19 Jan 2003 Biotech Results
Though the news from last week’s H&Q conference in San Francisco is still seeping out (even though press releases were rampant, no “breaking news” made the Wall Street Journal), the overall sentiment from the meeting seems to be one of optimism.
Remember that there are at least 15 IPOs queued up now. The outcome of the Eyetech IPO (expected to be in the $150 million range) and the aftermarket performance of this IPO will be closely monitored. The last time the IPO window was open in 2000, 56 companies went public and raised an average of $90 million each for a total of $5 billion.
Only four companies went public in 2002, which raised $455 million (note: this number differs from BioCentury’s estimate of $251 million for 2002) or an average of $114 million each. In 2003, the number increased to seven companies, a total approaching $500 million and about $70 million each, which is down in valuation from previous years.
In large part, what drives the biotech IPO market is FDA drug approval and partnering deals with Big Pharma (and the size of these deals). During the first half of 2003, the FDA had approved 17 new drugs. This compares with 20 drugs for all of 2002.
To put this all in perspective, let’s take a look at the biotech sector financing over the last few years:
Though last year was the second best year for total biotech financing of the last five years, the IPO market was still generally weak and the VC market was flat as compared to 2002 (but with a strong trend in the second half of the year). Note that the above financing does not include any Canadian financing that took place in Canada (only Canadian financing in the U.S.) nor does it include financing in Asia.
Most of the global biotech financing (79 percent) took place in the U.S. during 2003. Now let’s take a look at the break down of Europe versus the U.S.:
If the IPO market was still weak during 2003 in the U.S., it was in intensive care in Europe. On a relative basis, VC financing in Europe was stronger. One has to remember that in Europe there still is no single unified exchange for biotech companies to trade on but rather a series of country-based exchanges of which the London Stock Exchange is the most important.
Perhaps a way to look at Europe versus the U.S. would be in terms of regional equivalents (note: this is a Rosen assessment so take it for what it’s worth):
That does it for our wrap up of 2003. Next week, let’s start looking at 2004 and what’s to come. See you then!
Michael S. Rosen is president and CEO of Barbeau Pharma and a founder and board member of 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.
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