Biotech racked up impressive gains for both the month of March and the first quarter of 2010. The Burrill Biotech Select Index posted a 3.7 percent jump in value in March and an 8 percent overall gain for Q1 '10. The Dow also performed well in March, closing up 5.5 percent (4.5 percent for Q1 '10) with the NASDAQ doing even better - up 7 percent (5.7 percent for Q1 '10).
"Biotechs certainly benefitted from the robust general markets this quarter," 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. "The passage of the landmark U.S. healthcare legislation late March was also a contributing factor. While investors initially gravitated to investing in Medicaid insurers and HMOs in the wake of the passage of the healthcare reform bill, the prospect of adding millions of new paying patients certainly is a plus for pharma and biotech companies."
The Burrill Biotech Sect Index was boosted by strong performances from Alexion, Amylin Pharmaceuticals, and Illumina. Shares of Amylin Pharmaceuticals were up 19 percent in March and 58.5 percent for the quarter after revealing that the Food and Drug Administration did not ask them, along with their partners Eli Lilly & Co. and Alkermes, to conduct additional studies on the drug exenatide LAR, or Bydureon, a once-weekly version of the twice-daily Byetta injection. Strong fourth quarter financials were the driving force of Alexion's pop in its shares (up 10 percent in March and 11.5 percent for the quarter). Illumina's shares jumped 7.1 percent for the month and 26.5 percent for the quarter. The company received some favorable publicity following the sequencing of the genome of American film actress Glenn Close.
Genzyme's shares were off 9.4 percent in March following the company's announcement that the FDA planned to enforce plant operation inspections at their Boston facility. In June, the company shut down that manufacturing plant for about three months to clean up viral contamination that had been slowing down production of its key drugs Cerezyme and Fabrazyme. Genzyme is also in a battle with billionaire investor Carl Icahn who is striving to win four board seats at the company.
Shares of Myriad Genetics Inc. also slipped after a court overturned a group of patents on gene sequences linked to breast cancer and ovarian cancer, which Myriad uses in tests for those diseases. The company markets a test for mutations on the two breast cancer predisposition genes, which are called BRCA1 and BRCA2. The company holds patents on several DNA sequences from the gene, but its patents were challenged a year ago in a lawsuit by the American Civil Liberties Union and other groups. Myriad says that it will ask the U.S. Court of Appeals for the Federal Circuit to overturn the decision, and predicted the case could eventually reach the U.S. Supreme Court.
"The ruling has brought an added level of uncertainty for investors in the biotech space," noted Burrill, "since drug developers have many gene patents in place. Until the result of the appeals process are known, which could take many years, the landscape of biotech patent law has clearly been changed to the detriment of our industry."
Financing slows in the quarter
While venture capital continued to flow to US biotech companies it was in short supply for public companies. Approximately $1.044 billion of venture capital was invested in the first quarter of 2010, an increase of 7 percent over the prior quarter. However, follow-on financing fell 52 percent and only PIPE financing showed a slight increase in the amounts raised compared to the previous quarter.