|  |
Financial Snapshot For September 2004: In Need Of A Boost
Following this summer’s slump, the markets seem to have gathered a little momentum: Between mid-August and the beginning of October, the NASDAQ Composite Index gained 11% and the AMEX Biotech Index rose by 18%. That’s a good sign, especially if the upward trend continues for the rest of the year.
However, a recent flurry of negative announcements – Merck & Co. Inc.’s Vioxx debacle, Chiron Corp.’s flu vaccine snafu – haven’t helped matters one bit, and could cast a pall over the healthcare sector going forward.
The stocks could certainly use a pick-me-up, though: The AMEX Biotech Index added a mere 7% between December 31, 2003 and September 30, 2004, whereas the Comp actually shed 5% during the same time period. While the biotech stocks appear to be outperforming the overall market this year, the last two quarters have been essentially flat: Between March 31, 2004 and June 30, 2004, the AMEX Biotech Index shaved off 0.8%, and between June 30, 2004 and September 30, 2004, it gained 0.4%. The Comp gained 3% over the second quarter and subsequently dropped by 7% over the third quarter.
Although the last six months have been flat, the biotech sector has made some headway – but not much -- since September 2003: Between September 26, 2003 and September 30, 2004, the AMEX Biotech Index rose by 6%, keeping pace with the Comp.
It’s important to keep in mind that the 17 stocks that comprise the Amex Biotech 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, on September 30, 2004 the average 12-month change in price for the 239 stocks tracked by Recombinant Capital and Signals was -2% and the median change was -9%. This is the first time since April 2003 that we’ve seen both the average and median 12-month changes for the entire group fall into negative territory. That’s alarming, for it means that many of the biotech stocks are losing the ground they fought so hard to win over the last year and a half.
The top-tier companies aren’t immune to this situation, either: Over the last 12 months, the following stocks actually underperformed the group‘s average: Amgen Inc. (-13%), Chiron Corp. (-14%), Human Genome Sciences Inc. (-17%), MedImmune Inc. (-26%), Millennium Pharmaceuticals Inc. (-7%) and Vertex Pharmaceuticals Inc. (-14%).
September 2004 Stock Report
The September 2004 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 239 publicly traded biotechnology stocks, based on their closing prices on September 30, 2004.
We have been tracking biotech stock performance since February 2000. To access the June 2004 Stock Report, click here. For the others -- February 2000 through March 2004 -- 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 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 101k), 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 9/30/04
|
% change from 9/26/03
|
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
|
|
1st
Generation
Genomics
Average:
Median:
|
74%
69%
|
31%
17%
|
$1,377
$707
|
$498
$510
|
$1,108
$614
|
$1.1
$0.9
|
($163)
($216)
|
2.8
3.1
|
3.1
3.6
|
|
Genomic
Supply
Average:
Median:
|
52%
57%
|
0%
5%
|
$303
$140
|
$59
$49
|
$262
$111
|
$1.2
$0.7
|
($28)
($20)
|
2.3
1.6
|
0.8
0.4
|
|
Genomic
Targets
Average:
Median:
|
64%
60%
|
8%
10%
|
$357
$316
|
$162
$114
|
$232
$111
|
$0.9
$0.7
|
($54)
($51)
|
2.6
2.2
|
0.7
0.4
|
|
Autoimmune
Average:
Median:
|
74%
74%
|
21%
20%
|
$760
$619
|
$157
$122
|
$689
$501
|
$4.8
$3.6
|
($60)
($42)
|
6.6
3.6
|
1.8
2.2
|
|
Cancer
Average:
Median:
|
52%
53%
|
-18%
-24%
|
$517
$206
|
$117
$65
|
$445
$140
|
$2.6
$1.3
|
($49)
($36)
|
2.2
1.8
|
2.0
0.8
|
|
Cardiovascular
Average:
Median:
|
64%
67%
|
-10%
-21%
|
$481
$473
|
$147
$106
|
$377
$320
|
$4.3
$4.1
|
($51)
($42)
|
3.4
3.7
|
1.4
1.4
|
|
Chemistry
Average:
Median:
|
54%
57%
|
-12%
-18%
|
$282
$163
|
$124
$75
|
$196
$89
|
$0.8
$0.5
|
($44)
($21)
|
17.0
2.8
|
0.8
0.6
|
|
CNS
Average:
Median:
|
63%
62%
|
-3%
-5%
|
$437
$197
|
$146
$57
|
$389
$166
|
$5.1
$2.7
|
($31)
($24)
|
5.3
2.4
|
1.3
0.8
|
|
Delivery
Average:
Median:
|
58%
54%
|
-8%
-24%
|
$658
$186
|
$135
$54
|
$642
$167
|
$2.0
$1.4
|
($60)
($30)
|
3.0
1.3
|
5.5
2.3
|
|
Diagnostic/
Imaging
Average:
Median:
|
66%
68%
|
6%
4%
|
$507
$226
|
$56
$42
|
$460
$215
|
$1.5
$1.1
|
($12)
($13)
|
7.7
4.0
|
4.3
1.8
|
|
Gene
Therapy
Average:
Median:
|
54%
54%
|
-19%
-27%
|
$166
$112
|
$65
$36
|
$118
$74
|
$1.1
$1.3
|
($31)
($19)
|
2.1
1.7
|
0.5
0.3
|
|
Infection
Average:
Median:
|
58%
56%
|
-6%
-29%
|
$521
$214
|
$99
$60
|
$477
$167
|
$2.5
$1.6
|
($49)
($34)
|
2.2
1.7
|
1.4
0.8
|
|
Metabolic
Average:
Median:
|
62%
60%
|
26%
-22%
|
$439
$221
|
$101
$57
|
$383
$147
|
$3.3
$2.4
|
($86)
($59)
|
1.7
1.6
|
1.2
0.9
|
|
Other
Average:
Median:
|
69%
69%
|
NA
NA
|
$379
$232
|
$94
$62
|
$285
$171
|
$3.2
$2.5
|
($49)
($32)
|
2.1
1.9
|
1.1
1.0
|
|
Revenue-Driven
Average:
Median:
|
88%
89%
|
23%
24%
|
$30,781
$18,397
|
$1,751
$1,020
|
$30,388
$18,008
|
$5.7
$5.5
|
NA
NA
|
NA
NA
|
44.9
23.1
|
|
Screening
Average:
Median:
|
59%
52%
|
12%
4%
|
$507
$322
|
$191
$154
|
$397
$292
|
$11.1
$1.4
|
($46)
($43)
|
4.8
3.9
|
1.1
0.8
|
|
Wound
Average:
Median:
|
67%
67%
|
8%
4%
|
$121
$91
|
$9
$8
|
$113
$83
|
$1.4
$0.4
|
($8)
($11)
|
6.2
0.8
|
1.0
0.9
|
|
Grand
Average:
Median:
|
61%
60%
|
-2%
-9%
|
$1,257
$232
|
$162
$69
|
$1,182
$176
|
$2.7
$1.4
|
($49)
($32)
|
3.8
2.0
|
3.1
0.9
|
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 September 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 3/04 or 6/04, with pro forma adjustments for more recent financings (including debt offerings), if any.
Highlights From The September 2004 Stock Report:
§ Since our last report in June 2004, we’ve added the 5 companies that completed IPOs in July and August. (For a list of these companies, please refer to the Signals article, “IPO Monitor.”)
§ As we’ve mentioned, the stocks as a whole lost a significant amount of ground during the third quarter. At the end of June 2004, they had gained an average of 29% in value since the preceding June. But now, the average stock is down 2% from its year-ago price.
§ Several groups have been especially hard-hit. By category, the losers are Gene Therapy (an average drop of 19%), Cancer (-18%), Chemistry (-12%), Cardiovascular (-10%), Delivery (-8%), Infection (-6%), and CNS (-3%).
§ Conversely, the best-performing categories are First Generation Genomics (an average 12-month gain of 31%), Revenue-Driven (+23%), Autoimmune (+21%), and Screening (+12%).
§ Not surprisingly, then, market caps have declined over the last three months. At the end of June 2004, the average market cap for the entire universe of companies was $1,286 million; by the end of September, it had dropped by 2%, to $1,257 million. Likewise, the median market cap fell from $247 million in June 2004 to $232 million in September, a drop of 6%.
§ Still, market caps are better than they were 12 months ago: At the end of September 2003, the average market cap was $1,098 million and the median was $220 million.
§ On average, the companies in our universe also have a little more cash than they did a year ago: At the end of September 2003, companies had an average of $139 million in cash reserves; the median cash was $46 million. At the end of September 2004, those reserves had increased, on average, to $162 million; the median was $69 million.
§ However, the cash reserves aren’t as high as they were at the end of the first quarter of 2004, when companies had an average of $173 million on hand and the median stood at $72 million. Still, the median survival index of 2 years at the end of September 2004 indicates that most companies will be able to weather any short-term downturn.
Satomi Degami, CFA, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 10/08/2004 |