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Financial Snapshot For December 2004: Sideways
There were lots of reasons for investors to feel jittery in the last quarter of 2004 – from broad issues such as the presidential elections and the price of oil to healthcare-related concerns such as the flu vaccine shortage and the safety of COX-2 inhibitors.
Yet, stocks in the biotech and specialty pharma sector managed to end the year in decent shape – even outperforming the market in general. The AMEX Biotech Index gained 11% between Dec. 31, 2003 and Dec. 31, 2004, while the Nasdaq Composite Index rose by 9% during the same time period.
Unfortunately, those gains began to disappear as soon as Wall Street opened its doors for business on Jan. 3, 2005. Over the last three weeks, the Comp has shed 6%, while the AMEX Biotech Index has dropped by 4%. Reportedly, it’s been the worst start to a new year since 1982 – although a flurry of impressive earnings announcements in the weeks to come may be enough to turn the markets in a more positive direction.
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 17 stocks that 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, on December 31, 2004 the average 12-month change in price for the 236 stocks tracked by Recombinant Capital and Signals was +3% and the median change was -3%. That means that many of the biotech stocks actually gained little-to-no ground over the course of the year.
At this point, market gurus are predicting that 2005 will not be a breakout year, either – so we may see the biotech sector trade sideways in the months to come.
That won’t deter investors from buying stock in selected companies, though. In fact, although the stocks are off to a negative start in 2005, investors have already backed 4 biotech and specialty pharma public offerings since the turn of the year: Last week, ViaCell Inc. priced its IPO and Amylin Pharmaceuticals Inc., ISTA Pharmaceuticals Inc. and Martek Biosciences Corp. all raised money in oversubscribed follow-on stock offerings.
December 2004 Stock Report
The December 2004 Stock Report, published by Recombinant Capital and Signals, includes detailed financial data on 236 publicly traded biotechnology stocks, based on their closing prices on December 31, 2004.
We have been tracking biotech stock performance since February 2000. To access the September 2004 Stock Report, click here. For the others -- February 2000 through June 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 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 12/31/04
|
% change from 12/31/03
|
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%
81%
|
19%
17%
|
$1,397
$738
|
$492
$534
|
$1,134
$622
|
$1.8
$1.4
|
($163)
($216)
|
2.7
2.8
|
3.2
4.0
|
|
Genomic
Supply
Average:
Median:
|
62%
64%
|
-3%
4%
|
$383
$223
|
$51
$32
|
$352
$174
|
$1.8
$0.7
|
($29)
($27)
|
1.8
1.2
|
1.1
0.6
|
|
Genomic
Targets
Average:
Median:
|
73%
76%
|
-1%
-1%
|
$420
$359
|
$150
$110
|
$307
$244
|
$1.1
$0.7
|
($54)
($51)
|
2.4
2.0
|
0.8
0.4
|
|
Autoimmune
Average:
Median:
|
74%
78%
|
8%
11%
|
$768
$685
|
$145
$110
|
$709
$578
|
$5.2
$3.7
|
($60)
($42)
|
6.4
3.3
|
1.7
2.2
|
|
Cancer
Average:
Median:
|
58%
57%
|
-1%
-20%
|
$543
$241
|
$113
$52
|
$475
$203
|
$2.9
$2.1
|
($49)
($32)
|
2.0
1.6
|
2.0
0.9
|
|
Cardiovascular
Average:
Median:
|
68%
80%
|
44%
4%
|
$565
$573
|
$149
$129
|
$460
$481
|
$4.6
$3.7
|
($51)
($42)
|
4.0
3.4
|
1.6
1.6
|
|
Chemistry
Average:
Median:
|
64%
68%
|
-3%
-20%
|
$329
$204
|
$122
$89
|
$245
$124
|
$1.0
$0.6
|
($44)
($21)
|
17.4
3.0
|
1.0
0.7
|
|
CNS
Average:
Median:
|
63%
63%
|
-2%
-4%
|
$468
$230
|
$142
$51
|
$424
$204
|
$5.6
$3.5
|
($31)
($24)
|
5.4
2.5
|
1.3
0.8
|
|
Delivery
Average:
Median:
|
63%
61%
|
-1%
-12%
|
$769
$170
|
$128
$52
|
$766
$166
|
$2.1
$1.6
|
($60)
($30)
|
2.9
1.1
|
5.2
2.5
|
|
Diagnostic/Imaging
Average:
Median:
|
70%
69%
|
12%
8%
|
$586
$270
|
$55
$39
|
$541
$239
|
$1.7
$1.3
|
($12)
($13)
|
7.4
3.8
|
5.0
2.0
|
|
Gene Therapy
Average:
Median:
|
55%
49%
|
-10%
-6%
|
$193
$115
|
$57
$31
|
$152
$88
|
$1.4
$1.3
|
($31)
($19)
|
1.8
1.4
|
0.6
0.3
|
|
Infection
Average:
Median:
|
65%
66%
|
-4%
-26%
|
$295
$167
|
$77
$52
|
$243
$124
|
$2.9
$1.6
|
($37)
($28)
|
2.2
1.5
|
0.8
0.6
|
|
Metabolic
Average:
Median:
|
68%
65%
|
23%
-6%
|
$456
$246
|
$82
$53
|
$421
$183
|
$3.8
$2.5
|
($86)
($59)
|
1.5
1.4
|
1.2
1.1
|
|
Other
Average:
Median:
|
72%
74%
|
NA
NA
|
$480
$256
|
$82
$54
|
$399
$189
|
$4.5
$3.6
|
($49)
($32)
|
1.9
1.7
|
1.3
1.1
|
|
Revenue-Driven
Average:
Median:
|
88%
94%
|
16%
16%
|
$28,897
$15,148
|
$1,581
$1,004
|
$28,552
$14,457
|
$5.6
$5.9
|
NA
NA
|
NA
NA
|
44.1
23.2
|
|
Screening
Average:
Median:
|
61%
57%
|
-8%
-9%
|
$499
$360
|
$133
$94
|
$447
$347
|
$9.0
$1.9
|
($46)
($43)
|
3.2
3.5
|
1.1
1.0
|
|
Wound
Average:
Median:
|
68%
74%
|
29%
49%
|
$133
$89
|
$8
$6
|
$126
$86
|
$1.2
$0.7
|
($8)
($11)
|
6.0
0.6
|
0.9
0.9
|
|
Grand
Average:
Median:
|
66%
66%
|
3%
-3%
|
$1,345
$274
|
$155
$62
|
$1,280
$225
|
$3.0
$1.7
|
($49)
($31)
|
3.6
1.8
|
3.3
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 December 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 6/04, with pro forma adjustments for recurring losses and more recent financings (including debt offerings), if any.
Highlights From The December 2004 Stock Report:
§ What a difference a year makes. In 2003, the average 12-month change in price for the 245 stocks in our universe was 110%. In 2004, the average 12-month change in price was 3% -- indicating that in 2004 many stocks managed at least to hold onto the gains they accrued the previous year.
§ Some stocks, of course, fared far better than that. Stocks in the Cardiovascular group, for instance, gained an average 44% in value over the year; the Wound group gained 29% and the Metabolic group gained 23%, on average.
§ The worst-performing groups, in terms of average change in stock price between Dec. 31, 2003 and Dec. 31, 2004, included Gene Therapy (-10%); Screening (-8%); and Infection (-4%).
§ 2004 was a great year for fund-raising: IPOs and follow-on offerings alone reaped more than $5.6 billion in new financing, and private placements and debt offerings contributed an additional $9.8 billion to the coffers of biotech and specialty pharma companies. It follows, then, that the average pro forma cash was greater in Dec. 2004 than in Dec. 2003 ($155 million vs. $146 million).
§ Market caps at the end of 2004 were higher than they had been at the end of 2003. On Dec. 31, 2004, the average market cap for the entire universe was $1,345 million and the median market cap was $274 million. On Dec. 31, 2003, the average market cap was $1,171 million and the median was $265 million.
§ Thus, as biotech enters the new year, we find that companies are in good financial shape, generally speaking. With an average market cap of $1,345 million and cash reserves of $155 million most firms should be able to navigate the upcoming months with ease, and they’re also prepared to weather any unforeseen downturns.
Satomi Degami, CFA, Recombinant Capital
Jennifer Van Brunt, Editor, Signals
originally published 01/24/2005 |