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Financial Snapshot For February 2003: Waiting For War
The ever-present threat of war with Iraq has kept the capital markets in a state of extreme uncertainty for months now. It seems that Wall Street is holding its breath: Not surprisingly, there was little change in the overall market indices in February.
During the month, the Nasdaq Composite Index rose by a mere 1% and the Nasdaq Biotech Index dropped by 1%. The relatively flat performance was also evident in January. In fact, the Comp remains unchanged since the beginning of the year. The Biotech Index, on the other hand, shed 4% between December 31, 2002 and February 28, 2003.
Over the last 12 months, the Nasdaq Biotech Index – which is comprised of the 72 largest and most actively traded biotech stocks – dropped by 36%, underperforming the Nasdaq Composite Index, which lost 23% between February 28, 2002 and February 28, 2003.
Many biotech stocks, however, have suffered more than a 36% drop over the last year. On February 28, 2003, the average 12-month change in price for the 226 stocks tracked by Recombinant Capital and Signals was minus 44% and the median change was minus 52%.
On a positive note, the biotech stocks are still in better shape than they were in mid-July: Between July 10, 2002 and February 28, 2003, the Biotech Stock Index rose by 19% (while the Comp remained flat).
That’s encouraging – but the stocks have a long way to go if they are ever to reach their former heights. Indeed, they may never soar to those levels again. Today marks the 3-year anniversary of the peak of the genomics bubble: On March 6, 2000, the Nasdaq Biotech Index stood at 1,596.53. On March 5, 2003, it closed at 476.06 – a wrenching decline of 70%. Interestingly, the Nasdaq Composite Index fared worse, plummeting by 73% between March 6, 2000 and March 5, 2003.
February 2003 Stock Report
The February 2003 Stock Report, published by Recombinant Capital and Signals, is the 33rd in a series. It includes detailed financial data on 226 publicly traded biotechnology stocks, based on their closing prices on February 28, 2003.
(To access the January 2003 Stock Report, click here. For the others -- February 2000 through December 2002 -- click here to go to Signals' Table Of Contents. [We did not publish Stock Reports for the June 2001 - September 2001 time frame.] Click on the year of interest; you will find all the Stock Reports listed under the Signals vs. Noise section. The spreadsheets underlying these articles are quite large, so please be patient while you download them.)
We've classified the companies on the list into 18 separate categories, based largely on either technology or disease focus. These categories can be found in the table that follows, which provides a summary of the underlying data and the average values (the sum of all values divided by the number of values) for each. Because the average value tends to be distorted when there are extreme values in a set (as occurs in the biotech stocks as a group and even within groups), we've also calculated the median (mid-point) for each set of data and for the entire group. We believe that the median values reflect a more realistic financial profile for the biotech stocks.
If you wish to access the entire spreadsheet (HTML 199k), just click here (and remember, it's a large spreadsheet and takes time to download. Don't despair if your screen seems to remain forever blank after the download; it might take a minute or so for the spreadsheet to appear.) If you wish to access the section of the spreadsheet that concerns a specific category (i.e., cancer or gene therapy), click on that category in the summary table below.
|
Company
|
% 52 wk high on 2/28/03
|
% change from 2/28/02
|
Market cap ($M)
|
Cash & Mkt. Sec. ($M)
|
Tech value ($M)
|
LT Debt plus Convert.
|
Tech value/staff ($M)
|
Est. burn rate ($M)
|
Survival index (yrs)
|
Equity multiple
|
|
|
27%
27% |
-67%
-67% |
$693
$247 |
$748
$256 |
($55)
($6) |
$155
$50 |
($0.1)
$0.0 |
($128.9)
($40.3) |
2.9
2.8 |
0.7
0.7 |
|
|
43%
41% |
-38%
-52% |
$277
$78 |
$186
$76 |
$118
$14 |
$42
$0 |
$0.3
$0.4 |
($36.3)
($31.0) |
1.6
1.2 |
1.1
0.6 |
|
|
28%
25% |
-67%
-71% |
$122
$51 |
$104
$52 |
$18
$1 |
$14
$1 |
$0.0
$0.0 |
($49.2)
($36.7) |
2.3
1.1 |
0.4
0.3 |
|
|
59%
76% |
-22%
-1% |
$438
$30 |
$46
$5 |
$392
$25 |
$0
$0 |
$0.3
$0.4 |
NA
NA |
NA
NA |
1.7
0.9 |
|
|
52%
57% |
-33%
-34% |
$292
$56 |
$114
$28 |
$178
$15 |
$22
$0 |
$1.3
$1.2 |
($36.7)
($12.1) |
4.5
2.0 |
0.9
1.0 |
|
|
35%
32% |
-53%
-61% |
$194
$77 |
$94
$47 |
$100
$21 |
$19
$0 |
$0.6
$0.2 |
($40.1)
($22.3) |
4.4
1.7 |
0.7
0.5 |
|
|
54%
52% |
-15%
-29% |
$494
$48 |
$109
$47 |
$385
$32 |
$62
$3 |
$1.8
$0.9 |
($44.6)
($26.2) |
2.3
2.0 |
1.3
0.9 |
|
|
39%
34% |
-49%
-49% |
$194
$114 |
$127
$63 |
$67
$34 |
$33
$0 |
$0.4
$0.2 |
($34.7)
($23.6) |
3.8
2.3 |
0.8
0.8 |
|
|
43%
40% |
-48%
-60% |
$485
$76 |
$137
$52 |
$348
$12 |
$99
$0 |
$1.2
$0.4 |
($30.8)
($19.3) |
2.3
1.7 |
0.9
0.4 |
|
|
37%
35% |
-50%
-62% |
$238
$101 |
$117
$25 |
$121
$41 |
$113
$2 |
$0.7
$0.6 |
($63.8)
($38.1) |
1.4
0.7 |
0.9
1.0 |
|
|
57%
58% |
-25%
-22% |
$242
$91 |
$24
$18 |
$218
$78 |
$3
$0 |
$0.9
$0.5 |
($13.2)
($10.0) |
2.1
1.6 |
2.5
1.1 |
|
|
28%
29% |
-67%
-66% |
$66
$32 |
$88
$31 |
($20)
($6) |
$3
$0 |
($0.2)
($0.1) |
($30.8)
($22.8) |
2.6
1.4 |
0.3
0.2 |
|
|
35%
39% |
-54%
-54% |
$597
$60 |
$82
$36 |
$515
$34 |
$35
$1 |
$1.6
$0.5 |
($36.9)
($23.1) |
3.1
0.9 |
(0.4)
0.4 |
|
|
41%
44% |
-37%
-47% |
$392
$83 |
$77
$24 |
$315
$73 |
$3
$0 |
$2.1
$1.0 |
($66.8)
($37.7) |
1.2
1.2 |
2.8
1.2 |
|
|
51%
49% |
-32%
-40% |
$357
$103 |
$64
$19 |
$293
$84 |
$23
$1 |
$0.6
$0.4 |
($19.3)
($12.3) |
1.4
0.9 |
2.0
0.8 |
|
|
67%
69% |
-24%
-20% |
$16,914
$6,689 |
$1,279
$887 |
$15,635
$5,994 |
$782
$333 |
$4.0
$2.8 |
NA
NA |
NA
NA |
4.3
3.2 |
|
|
43%
35% |
-36%
-49% |
$228
$188 |
$124
$77 |
$104
$61 |
$59
$10 |
$0.5
$0.4 |
($47.4)
($29.7) |
4.4
2.2 |
0.6
0.6 |
|
|
61%
62% |
-21%
-18% |
$75
$65 |
$4
$3 |
$71
$60 |
$2
$1 |
$1.0
$0.7 |
($5.3)
($4.2) |
0.5
0.8 |
1.2
0.9 |
|
|
42%
39% |
-44%
-52% |
$782
$101 |
$143
$47 |
$645
$45 |
$57
$0 |
$0.8
$0.4 |
($39.0)
($27.5) |
2.8
1.7 |
1.1
0.6 |
Footnotes to the table:
§ Technology value: Market cap - cash (and cash equivalents)
§ LT debt plus convert.: Long-term debt plus convertible debt
§ Estimated burn rate: Net loss from the last available quarterly report, X4. Companies with net profit (instead of loss) are indicated as "na."
§ Survival index: Cash (plus cash equivalents) / Estimated burn rate.
§ Equity multiple: Market cap / (common stock + preferred stock + additional paid-in capital).
§ Median: Middle value in a set of values
§ The information contained in the February 2003 Stock Report has been obtained from public sources. Where information is not available, it is indicated as "na." Recombinant Capital cannot warrant the ultimate accuracy of the data. All data are subject to change.
§ Most of the accounting figures are from quarterly reports as of 9/02, with some figures adjusted for one-time write-offs.
Highlights From The February 2003 Stock Report:
We published the first Financial Snapshot in February 2000. Now, three years later, we thought it might be instructive to profile the changes that have occurred in the public biotech sector during that time.
| .
|
February 28, 2003
|
February 28, 2002
|
February 28, 2001
|
February 25, 2000
|
|
Number of companies
|
226
|
252
|
270
|
250
|
|
Percent trading at less than 50% of 52-week high
|
65%
|
46%
|
79%
|
4%
|
|
Negative one-year return
|
89%
|
73%
|
75%
|
9%
|
|
Positive one-year return
|
10%
|
26%
|
10%
|
85%
|
|
Market cap less than $200M
|
65%
|
54%
|
46%
|
36%
|
|
Market cap greater than $2B
|
5%
|
6%
|
10%
|
14%
|
|
Average/median market cap (M)
|
$782 / $101
|
$968 / $179
|
$1,194 / $237
|
$1,674 / ND
|
|
Technology value per staff (range, M)
|
-$1.7 -- $8.6
|
-$24.7 -- $37.1
|
-$24.8 -- $36.3
|
$2 -- $73.6
|
|
Average/median cash (M)
|
$143 / $47
|
$140 / $55
|
$116 / $48
|
$59 / ND
|
|
Survival index less than 1 year
|
27%
|
19%
|
18%
|
28%
|
|
Average/median survival index (Years)
|
2.8 / 1.7
|
5.7 / 2.4
|
9.3 / 2.9
|
2.7 / ND
|
Thanks to the genomics bubble, 2000 was a great year for the biotech sector.
§ The Nasdaq Biotech Index gained 23%, while the Nasdaq Composite Index lost 39%.
§ Stock prices soared into the stratosphere, with the Biotech Index hitting its all time high on March 6. At the end of February 2000, 85% of the stocks in our universe posted positive one-year returns, with 6% of them exhibiting gains of at least 1,000%.
§ About 14% of the companies in our universe had market caps exceeding $2 billion. The average market cap was nearly $1.7 billion. (We did not calculate the median value.)
Since then, as we know, it’s been downhill all the way.
§ In 2001, the Nasdaq Biotech Index shed 16% (still outperforming the Comp, which dropped by 21% over the 12-month period). In 2002, the Biotech Index lost 54%, underperforming the Comp, which shed 46% over the 12-month period.
§ In 2001, only 10% of the companies in our universe posted a positive one-year return. That number jumped to 26% in 2002, but now it’s back down to 10%.
§ In 2001, 10% of the companies we track had market caps exceeding $2 billion. Since then, that number has declined even further: By February 2003, a mere 5% had market caps of at least $2 billion. And, if you omit the 7 revenue-driven firms from the calculation, that number drops to less than 2% -- only 4 companies out of the 226 in our universe.
§ The average market cap declined from about $1.2 billion in 2001 to $782 million in 2003 – a 35% drop. The median market cap fared worse, falling by more than 50% -- from $237 million in 2001 to $101 million in 2003.
§ Interestingly, when we survey the entire group, we find that the amount of cash on hand hasn’t changed that much. In 2001, the median cash was $48 million; it’s $47 million in 2003. And the average has actually increased somewhat: In 2001, it was $116 million; in 2003, it’s $143 million.
§ The increase in the average value is due to those firms that raised considerable amounts of cash during the genomics boom in 2000, as well as those lucky few that have continued to garner funds over the last several years. Sixty-nine of the companies on our list (about 31%) have cash reserves of at least $100 million and 12 of those have at least $500 million in the bank.
§ Yet, we know that many firms are running out of money – especially since the well has been dry for so long. In reality, 20% (46/226) of the companies we track are currently sitting on cash reserves of $10 million or less. Many, if not most of those, initiated cost-savings efforts in 2002 to stretch what little money they have until financing becomes available once again. Long may they last.
Satomi Degami, Research Manager, Recombinant Capital
Jennifer Van Brunt, Editor, Signals |