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Financial Snapshot For March 2004: Looking Good
It’s been a rocky first quarter for the biotech stocks – and for the markets in general. Yet, despite investors’ nervousness – about issues as diverse as the terrorist train bombing in Madrid and the departure of Mark McClellan from the FDA – the biotech sector managed to hold its own, and even out-performed the Nasdaq Composite Index. Between December 31, 2003 and March 31, 2004, the Amex Biotech Index gained 7%, whereas the Comp dropped by about 0.5% over the same time period.
Importantly, the gains exhibited by the biotech stocks in the first quarter of 2004 followed on a strong performance by the sector in 2003. Over the last 12 months, the Amex Biotech Index soared 50%, besting the Comp, which gained 46% between March 28, 2003 and March 31, 2004.
However, we must remember that the 17 stocks contained in the Amex Biotech Index represent the sector’s top-tier companies – and our data show that all but two of these firms actually underperformed the group as a whole during the last 12 months.
On March 31, 2004, the average 12-month change in price for the 216 stocks tracked by Recombinant Capital and Signals was 153% and the median change was 106%. By contrast, the 17 stocks included in the Amex Index exhibited an average 12-month gain of 62% and a median gain of 39%. The two Index-based stocks that out-performed the group’s average change were Protein Design Labs Inc. (a 221% gain over the 12-month period) and Genentech Inc. (207%).
The general uptick in stock prices is good news, for it means that the smaller stocks, many of which suffered from severely depressed prices in 2002 and early 2003, have bounced back to healthy levels. In fact, at the end of the first quarter of 2003, the average change in price for the biotech stocks in our universe was minus 46% and the median change was minus 54%. A year later, the stocks have exhibited a significant turnaround.
March 2004 Stock Report
The March 2004 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 216 publicly traded biotechnology stocks, based on their closing prices on March 31, 2004.
We have been tracking biotech stock performance since February 2000. To access the December 2003 Stock Report, click here. For the others -- February 2000 through November 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, and may take some time to download.)
We've classified the companies on the list into 16 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 3/31/04 |
% change from 3/24/03 |
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 |
|
|
80%
83% |
140%
102% |
$1,643
$521 |
$466
$188 |
$1,353
$427 |
$2.4
$1.0 |
($198)
($101) |
3.2
1.8 |
3.3
3.0 |
|
|
70%
70% |
177%
110% |
$351
$197 |
$79
$34 |
$311
$151 |
$1.5
$0.9 |
($27)
($17) |
2.1
1.5 |
1.0
0.6 |
|
|
72%
76% |
142%
91% |
$369
$319 |
$211
$115 |
$189
$113 |
$0.9
$0.6 |
($41)
($38) |
4.7
2.7 |
0.7
0.6 |
|
|
78%
82% |
131%
100% |
$734
$390 |
$156
$90 |
$649
$324 |
$4.4
$3.4 |
($71)
($31) |
9.3
2.6 |
1.7
1.0 |
|
|
72%
79% |
207%
151% |
$534
$257 |
$111
$66 |
$471
$192 |
$3.1
$2.1 |
($44)
($24) |
2.6
2.1 |
2.4
1.1 |
|
|
71%
72% |
235%
100% |
$629
$290 |
$136
$84 |
$543
$179 |
$4.2
$3.1 |
($53)
($25) |
2.1
2.2 |
1.5
1.3 |
|
|
81%
89% |
124%
110% |
$370
$257 |
$130
$79 |
$281
$221 |
$1.2
$0.7 |
($84)
($13) |
9.1
1.6 |
1.1
1.2 |
|
|
77%
80% |
125%
100% |
$640
$247 |
$186
$49 |
$586
$225 |
$4.7
$5.3 |
($36)
($27) |
1.3
1.0 |
1.6
1.0 |
|
|
77%
80% |
129%
99% |
$681
$237 |
$140
$50 |
$672
$226 |
$2.3
$1.8 |
($42)
($22) |
1.7
1.3 |
5.9
2.7 |
|
|
70%
75% |
70%
65% |
$543
$277 |
$57
$40 |
$493
$236 |
$1.6
$1.0 |
($13)
($9) |
5.8
2.4 |
5.1
2.7 |
|
|
72%
75% |
200%
133% |
$194
$123 |
$68
$37 |
$143
$84 |
$1.4
$1.4 |
($28)
($24) |
1.9
1.5 |
0.6
0.6 |
|
|
67%
69% |
178%
106% |
$618
$217 |
$111
$28 |
$577
$201 |
$3.8
$1.8 |
($39)
($27) |
2.1
1.5 |
1.6
0.9 |
|
|
73%
77% |
229%
71% |
$669
$327 |
$120
$32 |
$612
$296 |
$4.6
$2.4 |
($65)
($10) |
3.4
3.0 |
1.5
0.9 |
|
|
84%
81% |
61%
39% |
$29,850
$11,854 |
$1,775
$933 |
$29,283
$11,349 |
$5.1
$4.9 |
NA
NA |
NA
NA |
51.6
28.7 |
|
|
81%
81% |
229%
149% |
$822
$434 |
$163
$130 |
$745
$440 |
$11.7
$2.6 |
($58)
($41) |
3.4
2.1 |
1.4
1.0 |
|
|
74%
79% |
110%
57% |
$120
$87 |
$9
$7 |
$113
$78 |
$1.1
$0.7 |
($10)
($4) |
0.7
0.8 |
1.2
1.0 |
|
|
74%
76% |
153%
106% |
$1,354
$290 |
$173
$72 |
$1,272
$226 |
$3.0
$1.8 |
($46)
($27) |
3.2
2.0 |
3.7
1.1 |
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 2004 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 12/03, with pro forma adjustments for more recent financings (including debt offerings).
Highlights From The March 2004 Stock Report:
§ We’ve made a number of changes to the stock list since our last report in December 2003. For one, we’ve deleted three categories: Agbio/Environmental; CRO/Service/Supply; and Other. For another, we’ve added the companies that completed IPOs in 2003. These include CancerVax Corp., Genitope Corp. and Pharmion Corp. (Cancer); Myogen Inc. and NitroMed Inc. (Cardiovascular); Acusphere Inc. (Delivery); and Advancis Pharmaceutical Corp. (Infection).
§ Finally, we’ve added data relating to each company’s IPO -- including the date of the IPO, the split-adjusted IPO share price, the post-IPO valuation and the cash on cash return from the IPO (the current price divided by the IPO price). This last figure is intended to provide a perspective on a particular stock’s performance since its public debut. For instance, the cash on cash return for newly public firm CancerVax was 0.9 on March 31, 2004, meaning the current price of $10.61 falls below the IPO price of $12.00. On the other hand, the cash on cash return for Human Genome Sciences Inc.‘s stock is 4.2, meaning the current price is about 4 times the IPO price (the IPO price was $3 per share [adjusted for two 2:1 splits] and the stock closed at $12.53 on March 31, 2004). In fact, the average cash on cash return for the entire group is 3.7, meaning the average price for the stocks in our universe is nearly 4 times the IPO price.
§ By category, the top performers in terms of stock performance are Cardiovascular, Metabolic and Screening, which gained an average of 235%, 229% and 229%, respectively. Other groups that exhibited gains greater than the average for the entire universe included Cancer (207%), Gene Therapy (200%), Infection (178%) and Genomic Supply (177%). In contrast, the stocks of the six companies that comprise the Revenue-Driven Group gained 61%, on average, between March 24, 2003 and March 31, 2004.
§ Market caps have improved significantly over the last 12-month period. At the end of March 2003, the average market cap for the companies in our universe was $825 million and the median was $102 million. One year later, the average market cap had risen by 64% to $1,354 million and the median market cap for the entire group had gained 184% to $290 million.
§ On average, the companies in our universe are burning slightly more money than they were in March 2003: Then, the average burn rate was about $40 million per year; now, it’s up to $46 million per year. The median burn rate, however, hasn’t changed: It’s held steady at $27 million over the last 12 months.
§ Given the fact that many biotech companies have been able to raise significant amounts of cash through public offerings and private placements (including debt offerings) this year, it’s not surprising that the survival index is up to 3.2 years, on average, from 2.9 years in March 2003. Moreover, companies have an average of $173 million in cash and cash equivalents from which to draw.
§ All told, the biotech sector is in very good shape, and should remain so for quite some time – even if investors turn their attention elsewhere.
Satomi Degami, CFA, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 04/14/2004 |