Burrill Biotech Select Index down 6.6% in April, year-to-date return now 6.16%

By Angela McDaniels

Seattle, May 1 - The Burrill Biotech Select Index closed down 6.6% in April, lowering its year-to-date return to 6.16%, according to a Burrill & Co. news release.

This compares with the Nasdaq Stock Market's 0.74% decline in April and 5.32% year-to-date return and the Dow Jones Industrial Average's 2.32% gain in April and 6.06% year-to-date return.

While the Bio 2006 Chicago Annual International Convention attracted a record 19,479 attendees from 62 countries during the second week of April, the successful event failed to ignite Wall Street and biotech closed out another "less-than-stellar" month, according to the release.

"There is no doubt that the sector is in a temporary slump right now and underperforming the market," G. Steven Burrill, the firm's chief executive officer, said in the release.

"There is some real uncertainty in the market following a string of disappointing clinical trial results reported in April by small- to mid-cap biotechs (Inhibitex and CombinatoRx) ... and the widely reported serious adverse drug reaction that occurred in six volunteers in a U.K. phase 1 trial who received an injection of TeGenero's TGN1412 monoclonal antibody...

"In addition, the Food and Drug Administration has been critical that despite the billions invested in pharmaceutical research and development, last year saw one of the lowest levels of drug approvals for almost a decade.

"Added to this are tougher regulatory barriers and increased drug safety concerns, an aging population with chronic health-care costs spinning out of control, Medicare reimbursement issues, the specter of follow-on biologics and biogenerics that have further contributed to a market that is being cautious in its excitement about biotech."

April IPOs

Burrill & Co. said that despite biotech's weak performance during April, three companies managed to get their initial public offerings off the ground.

Vanda Pharmaceuticals Inc., focused on product candidates for central nervous system disorders, raised $57.5 million in its offering. Targacept Inc., which is also focused on central nervous system diseases and disorders, sold 5 million shares at $9.00 per share in its offering. Omrix Biopharmaceuticals Inc. raised just over $37 million in its IPO.

To get their offerings out, however, all companies had to drop well below their original filing ranges, the firm said. At the close of the month, only Vanda's shares had improved from their offering price - up 9.5%. Omrix, on the other hand, closed flat and Targacept's shares were down 16%.

Two more companies filed for IPOs in April: Replidyne Inc. filed for a $100 million IPO, and Perlegen Sciences Inc. filed for a $115 million IPO.

Diagnostics on the rise

Though few and far between, the firm said there were some bright spots during the month.

"Despite the current uncertainty surrounding certain biotech sectors, investors are warming to the diagnostics space, as they begin to understand the importance that diagnostics plays in an evolving personalized medicine world," Burrill said in the release.

The Burrill Diagnostics Index, one of the few to gain in April, was up by 8.16% for the month. The increase was led by a 22% jump in share price of immunodiagnotics company Diagnostic Products Corp., which is being acquired by Siemens AG for $1.86 billion.

Blue chips fall

Amgen Inc.'s first-quarter sales rose 14% from a year ago, but Wall Street was looking for an even better performance and the company's share price closed down 7% for the month, according to the release.

Genentech Inc. also finished the month down 6%. The company announced a profit of $0.46 per share, compared with analysts' consensus forecast of $0.41 cents.

A similar fate befell Gilead Sciences Inc., which finished down 8% even though it celebrated its ninth straight quarter of beating analyst estimates.

Amylin Pharmaceuticals Inc.'s shares also dipped 11% in April after reporting disappointing first-quarter financials.

Large-Cap Biotech Index down 5.57%

The Burrill Large-Cap Biotech Index fell 5.57% in April, bringing its year-to-date return to negative 11.71%.

Chiron Corp. approved an amended merger agreement under which Novartis AG will acquire all Chiron shares it doesn't already own for $48.00 per share in cash.

Biogen Idec Inc. reported higher quarterly earnings but closed the month down 5%. Biogen and Elan Corp. plc expect to get the green light from the FDA to put Tysabri back on the market, albeit with restrictions, by the end of June.

Mid-Cap Biotech Index down 1.85%

Burrill & Co. said its Burrill Mid-Cap Biotech Index fared better, with a 1.85% decline in April and a 22.22% year-to-date return.

Although Novartis exercised an option to co-develop Idenix Pharmaceuticals Inc.'s lead drug candidate valopicitabine (NM283), Idenix shares closed April down 26% on an analyst report that the commercial potential of the drug is limited.

DOV Pharmaceutical Inc. reported that a phase 3 trial of bicifadine for treating chronic lower back pain had failed. Their shares plummeted to a 52-week low and closed down 49%.

Burrill & Co. said that balancing out these losses were Illumina Inc. and Aspreva Pharmaceuticals Corp., whose shares jumped 33% and 39%, respectively, on the strength of positive corporate news.

Small-Cap Biotech Index down 7.11%

The Burrill Small-Cap Biotech Index fell 7.11% in April but maintained a positive year-to-date return at 17.60%.

Matritech Inc.'s NMP22 BladderChek, a point-of-care urine test, uncovered bladder cancers that standard tests failed to detect. The company's shares closed April up 56%.

Matritech, along with Questcor Pharmaceuticals (up 37%) and Somaxon Pharmaceuticals Inc. (up 23%) were the only bright spots, the firm said, because 65% of the companies in this group posted share price losses. Acadia Pharmaceuticals Inc., for example, slumped 28%; earlier in the month it had priced a stock offering at $12 per share. The company sold 4.95 million shares, raising net proceeds of about $55.6 million.

Curis Inc. (down 27%),Transgenomic Inc. (down 25%), Aradigm Corp. (down 29%), Titan Pharmaceuticals Inc. (down 27%) and Avant Immunotherapeutics Inc. (down 29%) all contributed to the negative performance of the Small-Cap Biotech Index, which, despite this stumble, remains up 17.6% for the year to date.

Genomics Index down 10.27%

The Burrill Genomics Index fell by 10.27%, bringing its year-to-date return to a negative 15.87%.

Incyte Corp. plunged 31% by the end of April after it disclosed that it would discontinue the development of its DFC drug as a treatment for HIV due to possible side effects.

CuraGen Corp. dropped 20% in the month even though it reported a smaller loss for its first quarter. Affymetrix Inc. also posted a 13% drop in share price following disappointing financial results, the firm said, and despite a relative improvement in its earnings, Millennium Pharmaceuticals Inc. closed the month down 10%.

Gene Logic Inc., which provides analysis and compiles databases for drug developers, posted a wider first-quarter loss, hurt by slumping sales across its businesses. Its share price closed April down 37%.

Burrill & Co. said Celera Genomics Group rose a modest 3% after the company sold several small molecule drug candidates for the treatment of cancer and other diseases to Pharmacyclics.

Biotech IPO Index down 4.90%

Finally, the firm's Biotech IPO Index fell 4.90% in April, bringing its year-to-date return to 13.00%.

Somaxon Pharmaceuticals Inc.'s experimental treatment for adults with chronic insomnia helped patients maintain sleep longer than a placebo in its first late-stage clinical trial. The news sent the company's shares up and they closed 23% higher at the end of April, according to the release.

Heading the other way was Inhibitex Inc., which said that its drug candidate Veronate failed to meet its primary endpoint in a phase 3 trial designed to show that it lowered the staph infection rate in low-birth-weight infants. The company's shares closed April down 72%.

Shares of CombinatoRx Inc. also plummeted to close the month down 25% after the company said a phase 3 trial on its CRx-119 anti-inflammatory drug failed to meet one of its goals.

Burrill & Co. is based in San Francisco and has principal activities in venture capital, merchant banking and media.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.