You might not expect it -- what with the layoffs, bankruptcies and general doom-and-gloom attitudes -- but biotech companies actually raised more money in the first half of this year than last year, and the third quarter is starting off similarly strong.
That's got folks talking--or at least whispering--about whether the industry might be making a comeback. No one knows, of course, but here's what the data say:
According to BioWorld Insight, biotech companies raised $6.7 billion in the first half of 2009, up from $6 billion in the first half of 2008. As BNET wrote before, what's really amazing is that biotech fundraising was off by nearly one-third in the first quarter, so the industry had one heck of a hole to dig itself out of.
The third quarter is starting out pretty good too: July fundraising hit $1.41 billion, outpacing the $1.08 billion raised last July. And biotech stock performance heated up as well. According to a report from Burrill & Co., the Burrill Biotech Select Index posted a monthly gain of 6.5 percent thanks to some superstar returns like the 395 percent from Human Genome Sciences on surprise positive lupus data, the 338 percent from Targacept on depression data, and the 90 percent from Medarex on word of the Bristol-Myers Squibb buy-out.
Now for the bad news: as the In Vivo Blog points out, the fundraising total includes plenty of "financings-under-duress," like Oxigene's restructured deal with Symphony Capital.
As for the stock gains, Burrill's CEO Steven Burrill reminded folks that the returns were driven by just a few companies. He added:
We don't yet believe biotech is fully back on track as many companies are still struggling to find the necessary funding to maintain their operations, almost half of US public biotechs have market caps below $100 million and we are seeing companies still consistently turning off their lights for the last time. It is important to remind ourselves that the biotech industry is undergoing a major transition, a process that will likely continue for many months yet.So maybe we're not there yet--but here's one more positive sign.
Initial public offerings are a primary gauge of investor interest in companies, and although no biotechs have yet broken through the still-sealed IPO window, rumors are starting to circulate about potential contenders. And outside biotech, the Wall Street Journal's Venture Capital Dispatch Blog reported that four venture capital-backed IPOs priced in late May and June â€" all priced at the high end of their expected ranges and all now trade higher than their prices.
Cash photo by Flickr user Tracy O, CC