Report Confirms Biotech Struggling in the Face of Volatile Capital Markets

Burrill maintains that biotech and pharma no longer represent safe havens for investors.

The top five biotech companies by market cap all lost an average of 10% of their share values in May, according to Burrill & Company’s latest Burrill Report. The largest share drop in the Burrill Biotech Select Index group was experienced by Amylin Pharmaceuticals, which saw a 20% drop in its value in May. Burrill maintains that the plummet related both to tough market conditions and also to the disappointing news that FDA will not make a regulatory decision on clearance of the once-weekly injectable diabetes drug, Bydureon, until October.

Even good news doesn’t appear to guarantee giving share prices a leg up. Amgen’s stock saw the back of May some 10% down in value, despite the firm reporting on May 28 that its new drug, Prolia, had been approved in Europe as a treatment for osteoporosis. FDA followed suit rapidly, clearing the drug for use in the U.S. on June 1.

Aeterna Zentaris, however, does appear to have bucked the trend. Burrill reports that the company’s shares were up 44% in May, thanks to a positive opinion on the potential to grant orphan drug designation in the EU for the doxorubicin-targeted conjugate candidate, AEZS-108, as a treatment for ovarian cancer.

Burrill Biotech Select Index recorded a 10% drop in May, closing at under 300 for the first time in almost 18 months, the report notes. For the most part the Index was dragged down by the volatile capital markets and dipped further in light of concerns about the global effects of Europe’s monetary crises. According to Burrill, the Dow Jones industrial average closed down 8% for the month, which represented its worst May performance since 1962, while the NASDAQ suffered a similar monthly drop.

 “At one time in periods of economic uncertainty, investors would move into the relative safety of biotech and pharma,” remarks G. Steven Burrill, CEO, Burrill & Company. “However this is no longer the case, and for the foreseeable future biotech’s fortunes will be linked with the performance of the broader capital markets.”

The report’s calculations suggest the biotech industry closed May with a collective market cap of $341.25 billion, down 10.7% for the month. Some 56 biotech companies, or about 18.4%, had market caps over $1 billion, while 93 firms (about 30.5%) had market caps of less than $100 million. In comparison, there were 49 companies with market caps topping $1 billion at the end of May last year and 122 with market caps of less than $122 million.