Merrill Lynch updates biotech market; pipeline at record $9.6 billion

By Lisa Kerner

Erie, Pa., May 2 - Merrill Lynch analyst Eric Ende reported in the Bio-Stats report for April that the pipeline supply is at an all-time high of $9.6 billion - even after $1.8 billion worth of deals priced in April.

On the down side, Merrill reported negative fund flows, weak aftermarket performance of deals and all of the analyst's biotech indices decreased for the month.

The current four-week moving average funds flow is negative $135 million compared to the prior month's moving average of positive $56 million, according to the report.

During April, $1.8 billion of new supply came into the market, compared to $1.38 billion in March. A total of $9.1 billion of new supply has come into the market year to date versus $7.8 billion in 2005, $10.8 billion in 2004, $12.7 billion in 2003 and $6.8 billion in 2002.

Merrill's report also noted that 62% of biotech companies have less than two years of cash and 36% have less than one year of cash, which could mean more financings are on the horizon. Additionally, 15% of biotech companies are trading at less than two times cash and 5% are trading at less than one time cash.

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