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Financial Snapshot For March 2006: Modest Gains, Solid Quarter
Despite the fact that the markets rallied in late March midst feelings of optimism about economic growth, their overall performance during the first quarter of 2006 was relatively lackluster, with the Nasdaq Composite Index registering a very modest gain of 6% between December 30, 2005 and March 31, 2006. Still, the Comp outperformed the AMEX Biotech Index, which gained a mere 5% over the same time period.
However, despite the fact that the biotech stocks as a group slightly underperformed the general market during the first quarter of 2006, they are still on solid ground. In fact, over the last 12-month period the AMEX Biotech Index has soared by a very healthy 45%, far out-pacing the Nasdaq Comp, which rose by 17% percent between March 31, 2005 and March 31, 2006.
That’s an impressive amount of growth, especially when compared to the previous year. Over the 12-month period between March 31, 2004 and March 31, 2005, the AMEX Biotech Index dropped by 6%, underperforming the Comp, which exhibited no change during the 12-month period. The biotech stocks were still losing ground during the first quarter of 2005: The AMEX Biotech Index shed 9%, in line with the Nasdaq Comp, which dropped by 8% over the same time period.
Obviously, the stocks are on much firmer ground now than they were a year ago.
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, it’s widely thought that the stocks of the big-cap biotechs – Genentech Inc., Amgen Inc. and the like – have underperformed those of the smaller firms this year. Apparently, the high-growth prospects and often-low valuations of small and mid-cap firms have attracted investors’ interest.
And we’ve also found that to be true. The 7 stocks in our revenue-driven group (which of course includes Genentech and Amgen) gained an average of 41% in value over the 12-month period from March 31, 2005 to March 31, 2006. That’s slightly less than the AMEX Biotech Index (+45%). But what’s really encouraging is the fact that the 239 stocks in our universe gained an average of 47% over the 12-month period – more than the AMEX Index and a sure sign that the small- and mid-cap stocks are performing well.
March 2006 Stock Report
The March 2006 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 239 publicly traded biotechnology stocks, based on their closing prices on March 31, 2006.
We have been tracking biotech stock performance since February 2000. To access the December 2005 Stock Report, click here. For the others -- February 2000 through September 2005 -- 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 104k), 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 3/31/06
|
% change from 3/31/05
|
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:
|
77%
70%
|
11%
18%
|
$1,251
$1,021
|
$304
$242
|
$1,182
$779
|
$1.8
$2.0
|
($133)
($110)
|
3.3
3.2
|
2.7
3.2
|
|
Genomic
Supply
Average:
Median:
|
69%
69%
|
8%
-5%
|
$405
$124
|
$64
$31
|
$358
$95
|
$0.8
$0.6
|
($50)
($15)
|
2.5
1.3
|
0.9
0.4
|
|
Genomic
Targets
Average:
Median:
|
84%
87%
|
42%
42%
|
$516
$297
|
$226
$159
|
$339
$205
|
$1.0
$1.0
|
($53)
($60)
|
5.7
4.4
|
0.7
0.6
|
|
Autoimmune
Average:
Median:
|
76%
82%
|
29%
33%
|
$962
$605
|
$165
$142
|
$967
$641
|
$3.0
$3.1
|
($100)
($49)
|
4.7
2.2
|
1.8
1.3
|
|
Cancer
Average:
Median:
|
72%
76%
|
24%
11%
|
$721
$193
|
$141
$64
|
$635
$150
|
$2.3
$1.4
|
($50)
($31)
|
2.7
1.8
|
1.9
0.8
|
|
Cardiovascular
Average:
Median:
|
69%
82%
|
60%
8%
|
$633
$287
|
$161
$130
|
$528
$287
|
$3.3
$1.4
|
($96)
($64)
|
3.1
1.7
|
1.3
1.1
|
|
Chemistry
Average:
Median:
|
71%
79%
|
63%
26%
|
$678
$203
|
$115
$79
|
$586
$144
|
$1.9
$1.0
|
($34)
($19)
|
7.7
2.3
|
1.7
1.0
|
|
CNS
Average:
Median:
|
79%
84%
|
71%
85%
|
$697
$292
|
$123
$54
|
$695
$265
|
$5.8
$3.2
|
($35)
($27)
|
3.1
1.6
|
2.1
1.1
|
|
Delivery
Average:
Median:
|
78%
86%
|
83%
46%
|
$840
$355
|
$178
$84
|
$796
$298
|
$2.6
$1.8
|
($34)
($26)
|
2.4
1.5
|
5.3
1.6
|
|
Diagnostic/Imaging
Average:
Median:
|
81%
83%
|
59%
27%
|
$657
$383
|
$68
$45
|
$601
$328
|
$1.7
$1.2
|
($17)
($15)
|
3.4
3.3
|
4.5
1.3
|
|
Gene/Cell
Therapy
Average:
Median:
|
67%
66%
|
22%
14%
|
$182
$175
|
$54
$36
|
$150
$116
|
$2.0
$1.4
|
($19)
($17)
|
2.0
2.0
|
0.5
0.7
|
|
Infection
Average:
Median:
|
71%
75%
|
44%
21%
|
$323
$213
|
$85
$42
|
$271
$165
|
$2.2
$1.4
|
($48)
($26)
|
2.5
1.5
|
0.9
0.8
|
|
Metabolic
Average:
Median:
|
82%
91%
|
91%
99%
|
$856
$326
|
$167
$92
|
$842
$465
|
$5.0
$2.0
|
($77)
($44)
|
2.6
1.8
|
1.4
1.4
|
|
Other
Average:
Median:
|
75%
83%
|
52%
71%
|
$387
$234
|
$116
$85
|
$274
$155
|
$2.9
$1.9
|
($35)
($25)
|
3.7
2.1
|
1.6
1.0
|
|
Revenue-Driven
Average:
Median:
|
91%
95%
|
41%
43%
|
$36,579
$16,835
|
$2,095
$952
|
$35,741
$16,375
|
$5.8
$4.3
|
($90)
($44)
|
7.7
4.3
|
52.5
21.3
|
|
Screening
Average:
Median:
|
86%
92%
|
96%
91%
|
$523
$426
|
$119
$88
|
$476
$369
|
$2.0
$1.4
|
($64)
($31)
|
2.9
3.1
|
1.2
1.0
|
|
Specialty
Average:
Median:
|
84%
85%
|
43%
54%
|
$427
$231
|
$68
$59
|
$363
$182
|
$3.0
$1.0
|
($38)
($36)
|
1.1
1.1
|
1.3
1.1
|
|
Wound
Average:
Median:
|
59%
79%
|
10%
16%
|
$242
$65
|
$23
$6
|
$275
$135
|
$0.9
$0.7
|
($169)
($15)
|
0.1
0.1
|
1.5
1.0
|
|
Grand
Average:
Median:
|
76%
80%
|
47%
25%
|
$1,658
$297
|
$182
$82
|
$1,579
$261
|
$2.6
$1.7
|
($50)
($32)
|
3.1
2.1
|
3.5
1.0
|
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 2006 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 12/05, with pro forma adjustments for more recent financings (including debt offerings), if any.
Highlights From The March 2006 Stock Report:
n We have added one new category to this report: Specialty Pharma. We also added 15 new stocks, representing companies that have come public in the last year or so. These include: Accentia Biopharmaceuticals Inc.; Acorda Therapeutics Inc.; Adams Respiratory Therapeutics Inc.; Alexza Pharmaceuticals Inc.; Altus Pharmaceuticals Inc.; Aspreva Pharmaceuticals Corp.; Avalon Pharmaceuticals Inc.; CombinatoRx Inc.; Genomic Health Inc.; Gentium S.p.A.; Iomai Corp.; SGX Pharmaceuticals Inc.; Somaxon Pharmaceuticals Inc.; Sunesis Pharmaceuticals Inc.; and Valera Pharmaceuticals Inc.
§ As we’ve already seen, the revenue-driven group underperformed the universe as a whole, in terms of average percent gain in price over the 12-month period from March 31, 2005 to March 31, 2006 (41% vs. 47%). But which groups were better than the universal average? Quite a few, as it turns out. The most impressive group was Screening, which soared by an average of 96% over the 12-month period. But it was followed closely by Metabolic, which gained an average of 91% during the same time period. Other groups that exhibited better than average gains included Delivery (83%); CNS (71%); Chemistry (63%); Cardiovascular (60%); Diagnostic/Imaging (59%); and Other (52%).
§ Again, these data suggest that many of the small and mid-cap stocks are making a comeback: With 12-month increases of more than 50%, it’s easy to see why investors favor them right now.
§ It’s no surprise that the genomics-based groups (1st generation, genomic supply and genomic targets) are still underperforming the biotech universe in general. But it is somewhat surprising that the Cancer group – which includes the largest number of stocks (44), many of which are closely followed – has underperformed the universe. For the 12-month period ended March 31, 2006, the Cancer group gained an average of 24% in value, far below the 47% average gain for the entire universe.
§ Financings over the last 12 months have helped boost the average liquidity for the entire group from $143 million at the end of March 2005 to $182 million at the end of March 2006.
§ Market caps are up compared to a year ago, as well: The average market cap in March 2005 was $1,206 million. At the end of March 2006, it stood at $1,658 million.
§ All signs, then, point to a solid second quarter for the biotech stocks – especially those in the lower and middle tiers.
Satomi Degami, CFA, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 04/19/2006 |