Burrill Biotech Select Index up 18.5% year to date

By Angela McDaniels

Seattle, Dec. 1 - The Burrill Biotech Select Index closed up 6% in November, regaining losses suffered by biotechnology companies during September and October, according to a Burrill & Co. news release.

"Biotech is shaping up to have an exceptional year. With one month to go, the 18.5% increase in the Burrill Biotech Select Index compared with Nasdaq's 2.6% and the Dow's less than 1% gains since the beginning of the year is an incredible testimony to the successful industry's year," said G. Steven

Burrill, chief executive officer of Burrill & Co., in the release.

The Burrill Biotech Select Index is outperforming the markets, but the AMEX Pharmaceutical Index has dropped 3% year to date, the company said.

"Big pharma is reacting to its pipeline and investor blues. Drug discovery and development costs have risen dramatically over the years and the pipelines are drying up, and there is significant competition from generics," said Burrill in the release.

"With consumers clamoring for lower prices and at the same time, regulators increasing scrutiny, and delaying approval, it's not a pretty picture for big pharma."

Biotech Big Winners

Biotech's blue chip companies saw large gains: Amgen is up 26% year to date; Genentech up 77%; Vertex Pharmaceuticals Inc. up 141% and Gilead up 45%, Burrill said.

Both Amgen and Genentech recorded positive gains at 7% and 6% respectively. At the end of the month Amgen's market cap was $99.9 billion with Genentech just ahead at $100.8 billion.

Genentech announced in November that it had signed a deal with PIramed Ltd. worth up to $230 million for the development of PI 3-kinase, an enzyme involved in a large number of cancers. The collaboration is estimated to be one of the largest pre-clinical deals ever signed by a British biotech company, the company said.

Genomics index on the rise

The Burrill Genomic Index recorded the largest gain in November closing up over 8%, perhaps reflecting a changing investor sentiment for genomics and proteomics companies, the firm said.

Solexa Inc., for example, announced that its scientists had sequenced a human bacterial artificial chromosome. Solexa expects its instrument system to be the first to dramatically reduce the cost, while also increasing the speed, of DNA sequencing.

Solexa expects to be the first to deliver whole human genome sequencing at $100,000 per genome. The company's shares closed at $8.40, up 15%.

Diagnostics Index up 3.8%

The firm's Diagnostics Index was up 3.8% in November, although it is still down 2.1% year to date.

Among individual names, a 90% increase in sales of Cepheid's molecular diagnostics products for the first nine months of 2005 as compared to the same period in 2004 helped boost the company's shares in November, which closed at $10.99, up 73%.

Quidel also performed strongly in November, with its shares closing the month up 20% at $13.96. With the media focusing on the potential of a bird flu pandemic, the company was benefits from investor attention since it commands about 48% of the flu-testing market with its Quick Vue test, Burrill said.

Although Third Wave Technologies Inc., a leader in personalized medicine, received FDA clearance for its Invader UGT1A1 pharmacogenetic test, designed to detect select polymorphisms associated with adverse reactions to Pfizer's chemotherapy drug Camptosar, the company's shares closed the month in negative territory at $2.74, down 24%.

Mid-Cap Index up 4%

The mid-cap index rose 4% in the month and is 5.4% higher for the year so far.

Of its components, shares of Adolor Corp. surged during the month after investment firm Lehman Brothers upgraded the company over recent progress with its bowel dysfunction treatment, Entereg (alvimopan). The company's shares closed the month at$14.57, up 38%

Cell Genesys Inc. sold its manufacturing operation in San Diego to Genzyme Corp. for $3.2 million in cash. The operation was originally purchased by Cell Genesys from Chiron Corp. in 2001 for $4.8 million. Shares of Cell Genesys closed up 9% at $5.85.

Pain Therapeutics Inc.'s shares dropped in the month following their announcement that a study showed its painkiller Oxytrex was less addictive than oxycodone, but the phase 3 clinical trial failed since high dropout rates made the results not statistically significant. An analyst's upgrade helped stem the tide and the company's shares closed at $7.23 up 25%.

Small-Cap Biotech Index up 4%

Small-cap also jumped 4%, cutting its loss since Jan. 1 to 15.7%.

Palatin Technologies Inc. was one of the top gainers with its shares closing up 58%, even though financial results for their first quarter ended Sept. 30 revealed a widening net loss

Palatin attributed this to increased research and development costs related to PT-141, a drug under development to treat male and female sexual dysfunction, and lower license fees from Mallinckrodt Healthcare related to NeutroSpec, the company's product for imaging and diagnosing equivocal appendicitis.

A reduced loss in Large Scale Biology Corp.'s quarterly financials and a research license and option agreement with Growers Research Group LLC on Large Scale's Geneware plant gene expression technology was not enough to stop a significant fall in their share value. Large Scale closed at $0.33, down 40%.

Alnylam Pharmaceuticals Inc., which develops novel therapeutics based on RNA interference, was added to the Nasdaq Biotechnology Index. Its shares closed up 31% at $12.56

Shares for Avant Immunotherapeutics Inc. performed well in November, up 31%, with investors driving up their value following news that the company plans to develop a bird flu vaccine that can be kept at room temperature.

Cellegy Pharmaceuticals Inc. is facing delisting from the Nasdaq Stock Market since the market value of its common stock had been below the minimum price requirements. Cellegy has until Dec. 19 to regain compliance, the company said. Its shares closed at $0.63, down 48% in November.

Burrill & Co. is based in San Francisco and has principal activities in venture capital, merchant banking and media.

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