During the month, the Nasdaq Composite Index rose by a mere 1% and the Nasdaq Biotech Index dropped by 1%. The relatively flat performance was also evident in January. In fact, the Comp remains unchanged since the beginning of the year. The Biotech Index, on the other hand, shed 4% between December 31, 2002 and February 28, 2003.

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 February 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 9/02, with some figures adjusted for one-time write-offs.


Highlights From The February 2003 Stock Report:


We published the first Financial Snapshot in February 2000. Now, three years later, we thought it might be instructive to profile the changes that have occurred in the public biotech sector during that time.

Thanks to the genomics bubble, 2000 was a great year for the biotech sector.

§ The Nasdaq Biotech Index gained 23%, while the Nasdaq Composite Index lost 39%.
§ Stock prices soared into the stratosphere, with the Biotech Index hitting its all time high on March 6. At the end of February 2000, 85% of the stocks in our universe posted positive one-year returns, with 6% of them exhibiting gains of at least 1,000%.
§ About 14% of the companies in our universe had market caps exceeding $2 billion. The average market cap was nearly $1.7 billion. (We did not calculate the median value.)

Since then, as we know, it’s been downhill all the way.

§ In 2001, the Nasdaq Biotech Index shed 16% (still outperforming the Comp, which dropped by 21% over the 12-month period). In 2002, the Biotech Index lost 54%, underperforming the Comp, which shed 46% over the 12-month period.
§ In 2001, only 10% of the companies in our universe posted a positive one-year return. That number jumped to 26% in 2002, but now it’s back down to 10%.
§ In 2001, 10% of the companies we track had market caps exceeding $2 billion. Since then, that number has declined even further: By February 2003, a mere 5% had market caps of at least $2 billion. And, if you omit the 7 revenue-driven firms from the calculation, that number drops to less than 2% -- only 4 companies out of the 226 in our universe.
§ The average market cap declined from about $1.2 billion in 2001 to $782 million in 2003 – a 35% drop. The median market cap fared worse, falling by more than 50% -- from $237 million in 2001 to $101 million in 2003.
§ Interestingly, when we survey the entire group, we find that the amount of cash on hand hasn’t changed that much. In 2001, the median cash was $48 million; it’s $47 million in 2003. And the average has actually increased somewhat: In 2001, it was $116 million; in 2003, it’s $143 million.
§ The increase in the average value is due to those firms that raised considerable amounts of cash during the genomics boom in 2000, as well as those lucky few that have continued to garner funds over the last several years. Sixty-nine of the companies on our list (about 31%) have cash reserves of at least $100 million and 12 of those have at least $500 million in the bank.
§ Yet, we know that many firms are running out of money – especially since the well has been dry for so long. In reality, 20% (46/226) of the companies we track are currently sitting on cash reserves of $10 million or less. Many, if not most of those, initiated cost-savings efforts in 2002 to stretch what little money they have until financing becomes available once again. Long may they last.



Satomi Degami, Research Manager, Recombinant Capital
Jennifer Van Brunt, Editor, Signals