotech

Select 357.14 354.62 -0.71% 16.67%

Burrill Large Cap

Biotech 478.59 479.27 0.14% 12.89%

Burrill Mid-Cap

Biotech 209.25 200.94 -3.97% 17.13%

Burrill Small Cap

Biotech 143.72 130.92 -8.91% -8.83%

Burrill Genomics 102.68 98.88 -3.70% -2.76%

Burrill AgBio 189.53 182.88 -3.51% 46.87%

Burrill Industrial 160.64 158.03 -1.62% 4.76%

Burrill Diagnostic 175.89 158.37 -9.96% 28.98%


Nutraceutical 693.44 606.23 -12.58% -3.71%

NASDAQ 2859.12 2660.96 -6.93% 10.17%

DJIA 13930.01 13371.72 -4.01% 7.29%

Russell 2000 828.02 767.77 -7.28% -2.53%

Amex Biotech 840.36 828.69 -1.39% 9.87%

Amex Pharma 351.31 355.88 1.30% 3.14%

About Burrill & Company

Founded in 1994, Burrill & Company has over $950 million in venture capital funds under management and has an active merchant banking and media business. The company's 50 person scientific and business team, supported by its nearly 40-person Advisory Boards, the strategic and financial network of its limited partners, and the close relationships developed with numerous life science companies and management, provides Burrill with unparalleled access and insight.

Burrill publishes a wide range of biotechnology/life science bio-intelligence reports, the Journal of Life Sciences and facilitates leading life sciences conferences and events. The company analyzes the state-of-the-industry through its monthly reports, the quarterly Burrill Biotechnology Intelligence Report and its flagship annual book -- the 22nd Edition entitled Biotech 2008: A Vision for the Next Decade will be published in January 2008.

SOURCE Burrill & Company
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