01 Sep The Olympics: A Biotech Perspective
Jia Hu of China – Source: Getty Images
The Olympics of Biotech
The biotech Olympics aren’t held every four years. They’re held every year. Though this is still a primarily American-influenced event, it becomes more global every year as the pervasive growth of the industry becomes part of the economies of many countries.
While the Olympics run every four years and last two weeks, the biotech Olympics run about four days every year. While global biotech participation still lags behind the athletic Olympics, the biotech Olympics (known as the annual BIO convention) had participation from 33 countries in 2003.
The attendance to this annual event has grown every year. Let’s take a look:
As you can see, the attendance numbers have jumped times 10 since 1993.
I have heard numbers bandied about that the 2006 event in Chicago will draw more than 25,000 people. Even if it reaches 20,000 over the four-day period, it will be a mighty clustering of biotech hordes arriving in the Midwest for the first time. Some 18,000 people are expected for the Philadelphia meeting.
According to BIO, the 2004 BIO convention drew a record number of bio people from 49 U.S. states (it’s not clear which state was missing), 61 countries and 10 Canadian provinces. The economic impact of the meeting on San Francisco was $35 million for those four days. The exhibit hall had 1,469 displays and 60 state and international pavilions.
Six governors attended (from Florida, Kentucky, Iowa, Massachusetts, Minnesota and Missouri). Some 50 high-level officials from 15 countries attended as well. BIO 2004 represented the first visit for the following countries: Algeria, Armenia, the Ivory Coast, Kazakhstan, Lithuania, Peru, Romania, Slovenia, Uganda, the Ukraine and Yemen.
In terms of international biotech companies, we had the following distribution for San Francisco:
The normal June scheduling for BIO 2006 in Chicago has been shifted to April so it won’t interfere with some major medical congresses (such as ASCO). This isn’t great news as Chicago is often prone to snow in April (whereas June is a month in which Chicago flourishes).
Nevertheless, this will have an impact on some of the planned activities (you can hardly hold an outdoor street party like the one held in San Diego) and this will involve some creative thinking by the convention planners.
By the way, a broad spectrum of Illinois state and Chicago city government, academic, agricultural and industry movers and shakers got together a week or so ago to brainstorm what the BIO 2006 meeting should look and feel like. One theme that resounded is that it should truly be a Midwest event rather than just a Chicago event.
Analogies were made to the Chicago World’s Fair of 1893 and the impact that this event had not only on the city and the Midwest but technology in the U.S. The key here is that this event could be the catalytic event the Midwest needs to get the attention it deserves in the world of biotech (so early planning is good).
The Biotech IPO Market
My previous comments indicated that it would be a dry summer for biotech IPOs. Surprisingly, it hasn’t been. Though I also indicated price haircuts galore on these IPOs, there was at least one IPO priced decently.
It has been about 11 months since the biotech IPO market opened in October 2003. Since then, 33 biotech companies have gone public (because this doesn’t include the medical device companies, the impact is actually greater).
According to William Blair’s IPO watch (which assiduously tracks the biotech IPO market), 33 biotech companies have now gone public. The average return for this group off the IPO price is negative 3 percent, which isn’t too bad given the overall market (the Nasdaq is down 8 percent year to date).
While the average market cap of these companies is about $290 million per company, there is a pretty wide range from $67 million on the low side (Xcyte) to $1.6 billion on the high side (Eyetech).
Current stock price per share has a wide range as well from a low of $4.58 per share for Dynavax to $48.18 per share for Pharmion.
There are nine companies of the 33 with a positive return from the time of going public. This ranges from 4 percent up to 244 percent (again Pharmion). The other 24 companies either had a flat share price or are declining from the time of the offering with the worst being Myogen, which is down 57 percent from its IPO opening.
Let’s take a look at the number of IPOs per quarter to see if there is a seasonality effect for biotech:
According to William Blair, there’s a backlog of 11 IPOs still filed but unpriced.
This represents about $900 million in potential new capital to flow into the industry. One of these was filed in 2003 and is still pending while the other 10 were filed earlier in 2004. Though nothing was filed over the summer, two IPOs were filed in early June.
During the summer, four companies went public in July and one in August, which is almost unheard of in prior years.
Two of the five companies priced at $14 per share for the opening price while the other three were in the $7 to $8 per-share range. It seems like everyone wasn’t off on vacation and perhaps the old paradigm of summer being a dead time for biotech IPOs has changed.
While we’re still short of Steve Burrill’s prediction last October of about 50 biotech IPOs for this financing window, it ain’t over ’till it’s over. Happy Labor Day, and as one great San Francisco band (not Metallica) used to say, keep on truckin’. See you next week!
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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 rosenmichaels@aol.com. 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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