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Financial Snapshot For July 2003: Still Sizzling
“Summertime, and the living is easy…” That’s often as true on Wall Street as it is on Main Street, as traders take long weekends in the Hamptons or go on family vacations. This year, though, it’s as hot on the floor as it is on the beach. Buoyed by largely encouraging economic data, investors are avidly playing the market again – and that certainly includes the biotech sector, which is in the midst of a strong rally that shows no signs of petering out. In fact, some analysts predict that this rally will continue for the remainder of the year: If so, it may very well force the IPO window open.
Although the biotech stocks started soaring in April, the rally really began about a year ago. On July 10, 2002, the Nasdaq Biotech Index (which reflects the activity of the 71 largest and most actively traded biotech stocks) sunk to a nadir of 403.98 – a value it hadn’t seen since mid-December 1998. But since then, the Biotech Index has staged a remarkable comeback, gaining 78% between July 10, 2002 and July 25, 2003 and far outperforming the Nasdaq Composite Index, which rose by 29% during the same time period.
Given the fact that 2002 was a brutal year for the biotech sector, it’s not surprising that much of that recovery has occurred in 2003: In fact, the Biotech Index soared 45% between December 31, 2002 and July 25, 2003, leaping past the Comp, which rose by 30% during the same time period.
Moreover, the Biotech Index gained 53% over the last 12 months, while the Comp added 37% between July 26, 2002 and July 25, 2003. Obviously, then, the select group of stocks that comprise the Biotech Index are doing extremely well. But what of the others? Happily, they are also in good shape. On July 25, 2003, the average 12-month change in price for the 251 stocks tracked by Recombinant Capital and Signals was 64% and the median change was 40%. It’s an extraordinary reversal of fortunes: A year ago, on July 26, 2002, the average 12-month change in price for the biotech stocks in our universe was minus 46%, and the median change was minus 56%.
July 2003 Stock Report
The July 2003 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 251 publicly traded biotechnology stocks, based on their closing prices on July 25, 2003.
We have been tracking biotech stock performance since February 2000. To access the June 2003 Stock Report, click here. For the others -- February 2000 through May 2003 -- 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 19 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 155k), 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 7/25/03
|
% change from 7/26/02
|
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
|
|
|
66%
66% |
5%
8% |
$1,220
$397 |
$672
$235 |
$547
$163 |
$155
$49 |
$0.4
$0.5 |
($199.4)
($100.1) |
3.5
2.3 |
1.2
1.0 |
|
|
75%
79% |
65%
65% |
$228
$129 |
$100
$49 |
$173
$53 |
$4
1$1 |
$0.5
$0.4 |
($31.1)
($30.4) |
2.5
1.3 |
1.1
0.6 |
|
|
71%
73% |
7%
(3%) |
$267
$171 |
$115
$69 |
$127
$27 |
$20
$1 |
$0.3
$0.2 |
($37.3)
($30.5) |
3.4
1.6 |
0.7
0.6 |
|
|
70%
78% |
10%
35% |
$316
$60 |
$44
$8 |
$272
$43 |
$0
$0 |
$0.4
$0.3 |
($11.6)
($5.3) |
2.3
1.6 |
2.1
1.2 |
|
|
80%
83% |
111%
84% |
$572
$223 |
$126
$34 |
$446
$108 |
$57
$3 |
$4.0
$2.5 |
($45.1)
($23.5) |
2.2
1.4 |
10.3
1.9 |
|
|
69%
78% |
75%
45% |
$383
$161 |
$94
$40 |
$298
$116 |
$37
$1 |
$1.9
$1.5 |
($39.8)
($23.8) |
1.8
1.5 |
1.2
0.9 |
|
|
78%
80% |
71%
77% |
$482
$124 |
$132
$58 |
$350
$72 |
$42
$2 |
$2.3
$1.1 |
($30.6)(
$18.6) |
3.7
3.1 |
1.2
0.9 |
|
|
73%
80% |
42%
40% |
$314
$142 |
$137
$71 |
$176
$71 |
$40
$0 |
$0.7
$0.4 |
($13.5)
($10.3) |
7.6
2.3 |
1.3
0.9 |
|
|
73%
81% |
58%
31% |
$487
$158 |
$107
$46 |
$381
$92 |
$153
$0 |
$3.1
$1.7 |
($29.8)
($18.5) |
2.4
1.5 |
1.5
1.1 |
|
|
84%
87% |
57%
41% |
$782
$323 |
$196
$52 |
$627
$235 |
$73
$1 |
$0.4
$0.3 |
($31.6)
($29.6) |
1.6
1.5 |
4.4
1.4 |
|
|
72%
78% |
122%
56% |
$453
$172 |
$101
$36 |
$353
$157 |
$95
$0 |
$1.9
$1.3 |
($34.4)
($17.2) |
2.0
1.4 |
1.7
1.5 |
|
|
82%
87% |
85%
68% |
$446
$265 |
$28
$15 |
$419
$243 |
$6
$0 |
$1.9
$1.2 |
($11.5)
($7.8) |
4.1
1.5 |
4.3
3.0 |
|
|
50%
52% |
35%
27% |
$133
$74 |
$57
$12 |
$81
$37 |
$7
$0 |
$0.9
$0.6 |
($33.5)
($20.6) |
2.2
1.0 |
0.6
0.5 |
|
|
61%
72% |
39%
36% |
$797
$80 |
$91
$16 |
$706
$74 |
$46
$0 |
$1.8
$1.0 |
($40.0)
($23.7) |
1.5
1.0 |
0.9
0.7 |
|
|
80%
86% |
49%
43% |
$524
$135 |
$90
$23 |
$434
$112 |
$57
$1 |
$2.0
$1.2 |
($57.7)
($15.2) |
2.6
1.9 |
1.4
1.1 |
|
|
71%
76% |
98%
59% |
$192
$136 |
$36
$15 |
$157
$122 |
$11
$2 |
$2.8
$1.0 |
($19.5)
($17.2) |
1.4
0.9 |
1.6
1.2 |
|
|
90%
96% |
80%
79% |
$24,779
$9,756 |
$1,355
$828 |
$23,424
$9,077 |
$797
$507 |
$5.2
$3.2 |
NA
NA |
NA
NA |
6.3
5.4 |
|
|
70%
82% |
40%
31% |
$433
$361 |
$133
$71 |
$300
$260 |
$75
$14 |
$1.2
$0.9 |
($72.5)
($81.3) |
1.7
1.6 |
1.1
1.1 |
|
|
69%
77% |
59%
64% |
$94
$63 |
$5
$3 |
$89
$56 |
$7
$1 |
$0.7
$0.6 |
($6.9)
($1.2) |
1.4
1.0 |
1.2
1.2 |
|
|
72%
77% |
64%
40% |
$1,078
$172 |
$136
$42 |
$965
$127 |
$66
$1 |
$1.7
$0.9 |
($38.5)
($23.6) |
2.4
1.6 |
2.1
1.1 |
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 July 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 12/02 or 3/03, with some figures adjusted for more recent financings.
Highlights From The July 2003 Stock Report:
§ Although the biotech stocks (as measured by the Nasdaq Biotech Index) gained 6% between June 27, 2003 and July 25, 2003, the major surge occurred in the first two weeks of the month. Since then, stock prices have seesawed a bit, but there has been no significant pullback.
§ The average market cap of the 251 companies in our universe climbed 8% between June 27, 2003 and July 25, 2003. reaching a value of $1,078 million. The market caps of the 7 revenue-driven companies contribute heavily to this figure; without them, the average market cap for the group at the end of July was a relatively modest $409 million. The median market cap for all 251 firms was $172 million.
§ For comparison, at the end of July 2002, the average market cap for the group – including the revenue-drive firms -- was $612 million and the median was $102 million.
§ In terms of one-year price performance, the average increase for the entire group was 64%. The top 3 performing groups were Delivery, Autoimmune and Other – with average increases of 122%, 111% and 98%, respectively.
§ The groups with the worst one-year price performance were 1st Generation Genomics, Genomic Targets and Agbio/Environmental, with average increases of 5%, 7% and 10%, respectively. Interestingly, while the stocks of companies in the 1st Generation Genomics and Genomic Targets groups are having a difficult time recovering value, those of companies in the Genomic Supply contingent are faring better – with an average 65% increase in price over the last 12 months.
§ As another indication that the biotech sector is back in favor, quite a few companies have managed to raise money through convertible debt financings and follow-on stock offerings (usually via shelf registrations) in recent months.
§ However, 3 companies – Deltagen Inc., Sheffield Pharmaceuticals Inc. and Essential Therapeutics Inc. – have filed for bankruptcy since May 2003, adding to a long list of bankrupt or near-bankrupt firms that has been building since 2001.
§ While each company is unique, many share similar financing histories and business strategies. Deltagen, for example, was one of the high-flying genomics firms that went public in August 2000. It raised $120 million in its IPO, yielding a post-money valuation of $450 million. From an IPO price of $15, the shares traded up during August and September, raising the market cap to about $900 million before the stock plunged with the rest of the market.
§ Deltagen issued additional shares to conduct a series of acquisitions and raised additional funds through subsequent private offerings. It also entered into a number of strategic alliances and reduced its burn rate through a series of lay-offs. Yet, Deltagen still ran out of cash: In its report for the quarter ended March 31, 2003, the company cited a cash balance of $2.6 million, yet its quarterly burn rate was $17.9 million.
§ There are still 10 companies in our universe whose stock was trading at $1.00 or less at the end of July. And there are 52 firms with a survival index of less than one year. We wonder if the market momentum is going to pick up fast enough to save these companies.
Satomi Degami, Research Manager, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 08/02/2003 |