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Financial Snapshot For March 2008: Batten Down The Hatches
The first quarter of 2008 was difficult for almost every sector of the economy: The weak dollar got weaker, the high price of oil got higher, the mortgage and credit crises claimed more victims, and investment bank Bear Sterns crumbled, horrifying Wall Street. Most stocks have taken a serious beating this year, but the biotechs have somehow managed to fend off the worst of it. In fact, their relative resiliency to the economic turmoil has piqued the interest of many investors, it seems – who now view biotech stocks as a safe haven. Well, big caps like Genentech Inc. and Amgen Inc. are considered safe, but investors still consider the many smaller firms as risky bets.
Thus, although stocks in the biotech and specialty pharma sector dropped by 9% during the first quarter (as measured by the AMEX Biotechnology Index), they still outperformed the general market (as measured by the Nasdaq Composite Index), which lost 15% of its value between December 28, 2007 and March 28, 2008.
The biotech and specialty pharma stocks also lost ground in the 12-month period between March 30, 2007 and March 28, 2008 (a 6% drop), but in this case they were performing in parallel with the general market, which lost about 7% during the same time period.
We use the AMEX Biotech Index to track the performance of the biotech stocks as a group – but it’s important to recall that the 20 stocks that currently 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.
Indeed, although the AMEX Biotech Index dropped by 6% between March 2007 and March 2008, the 233 stocks in our universe shed an average of 27% over the same time frame. And the median loss was 37%. That’s a clear sign of troubled times for all but the richest of biotech companies. The rest had better batten down the hatches.
March 2008 Stock Report
The March 2008 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 233 publicly traded biotechnology stocks, based on their closing prices on March 28, 2008.
We have been tracking biotech stock performance since February 2000. To access the December 2007 Stock Report, click here. For the others -- February 2000 through September 2007 -- 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, and may take some time to download.)
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 102k), 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 3/28/08
|
% change from 3/30/07
|
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:
|
61%
68%
|
-2%
17%
|
$1,651
$852
|
$346
$265
|
$1,658
$1,359
|
$2.8
$2.0
|
($97)
($78)
|
28.8
2.7
|
3.4
4.5
|
|
Genomic
Supply
Average:
Median:
|
57%
56%
|
7%
-26%
|
$681
$84
|
$80
$24
|
$730
$126
|
$1.7
$0.5
|
($16)
($16)
|
2.3
1.4
|
1.3
0.3
|
|
Genomic
Targets
Average:
Median:
|
49%
53%
|
-25%
-37%
|
$422
$349
|
$209
$175
|
$276
$225
|
$1.2
$0.8
|
($64)
($56)
|
19.7
3.0
|
0.6
0.4
|
|
Autoimmune
Average:
Median:
|
40%
39%
|
-35%
-49%
|
$672
$228
|
$156
$107
|
$684
$144
|
$3.1
$1.4
|
($41)
($38)
|
10.8
2.7
|
1.6
0.5
|
|
Cancer
Average:
Median:
|
41%
38%
|
-40%
-43%
|
$344
$120
|
$116
$48
|
$270
$54
|
$10.1
$0.8
|
($41)
($28)
|
9.8
1.6
|
0.9
0.3
|
|
Cardiovascular
Average:
Median:
|
40%
47%
|
-1%
-28%
|
$254
$139
|
$79
$53
|
$246
$141
|
$2.1
$1.2
|
($70)
($64)
|
1.5
1.5
|
0.4
0.1
|
|
Chemistry
Average:
Median:
|
45%
44%
|
-37%
-43%
|
$459
$190
|
$162
$106
|
$315
$79
|
$0.5
$0.3
|
($108)
($45)
|
2.2
2.1
|
0.9
0.6
|
|
CNS
Average:
Median:
|
47%
52%
|
-21%
-37%
|
$445
$181
|
$145
$93
|
$387
$97
|
$2.6
$1.6
|
($112)
($35)
|
2.0
2.0
|
0.9
0.5
|
|
Delivery
Average:
Median:
|
45%
48%
|
-35%
-48%
|
$399
$157
|
$169
$56
|
$347
$127
|
$1.4
$0.9
|
($52)
($36)
|
1.9
1.4
|
3.1
0.9
|
|
Diagnostic/Imaging
Average:
Median:
|
55%
54%
|
-17%
-1%
|
$695
$340
|
$94
$51
|
$615
$228
|
$2.0
$1.3
|
($26)
($27)
|
4.9
1.8
|
3.0
0.9
|
|
Gene/Cell Therapy
Average:
Median:
|
38%
37%
|
-45%
-42%
|
$129
$127
|
$49
$33
|
$105
$79
|
$1.4
$0.9
|
($36)
($28)
|
1.4
1.5
|
0.3
0.2
|
|
Infection
Average:
Median:
|
49%
50%
|
-41%
-45%
|
$206
$142
|
$90
$52
|
$163
$108
|
$1.5
$0.7
|
($43)
($25)
|
4.9
1.1
|
0.5
0.3
|
|
Metabolic
Average:
Median:
|
55%
59%
|
-12%
-13%
|
$807
$310
|
$250
$158
|
$732
$266
|
$3.7
$2.3
|
($80)
($50)
|
5.2
2.6
|
1.0
0.8
|
|
Other
Average:
Median:
|
43%
43%
|
-34%
-42%
|
$283
$228
|
$119
$85
|
$177
$138
|
$2.0
$0.9
|
($61)
($33)
|
8.4
1.9
|
1.1
0.7
|
|
Revenue-Driven
Average:
Median:
|
82%
84%
|
12%
17%
|
$39,438
$34,541
|
$2,705
$1,881
|
$39,569
$33,906
|
$8.8
$6.4
|
NA
NA
|
NA
NA
|
45.1
30.8
|
|
Screening
Average:
Median:
|
49%
44%
|
-28%
-50%
|
$519
$247
|
$131
$90
|
$477
$259
|
$1.8
$1.3
|
($118)
($65)
|
1.8
1.3
|
0.9
0.8
|
|
Specialty
Average:
Median:
|
49%
41%
|
-30%
-61%
|
$302
$224
|
$60
$51
|
$258
$119
|
$2.9
$1.2
|
($39)
($28)
|
2.6
1.8
|
0.8
0.7
|
|
Wound
Average:
Median:
|
94%
NA
|
-1%
NA
|
$724
NA
|
$45
NA
|
$684
NA
|
$2.0
NA
|
($9)
NA
|
NA
NA
|
NA
NA
|
|
Grand
Average:
Median:
|
49%
48%
|
-27%
-37%
|
$1,511
$206
|
$198
$79
|
$1,460
$141
|
$3.5
$1.2
|
($56)
($36)
|
6.2
1.8
|
2.5
0.6
|
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 2008 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.
§ All of the accounting figures are from quarterly reports as of 9/07.
Highlights From The March 2008 Stock Report:
n The median market capitalization for the entire universe keeps sliding downhill: It was $206 million at the end of the first quarter of 2008, significantly lower than it was in the year-ago period ($281 million at the end of the first quarter of 2007).
n There are now 37 companies that sport a market cap of $1 billion or more – and 6 of those (which comprise the revenue-driven group) have market caps that exceed $10 billion. At the other end of the scale, there are 81 companies whose market cap is $100 million or less. Not surprisingly, about half (51%) of the companies have market caps that lie somewhere in between these extremes, comprising the small- to mid-cap stocks that many investors favor.
n These results are worrisome, because the number of firms with market caps of $100 million or less has increased substantially in just the last 3 months – from 65 in December 2007 to 81 in March 2008.
n The group with the lowest median market cap at the end of the first quarter of 2008 is Genomic Supply ($84M). The highest median market cap, of course, is held by the Revenue-Driven group ($34.5B).
n In terms of stock performance of individual companies, we find that Tapestry Pharmaceuticals Inc. and Orchestra Therapeutics Inc. ended in a tie, with both firms’ stock dropping by 97% in the 12-month period from March 2007 to March 2008.
n On the other end of the scale, Questcor Pharmaceuticals Inc.’s stock jumped 271% between March 2007 and March 2008. Corcept Therapeutics Inc.’s stock logged the next-best performance, soaring 248% in the 12-month period.
§ 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 2008, substantially lower than the median value of 0.9 obtained at the end of March 2007.
§ At the end of the first quarter of 2008, 65% of the stocks in our universe were trading at or below their IPO price. Only a handful of stocks achieved a cash-on-cash return from the IPO price of at least 5X: These included Incyte Corp. (5.4X), Millennium Pharmaceuticals Inc. (5X), Alexion Pharmaceuticals Inc. (7.1X), ImClone Systems Inc. (6.1X), OSI Pharmaceuticals Inc. (6.4X), Noven Pharmaceuticals Inc. (17.7X), Xenoport Inc. (8.2X), Enzo Biochem Inc. (10.3X), Gen-Probe Inc. (7.0X), and Idexx Laboratories Inc. (13.5X) – as well as the 6 stocks in the Revenue-Driven Group, whose returns range from 10.9X to 118.4X.
Satomi Degami, CFA, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 04/16/2008 |