Biotech Weathers a Market Storm in February

    SAN FRANCISCO, March 1 /CNW/ -- While the 416-point plunge in the Dow
industrials on the penultimate day of the month took the wind out of biotech's
sails, which up until then was performing ahead of the general markets, it did
not completely ruin what was a strong performance by biotechs. The Burrill
Biotech Select Index held its own in February, up slightly at 0.24% in
contrast to the Dow, which finished down 3.2% and the NASDAQ down 2.2%. It
could have been much worse but, fortunately, Wall Street rebounded somewhat on
the closing day as investors took comfort from comments by Federal Reserve
Chairman Ben Bernanke but still remained uneasy about the economy.  He allayed
some of the fears about an economic slowdown in the US and Chinese economies
that had fed the largest drop in the Dow since the fateful 9/11 five years
    However, there wasn't enough time after the "recalibration" on Wall
Street, February 27, for the biotech industry to recover the $20 billion that
was shaved off its collective market cap that day, and which stood at $475
billion by month end. "The short-term weakness in biotech will give way to
longer term strength and we expect to see biotech's value hit the $500 billion
mark by the end of the first quarter," said G. Steven Burrill CEO, Burrill &
Company, a San Francisco based global leader in life sciences with principal
activities in Venture Capital, Merchant Banking and Media. "In times of
stress, the market's first reaction is to sell and to move to less
risky/higher quality investments. We saw this 'knee-jerk' reaction with the
Dow's rapid fall. However, biotech has a good story and is robust enough to
quickly recover from market hiccups," he added.
    One didn't have to look far for a spate of positive news: Onyx
Pharmaceuticals and its strategic partner Bayer said they were prematurely
halting a clinical trial testing Nexavar in advanced liver cancer, based on an
interim review of the very good data. Onyx plans to provide more complete data
at the American Society of Clinical Oncology conference in June. Nexavar net
revenue, as recorded by Bayer, was $165.0 million for the year ended December
31, 2006.  Onyx's shares finished February up a whopping 122% more than
recovering from the bath its shares took following a setback with Nexavar in
November when there were disappointing results in trials for it as a treatment
for advanced melanoma.
    Also on the regulatory front, the FDA approved Shire and New River
Pharmaceuticals Inc.'s attention deficit hyperactivity disorder drug Vyvanse.
The same companies added themselves to the growing list of M&A's that are
pervading the industry. Shire said that it would buy New River for
approximately $2.6 billion in cash. Although financial terms were not
disclosed, Pfizer said it would acquire BioRexis Pharmaceutical, which is
developing long-acting GLP-1 receptor agonists for the potential treatment of
patients with type 2 diabetes.
    On the other side of the coin, Threshold Pharmaceuticals shares sank 59%
by the close of February after it reported that a Phase III clinical trial of
glufosfamide failed to show the drug could extend the lives of patients with
advanced pancreatic cancer. The company said despite the results, it remains
committed to further studying the compound.

    IPO market still weak for biotechs
    Despite the fact that five biotech IPOs were completed in February only
3SBio Inc., a Chinese biotech company, priced its IPO of 7.7 million American
depositary shares at $16 each, above their announced pricing range. The
remainder had to ameliorate their expectations:

     --   Rosetta Genomics Ltd. raised $26 million from 3.75 million shares at
          $7.00 per share. Rosetta's current programs are focused on the
          development of microRNA-based diagnostic and therapeutic products
          for various cancers and infectious diseases. The company priced
          below its $7.50-$8.50 range.

     --   Optimer Pharmaceuticals Inc. settled for selling 7 million shares at
          $7 a share, down from its initial $12 to $14 range. Optimer focuses
          on anti-infective drugs with its initial efforts aimed at treating
          gastrointestinal infections and related diseases.

     --   Synta Pharmaceuticals Corp.'s debut received a cool reception after
          the stock priced well below its expected range and sold fewer shares
          than anticipated. At $10 a share, the IPO price fell well short of
          the $14 to $16 range. The company has two products in clinical
          trials. The most advanced, STA-4783, was awarded fast track
          designation status from the Food and Drug Administration for the
          treatment of metastatic melanoma.

     --   Molecular Insight Pharmaceuticals Inc. offered 5 million shares at
          $14 a share, raising $70 million. The company is developing Azedra
          and Onalta, both radiotherapeutic treatments aimed at treating
          neuroendocrine tumors. Both products have Orphan Drug status from
          the FDA and Azedra has Fast Track status. Zemiva is the company's
          lead molecular imaging product, aimed at diagnosing carida ischemia.

                                   Issue           Share     % Change   Market
    Company          Ticker        Price   Amount  Price       since      Cap
                                  ($USD)   raised  2/28/06      IPO       ($M)
                                           ($M)     ($US)
    Rosetta                                  26                           85
    Genomics          ROSG           $7             $7.55        8 %
    Optimer                                  49                          220
    Pharmaceuticals   OPTR           $7            $10.10       44 %
    3S Bio            SSRX          $16     123    $14.16      -11 %     202
    Synta                                    50                          288
    Pharmaceuticals   SNTA          $10             $8.53      -16 %
    Molecular         MIPI          $14      70    $13.18       -6 %     325
    Average                      $10.80     $63    $10.70        4 %     224

    Vancouver-based OncoGenex Technologies Inc. got caught up in the market
upheaval and postponed its IPO because of the adverse conditions. Quebec-based
EndoCeutics Inc., a firm developing hormone therapies for breast cancer and
other endocrine-related disorders, added itself to the IPO runway.

    Burrill Biotech Select Index (Month: 0.24% YTD: 4.6%)

    The Onyx jump in share price helped offset most of the negative numbers
recorder by the rest of the group. Vertex Pharmaceuticals' shares closed down
13% mostly on the news that it expects deeper losses in 2007 as it invests in
developing its hepatitis C drug candidate telaprevir. Gilead Sciences, Inc.
closed February up 11%. The company completed a Phase II clinical trial of GS
9137, an oral HIV integrase inhibitor, and it met its primary endpoint.
However, Gilead and partner Achillion Pharmaceuticals  announced that they
will halt development of their hepatitis C treatment GS 9132, or ACH-806.
Amgen and Genentech's shares closed the month down 9% and 3% respectively.

    Burrill Large Cap Biotech Index (Month: -2% YTD: N/C)
    Genzyme Corp. finished the month down 6% after it said that it was ending
its partnership with Dyax Corp. on a DX-88 program aimed at treating
angioedema, which causes swelling under the skin. Affymetrix Inc. (up 3%) said
that it had started the full commercial launch of its SNP Array 5.0, which
helps to better identify complex diseases such as autism, cancer, and
diabetes. Biogen Idec Inc. lost ground in February (down 7%) after its
reported fourth-quarter revenue fell short of Wall Street expectations.

    Burrill Mid Cap Biotech Index (Month: -2.3% YTD: N/C)
    Illumina Inc. plans to buy back $75 million of its shares over a
six-month period using some of the $400 million raised from a debt offering.
Its shares closed down 18%. Also in negative territory was Telik Inc.'s (down
13%). In the month it reported a widening net loss on higher operating costs
and expenses. Neurochem closed down 15% even though it reported the completion
of its 18-month North American Phase III clinical trial for tramiprosate for
the treatment of Alzheimer's disease (AD). Also in the loss column (down 12%)
was Pain Therapeutics Inc. Its fourth-quarter loss widened despite higher

    Burrill Small Cap Biotech Index (Month: 12.8% YTD: 12%)
    Osteotech Inc. (up 38%) received the green light from the FDA for its
bone-polymer biocomposite Plexur, which is used as a porous, resorbable
scaffold that can be used to fill bony voids of the pelvis and extremities.
XOMA Ltd. also recorded a solid gain of 25%. They have amended their existing
agreement with Takeda Pharmaceutical to increase the number of potential
therapeutic antibody programs under the collaboration initiated in November of
2006. With this expansion, XOMA estimates the aggregate upfront, R&D funding,
milestone and other payments could exceed $230 million before royalties over
the life of the agreement.

    Pharmacyclics Inc. shares tumbled 38% after the company said the FDA
deemed an application for its lead drug, Xcytrin, an injection for the
treatment of non-small cell lung cancer patients with brain metastases,

                                                             Percent  Percent
    Index              12/30/05 12/29/06  1/31/07   2/28/06  Change   Change
                         Value    Value    Value     Value  For Month For Year

    Select Index        351.39   303.96    317.15    317.92   0.24 %   4.59 %
    Biotech Index       454.56   424.56    435.54    424.56  -2.52 %   0.00 %
    Burrill MID-
    CAP Biotech
    Index               155.59   171.55    175.78    171.74  -2.30 %   0.11 %
    SMALL-CAP                                                      -        -
    Biotech Index       125.73   143.60    145.01    126.46  12.79 %   11.94%
    Index               117.19   101.69    107.50    103.62  -3.61 %   1.90 %
    Biotech IPO
    Index                65.08    63.33     65.43     63.04  -3.65 %  -0.46 %
    Burrill Agbio
    Index               113.15   124.52    128.39    128.20  -0.15 %   2.96 %
    Biotech Index       124.97   150.85    145.68    143.35  -1.60 %  -4.97 %
    Index               105.61   122.79    130.86    139.13   6.32 %   13.31 %
    Index               439.42   523.85    548.93    578.94   5.47 %   10.52 %
    Burrill Life
    Index               231.35   213.07    220.02    219.69  -0.15 %   3.11 %
    NASDAQ             2205.32  2415.29   2463.93   2407.86  -2.28 %  -0.31 %

    DJIA              10717.50 12463.15  12621.69  12216.24  -3.21 %  -1.98 %

    Russell 2000        673.22   787.66    800.34    792.66  -0.96 %   0.63 %


For further information:

For further information: Media Contact: Peter Winter, Editorial Director
 of Burrill & Company, +1-415-591-5474, or Web Site:

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