Signals vs Noise Article







Financial Snapshot For March 2010: Off To The Races

Financial Snapshot For March 2010
Recovery has been the name of the game in 2010 – and despite a number of scary events (the stock market’s dizzying plunge in early May, The debt crisis in Greece, to name two), the economy has made some real strides this year.

Happily, stocks in the biotech and specialty pharma sector have gained new strength in 2010: As measured by the AMEX Biotechnology Index, the stocks gained 32% in value between December 31, 2009 and March 26, 2010, soaring above the general market as measured by the Nasdaq Composite Index (Comp), which rose by about 6% over the same time frame.

The recovery is even more impressive when we look at the stocks’ performance over the last 12 months: Between March 27, 2009 and March 26, 2010, the AMEX Biotech Index rocketed 91%, still outperforming the Comp, which itself added a hefty 55%.

As well, the AMEX Biotech Index broke through the 1,000 level for the first time since its inception on December 5, 1994 (that day, it closed at 83.07). The 1,000-point break through occurred on February 16, 2010, and the Index is still riding comfortably above 1,000. This has got to be one of the more meaningful milestones in biotech’s history. Despite the inevitable short-term ups and downs, the sector’s value has increased steadily over the last 16 years.


Amex Nasdaq Chart


Although we continue to use the AMEX Biotech Index to track the performance of the biotech stocks as a group, it’s important to recall that the 20 stocks that comprise this index (which is equal dollar weighted) represent the biotech sector’s top-tier companies – and their performance may not reflect what’s happening to the group as a whole.

Surprisingly, the 181 stocks in our universe, when taken as a whole, performed far better than the AMEX Biotech Index – gaining 183% in value, on average, between March 27, 2009 and March 26, 2010.

The sector’s performance during the first quarter of 2009 provides a stark contrast: Between March 28, 2008 and March 27, 2009, the 201 stocks then in our universe dropped 35% of their value, on average.

Thus, a large number of biotech and specialty pharma stocks exhibited substantial gains during the last 12 months – and a few have gone ballistic. Human Genome Sciences Inc., for instance, saw its stock appreciate 3,061% between March 27, 2009 and March 26, 2010. During the same time frame, Vanda Pharmaceuticals Inc.’s stock rose 1,377%, Keryx Biopharmaceuticals Inc.’s shares soared 1,773%, and Jazz Pharmaceuticals Inc.’s stock appreciated 1,213%.

Interestingly, the stocks of the revenue-generating companies exhibited far more modest gains -- from Gilead Sciences Inc.’s 2% rise to Celgene Corp.’s 35% gain. And one of them – Genzyme Corp. – even took a hit, shedding 11% in the process.

March 2010 Stock Report

The March 2010 Stock Report, published by Deloitte Recap LLC and Signals, includes detailed financial data on 181 publicly traded biotechnology stocks, based on their closing prices on March 26, 2010.

We have been tracking biotech stock performance since February 2000. To access the December 2009 Stock Report, click here. For the others -- February 2000 through March 2009 -- click here to go to Signals' Table Of Contents. [We did not publish Stock Reports for the June 2001 - September 2001 time frame, nor did we publish one for June 2009.] Click on the year of interest; you will find all the Stock Reports listed under the Signals vs. Noise section.

We've classified the companies on the list into 17 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 95k), just click here. 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 3/26/10

% change from 3/27/10

Market cap ($M)

Liquidity, pro forma ($M)

Company valuation ($M)

Valuation/
employee ($M)

Burn rate, annualized ($M)

Survival index (yrs)

Cash/cash from IPO/share

1st Generation Genomics
Average:
Median:

82%
89%

1177%
514%

$3,048
$2,418

$518
$489

$2,907
$2,072

$6.0
$6.5

($196)
(4196)

10.0
10.0

6.8
7.5

Genomic Supply
Average:
Median:

76%
82%

665%
137%

$748
$190

$179
$37

$803
$259

$2.0
$0.8

($23)
($14)

2.3
1.4

0.9
???

Genomic Targets
Average:
Median:

54%
57%

4%
8%

$318
$287

$128
$133

$277
$277

$1.0
$0.8

($85)
($100)

3.7
1.8

0.3
???

Autoimmune
Average:
Median:

54%
55%

31%
5%

$1,286
$137

$129
$142

$1,591
$48

$6.5
$3.2

($21)
($21)

4.8
4.8

1.8
???

Cancer
Average:
Median:

57%
58%

100%
60%

$518
$197

$88
$43

$476
$136

$18.2
$1.7

($57)
($36)

2.3
1.2

1.2
0.5

Cardiovascular
Average:
Median:

60%
56%

38%
42%

$256
$239

$72
$51

$190
$139

$3.1
$1.6

NA
NA

NA
NA

0.2
0.03

Chemistry
Average:
Median:

71%
65%

47%
14%

$1,257
$218

$174
$99

$1,160
$179

$2.8
$0.6

($156)
($53)

4.6
1.5

1.7
0.6

CNS
Average:
Median:

66%
71%

655%
48%

$630
$152

$184
$57

$546
$107

$5.4
$2.5

($39)
($39)

117.9
0.9

1.3
0.4

Delivery
Average:
Median:

66%
77%

85%
67%

$398
$212

$100
$43

$359
$147

$2.9
$1.6

($41)
($32)

1.9
1.2

1.9
1.2

Diagnostic/Imag.
Average:
Median:

72%
79%

65%
28%

$708
$414

$93
$56

$642
$359

$2.5
$2.0

($30)
($17)

2.9
1.2

3.3
1.4

Gene/
Cell Therapy
Average:
Median:

60%
60%

148%
4%

$172
$181

$24
$18

$156
$140

$2.3
$2.2

($22)
($22)

1.0
1.2

3.3
1.4

Infection
Average:
Median:

62%
66%

63%
36%

$453
$194

$93
$51

$400
$171

$4.3
$1.0

($45)
($35)

1.2
0.9

1.1
0.3

Metabolic
Average:
Median:

64&
67%

256%
89%

$951
$752

$168
$94

$1,006
$614

$4.1
$2.4

($127)
($127)

4.7
1.5

0.9
1.0

Other
Average:
Median:

63%
52%

66%
52%

$295
$159

$83
$78

$231
$146

$2.2
$1.2

($35)
($24)

20.7
2.3

1.1
0.9

Revenue-Driven
Average:
Median:

91%
92%

11%
11%

$32,102
$28,560

$4,554
$2,019

$30,173
$25,397

$8.8
$4.4

NA
NA

NA
NA

51.8
23.3

Screening
Average:
Median:

61%
55%

37%
28%

$543
$201

$176
$56

$439
$180

$1.4
$1.3

($42)
($46)

12.4
3.7

1.3
1.2

Specialty
Average:
Median:

72%
74%

486%
12%

$415
$289

$49
$62

$387
$251

$3.9
$1.8

($28)
($29)

2.8
1.5

0.9
0.8

Grand
Average:
Median:

65%
66%

183%
43%

$1,537
$257

$243
$67

$1,452
$198

$5.8
$1.9

($54)
($34)

14.1
1.4

3.0
0.7

Footnotes to the table:


§ ST & LT Debt: Short-term and long-term debt.

§ Company valuation: Market cap + short-term and long-term debt, minus pro forma cash and cash equivalents.

§ Annualized 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.

§ Cash/cash from IPO/share: cash on cash return from IPO price = current stock price / IPO price per share (split-adjusted).

§ Price/share at IPO: IPO share price, adjusted for all subsequent splits.

§ Median: Middle value in a set of values.

§ The information contained in the March 2010 Stock Report has been obtained from public sources. Where information is not available, it is indicated as “na.” Deloitte Recap LLC 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 September or December 2009.


Highlights From The March 2010 Stock Report:

  • The median market capitalization for the entire universe has improved in the last 12 months. It was $257 million at the end of the first quarter of 2010, up substantially from $141 million at the end of the first quarter of 2009.
  • There are now 33 companies that sport a market cap of $1 billion or more, 7 more than there were at the end of December 2009 and 9 more than there were at the end of March 2009. In each year, the companies which comprise the Revenue-Driven group have market caps that exceed $10 billion.
  • At the other end of the scale, there are 45 companies whose market cap was $100 million or less at the end of March 2010. This represents 25% of all companies in our universe – far better than the situation in March 2009, when 46% of the companies in our universe (92 companies) had market caps of $100 million or less.
  • That leaves 103 companies, or 57% of our universe, with market caps between $100 million and $1 billion.
  • The group exhibiting the lowest median market cap at the end of March 2010 was Autoimmune ($137 million). The highest median market cap, of course, was held by the Revenue-Driven group ($28.6 billion), but the First Generation Genomics group holds second place ($2.4 billion).
  • The median cash on cash return from the IPO price (the current stock price/IPO price per share [split-adjusted]) was 0.6 at the end of March 2010, somewhat better than the median value of 0.4 obtained at the end of March 2009.
  • A significant number of stocks gained value between March 27, 2009 and March 26, 2010. In fact, 76% of the stocks in our universe (138/181) increased in value, while a mere 24% (43/181) decreased in value. That’s a clear reversal of the situation we encountered one year ago, when only 21% of the stocks gained value between March 28, 2008 and March 27, 2009 while 79% decreased in value. It doesn’t get much better than this.

Satomi Degami, CFA, Deloitte Recap LLC
Jennifer Van Brunt, Editor, Signals



originally published 05/14/2010


Copyright © 2010. Signals (signalsmag.com) is an online magazine of analysis for biotechnology executives. To contact the Signals editorial department, send e-mail to signals_edit@deloitte.com. Signals is published by: Recap, 2033 N Main Street, Suite 1050 , Walnut Creek, California 94596-3722, Phone: (925) 952-3870