Burrill Biotech Select Index drops 12% in May

By Jennifer Chiou

New York, June 2 - The Burrill Biotech Select Index closed down 12% in May and higher oil prices in addition to sliding consumer confidence contributed to a tough month for biotechs, according to a Burrill & Co. news release.

This compares to a 1.7% drop for the Dow Jones Industrial Average and 6% decline of the Nasdaq Stock Market, the company said.

"In May the biotech industry's downward slide, which started a couple of months ago, continued in the wake of a very nervous and volatile market," G. Steven Burrill, the firm's chief executive officer, said in the release.

The 30% drop in PDL Biopharma's shares resulted from disappointing first-quarter results and lowered fiscal 2006 earnings guidance due to higher research expenses.

Burrill took note of the meltdown of the share price of Neurocrine Biosciences as the company's shares closed the month down 66% after the Food and Drug Administration said that the 5 milligram and 10 milligram doses of its insomnia drug candidate indiplon were "approvable," but rejected the 15 milligram XR version of the sleeping pill tablets.

The FDA decision also had a spill over effect on DOV Pharmaceuticals Inc.'s shares, which closed down 62% in May because it is the developerof indiplon and licensed the compound to Neurocrine and its pharma partner Pfizer.

In addition DOV reported that its first phase 3 trial of bicifadine in patients with chronic low back pain did not achieve a statistically significant effect relative to placebo and, according to Burrill, the company's share price performance was a major contributor to the dismal monthly performance for the Burrill Mid-Cap Biotech Index. The index lost over 40% of its value in May.

"While biotech is in the doldrums right now it will recover," Burrill added in the release, "and it could come as early as [June] in the wake of the annual meeting of the American Society of Clinical Oncology in Atlanta, June 2-6."

May IPOs

Burrill said that two new biotech firms managed to launch IPOs in May and two added themselves to the IPO runway.

Novacea, Inc. priced an offering of 6.25 million shares at $6.50 per share and BioMimetic Therapeutics Inc. priced its offering of 4.6 million shares at $8.00 per share.

Both had to reduce their price expectations to get the deals done, Burrill said, noting that BioMimetic, which is developing and commercializing bio-active drug- device combination products for the healing of musculoskeletal injuries and disease, had originally filed for a share offering in the range of $11.00 to $13.00.

SenoRx Inc., which makesmedical devices for diagnosing and treating breast cancer, is planning an initial public offering for up to $86.25 million. Amicus Therapeutics, Inc. also filed for its IPO, the company said.

Large-Cap slides 9.6%

The Burrill Large-Cap Biotech Index fell 9.6% in May.

Biogen Idec and Fumapharm AG announced positive results from a phase 2 study designed to evaluate the efficacy and safety of BG-12, an oral fumarate, in patients with relapsing-remitting multiple sclerosis. A day later Biogen Idec said that it will purchase privately-held Fumapharma although no financial details were revealed, the company said.

This news helped the Biogen's shares close in positive territory, up 4%, while Genzyme's shares closed down 3% even though the company reported that it had launched two new molecular tests for acute myelogenous leukemia.

Mid-Cap drops 40.87%

The Burrill Mid-Cap Biotech Index plummeted 40.87% in May. Although New River Pharmaceuticals Inc. had a late-month surge in its share price following news that treatment with their investigational drug NRP104 demonstrated statistically significant reduction in the symptoms of Attention-Deficit/Hyperactivity Disorder in children aged 6 to 12 years, its shares still finished down 13%.

Shares of Telik Inc. closed down 13% after an analyst downgrade on the news that clinical trial data that would be delayed, despite the company beating Wall Street estimates in the first quarter, Burrill noted.

Small-Cap dips 7.9%

The Burrill Small-Cap Biotech Index dropped 7.9% in May.

Shares of Vivus Inc. made up one of the few bright spots and its shares finished up 43% for the month.

The company reported positive phase 2 trial results for its obesity treatment candidate drug Qnexa, Burrill added.

Auxilium Pharmaceuticals, Inc., a specialty pharmaceutical company, also closed in positive territory, up 15%, on the strength of receiving Canadian marketing approval for Testim 1%, its topical testosterone gel, indicated for the treatment of patients with hypogonadism.

Genomics slip 5.9%

The Burrill Genomics Index fell 5.9% on the month as companies in the genomics space have had a difficult time since the beginning of the year with the Burrill Genomics Index slipping over 20% on the year.

The biggest loser in the group was Nanogen, Inc., which is collaborating agreement with Finnish genomics company Jurilab, Ltd., to identify and validate new prognostic markers for type II diabetes.

Despite the news, Nanogen's shares dipped 17% by the end of the month.

Gene Logic was down 16%, even though it did not report any unfavorable news during the month.

IPO index lowered by 12.4%

The Burrill Biotech IPO Index slid 12.4% in the month.

Shares of Threshold Pharmaceuticals lost almost three quarters of their value by months end after the company said the FDA had asked that portions of two clinical trials for its drug TH-070 be halted due to safety concerns.

Phase 2 and 3 trials were put on hold after data showed that some patients taking TH-070, for the treatment of enlarged prostate glands, had developed serious liver problems, Burrill reported.

The 51% loss in sharevalue for once high-flying NitroMed also helped drive the index down, the company said, adding that the maker of BiDil heart-failure drug, approved for use only by blacks, fell short of expectations.

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

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