Burrill Biotech Select Index manages to claw back almost half the value it lost in October

The Burrill Biotech Select Index managed to claw back almost half the value it lost in October. The Select's gain of 4.5 percent mirrored what was also an excellent month for the general markets with the Dow up 6.5 percent and the NASDAQ up 4.8 percent in value. The gains held firm in the final two trading days of the month despite investor worries about sluggish Thanksgiving holiday shopping and Dubai's reported debt woes.

Almost all members of the Burrill Biotech Select Index saw their share values increase. Leading the group were Amylin Pharmaceuticals, Vertex Pharmaceuticals, and Biogen posting share jumps of 28, 15 and 10 percent respectively. On the negative side of the list were Illumina (-10 percent) and Affymetrix (-10 percent), whose shares continued to languish from soft sales outlooks reported in their third quarter financials in October.

"As we head into the final month of the year, biotech is poised to close in positive territory," 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. "Although there is still some residual investor nervousness about the strength of the economic recovery there is no doubt that the markets are back on track and the biotech industry will certainly benefit from this in 2010.

"Biotech is also benefiting from big pharma's willingness to pay for its innovation. Partnering revenues have been a staple for many biotech companies throughout the year and, as a result, we are likely to see a record amount raised by US biotechs by the close of 2009," noted Burrill.

One headline deal in November, potentially worth $1 billion, involved Alder Biopharmaceuticals and Bristol Myers Squibb covering the development and commercialization of ALD518, a novel biologic that has completed Phase IIa development for the treatment of rheumatoid arthritis. Bristol-Myers Squibb an option to co-develop and commercialize outside the United States. In return, Bristol-Myers Squibb will pay Alder an upfront cash payment of $85 million, potential development-based and regulatory-based milestone payments of up to $764 million across a range of indications, and potential sales-based milestones which, under certain circumstances, may exceed $200 million. Alder also has an option to require Bristol-Myers Squibb to make an equity investment of up to $20 million in Alder during an initial public offering.

IPO watch

"Our prediction that we are likely to see an increasing number of biotech companies add themselves to the IPO runway in the final quarter of the year continues to be reinforced with four more companies filing in November," added Burrill.

These companies are:

- Ironwood Pharmaceuticals: hoping to raise up to $173 million in an initial public offering. Linaclotide, the company's first in class compound, is being evaluated in a confirmatory Phase III program for the treatment of irritable bowel syndrome with constipation and chronic constipation. Ironwood has already raised $306 million in private equity financing and recently announced that it had partnered with Japanese pharmaceutical powerhouse Astellas granting them exclusive rights to develop and commercialize linaclotide in Japan, Indonesia, Korea, the Philippines, Taiwan, and Thailand.

- Trius Therapeutics, which focuses on the discovery, development and commercialization of antibiotics for serious infections, filed to raise up to $86 million. The San Diego, CA-based company, is planning two phase III trials of the second-generation oxazolidinone that inhibits bacterial protein biosynthesis to treat serious Gram-positive bacterial infections.

- Alimera Sciences, developing products that treat retina-related diseases, filed to raise up to $80 million. Presently the company is focused on diseases affecting the retina. Its most advanced product candidate is Iluvien®, which is being developed for the treatment of diabetic macular edema.

- Durham, North Carolina based Aldagen also took its place in the queue of companies hoping to go public in the coming months as the IPO window begins to open. The company, which develops regenerative cell therapies, had initially filed to go public in May 2008 but withdrew those plans last October when the stock market melted down. The company hopes to raise an estimated $80.5 million in an initial public offering to fund a phase III trial of its most advanced therapy for the treatment of critical limb ischemia.