29 Sep Midwest Public-Sector Biotech Continues to Sizzle
CHICAGO – Though results for third-quarter publicly traded biotech stocks continue to show strong growth, the rate of growth seems to be slowing down (or else the rest of the market is catching up).
The Nasdaq Biotech index continues to lead with year-to-date sizzling growth of 42 percent versus the Nasdaq Composite’s growth of 33 percent and the Dow Jones Industrials’ respectable growth of 12 percent. The Amex Biotech index matches the high growth of the Nasdaq Composite.
Startling enough, none of these compare to the meteor-like growth of ePrairie’s Midwest Biotech Index, which shows a 56 percent growth rate year to date.
We have already noted high growth of all the indices at the mid-year mark, so how has quarter to quarter performed? The third quarter of 2003 shows continued growth in all indices but a slow down in the growth rate.
The Nasdaq Composite leads growth from quarter to quarter with 10 percent growth, which is outpacing both biotech indices. Once again, though, the ePrairie Midwest Biotech index even outpaced this level with quarter-to-quarter growth of 13 percent.
Of the 21 stocks in the ePrairie Midwest Biotech index, 16 companies show advances in their stock prices since the beginning of the year with only five stocks as laggards. The leading companies in stock price appreciation this year are:
The 21-company Midwest biotech basket has increased in combined market valuation a total of $2.4 billion since the beginning of 2003. The leading companies in market cap value increase are:
The Midwest biotech sector now has two companies worth more than $1 billion (Dade-Behring and KV Pharmaceuticals) with a third (MGI Pharma) just a tad below this level with a market cap of $978 million. Seven Midwest public biotech companies have raised a total of $269 million thus far in 2003 from the financial markets:
Key news for our Midwest companies this year includes:
1) MGI Pharma FDA approval for its new anti-nauseant drug (Aloxi).
2) ImmTech International and Bio-Sante both listing on the American Stock Exchange (moving up from the OTC bulletin board).
3) KV Pharmaceuticals’ three-for-two stock split
4) Orphan Medical’s divestiture of two products to two different specialty pharma companies for about $ 30 million.
On a national level, financing of biotech shows a slight improvement over 2002 with total funds raised for the sector of $11.8 billion year to date in 2003 versus $11.6 billion in 2002. This year’s mix of money raising is very different from last year. The following is a table of biotech money raised in the U.S. in 2003:
As has been noted earlier this year, the IPO market and the venture market have both been weak, which bodes poorly for private companies. For the early stage companies, it has been a very tough year to raise money as VC activity has been quite sluggish. The IPO market, which is the main VC outlet for exiting their investments, has been poised for activity but is still hesitant.
According to BioCentury, 12 companies as of last week have queued up to test the “pricing waters” for an IPO with initial amounts ranging from $50 million (Genitope) to $100 million (Nitromed). At an average deal price of $75 million, that’s a total of $900 million in IPO financing waiting to happen for the sector.
Keep poised for more news. See you next week!
Michael S. Rosen is the vice chairman of human health at the Illinois Biotechnology Industry Organization (IBIO). He can be reached at firstname.lastname@example.org. This article has been syndicated on the Wisconsin Technology Network courtesy of ePrairie, a user-driven business and technology news community distributed via the Web, the wireless Web and free daily e-mail newsletters. They can be found at www.eprairie.com.