Biotech Remained Flat in May



    SAN FRANCISCO, June 4 /CNW/ -- The summer blues seem to have started
early for biotech. Despite a record setting attendance of over 22,000 at the
Biotechnology Industry Organization International Convention in Boston, a
nearly 15% increase from the previous year, the event failed to boost the
industry on Wall Street. Overall it was a generally a lackluster month for
biotech in the capital markets. The Burrill Biotech Select Index closed up
1.7% in contrast to the general markets, which continued their bullish run.
The Dow Jones Industrial average jumped 4.3% reaching a new high of 13,633
before closing May, down 6 points from this high, and the NASDAQ closed the
month up 3.1%. The positive markets were driven by investors growing more
confident that the Federal Reserve might cut interest rates in the second half
of 2007.
    "Biotech's positive run came up short in May after posting positive
numbers for the previous four months," said G. Steven Burrill CEO, Burrill &
Company, a San Francisco based global leader in life sciences whose principal
activities are in Venture Capital, Merchant Banking and Media. "Investors may
have been spooked by all the negative publicity surrounding safety concerns
over GlaxoSmithKline's diabetes drug Avandia, disappointing clinical results
from several companies and an advisory committee of the FDA recommending that
Amgen Inc. should be required to further strengthen the warning labels of its
anemia drugs Aranesp and Epogen and conduct additional studies to prove their
safety. The news played havoc with the company's shares, which ended down 12%
for the month.
    "The markets for some biotechs, were holding back on the eve of the
premiere oncology conference, ASCO (American Society of Clinical Oncology), in
Chicago. As always, the conference brings together the world thought leaders
in oncology and the latest results from the most promising therapeutic
compounds. For cancer, the development of targeted therapies will also be
front and center at the meeting," noted Burrill, "the 5000 presentations
spread out over five days, could very well set the tone for the fortunes of
the industry for the second half of the year."

    
    Stem cell companies receive a boost
    
    Stem cell technology proved therapeutic on two fronts in May. First,
California's Supreme Court rejected appeals by opponents of Proposition 71,
the first Stem Cell research program financed by any state, removing the final
obstacle to freeing up to $3 billion in bond sales approved by state voters in
2004. The second came with news from Geron Corporation that its scientists, in
collaboration with scientists at the University of Alberta, have
differentiated human embryonic stem cells (hESCs) into islet-like clusters
(ILCs) that secrete insulin in response to elevated glucose levels, thus
demonstrating the feasibility of producing therapeutic cell types from hESCs
for the treatment of diabetes. The news boosted Geron's stock 15% in one day,
and its shares closed up 26% for the month.
    "For many who believe that stem cells will have a huge impact on the
future of medicine the Supreme Court's decision is a huge relief," commented
Burrill, "the California Institute for Regenerative Medicine is now free to
sell bonds to get on with its work."

    
    Consolidation continues ...
    
    As Washington worked on trade legislation easing the rules on generics,
Mylan Labs agreed to pay $6.6 billion to acquire the generics unit of Merck
KGaA, creating a global powerhouse with combined revenue of $4.2 billion in
2006. Among biotechs, Hologic Inc. will pay $6.2 billion for Cytyc
Corporation, combining two major players in women's health care. Both
companies specialize in screening tools and medical devices for women's health
and the combined companies will create a strong sales force in the US.  At the
end of May, Genzyme announced its intention to buy BioEnvision for $345
million in cash, to enhance its oncology business. This deal might have
difficulty going through because the offer is considered as undervalued by a
major shareholder. Genzyme said the move helps enhance its oncology offerings
because it will receive exclusive, worldwide rights to clofarabine, a drug
Bioenvision and Genzyme co-developed in Europe. All in all a busy month on the
M&A front.

    
    IPOs still getting done
    
    It was a relatively good month for biotech IPOs with four companies
getting their IPOs done in May:

    
    -- Sirtris Pharmaceuticals, which is developing drugs to treat age-related
       diseases including metabolic diseases such as type 2 diabetes, went
       public at $10 per share, the midpoint range, raising $69 million. After
       their debut, the company's shares shot up and by the end of the month
       had gained 29%.
    -- Biodel, which is developing new treatments for diabetes and
       osteoporosis, went public at the midpoint of their proposed pricing
       range at $18 per share, raising $82.5 million, At months end the
       company's share value had risen 20%.
    -- Helicos BioSciences, a genomics company, reduced its IPO price to $9
       per share, raising $48 million. The company's shares were down 6% at
       the end of the month.
    -- NeurogesX, which is developing novel pain management therapies, priced
       its share offering at $11 per share, below their original planned price
       of $13 to $15 per share. By months end the company's shares were down
       20%, trading at $8.10.

    Industry Market Cap
    
    Although the collective market cap of the biotech industry dipped below
its record setting $513 billion total, set in April, it did manage to recover
towards the end of May and close at $506 billion.

    MAY INDICES

    
                                                             % change % change
    Index            12/29/2006 3/30/2007 4/30/2007 5/31/2007   Month    Year
    Burrill Biotech
    Select              303.96    317.03    325.67   331.15     1.68 %  8.95 %
    Burrill Large Cap
    Biotech             424.56    419.97    443.75   446.72     0.67 %  5.22 %
    Burrill Mid-Cap
    Biotech             171.55    179.02    182.86   175.81    -3.86 %  2.48 %
    Burrill Small Cap
    Biotech              143.6    144.44    155.83   147.11    -5.60 %  2.44 %
    Burrill Genomics    101.69    107.98    103.44    99.06    -4.23 % -2.59 %
    Burrill IPO          63.33     63.33     64.88    61.69    -4.92 % -2.59 %
    Burrill AgBio       124.52     141.8    147.31   156.46     6.21 % 25.65 %
    Burrill Industrial  150.85    148.59    152.65   160.23     4.97 %  6.22 %
    Burrill Diagnostic  122.79    136.76    141.64   142.82     0.83 % 16.31 %
    Burrill
    Nutraceutical       629.56     639.2    629.01   619.22    -1.56 % -1.64 %
    NASDAQ             2415.29   2421.64   2525.09  2604.52     3.15 %  7.83 %
    DJIA              12463.15  12354.35  13062.91 13627.64     4.32 %  9.34 %
    Russell 2000        787.66    800.71     829.7   847.18     2.11 %  7.56 %
    Amex Biotech        754.25    764.18    814.57   825.22     1.31 %  9.41 %
    Amex Pharma         345.06    342.01    366.35   364.29    -0.56 %  5.57 %

    




For further information:

For further information: Peter Winter, Editorial Director of Burrill
Life  Sciences Media Group, +1-415-591-5474, pwinter@b-c.com Web Site:
http://www.burrillandco.com

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