Biotech Raises Nearly $15 Billion in First Half of 2004

... turning in another strong quarter, biotech is poised for an
excellent
year

SAN FRANCISCO, July 7 "In the history of the biotechnology industry,
the prospects for long term success have never been greater,"
stated G. Steven Burrill, CEO of Burrill & Company, a San Francisco-
based life sciences merchant bank. "You could sense the growing
enthusiasm for this industry at BIO 2004 where nearly 20,000 people
poured into the Moscone Center in San Francisco to network,
showcase, educate, and learn about the latest advances," he
said. "Leaders from science, industry and governments from
all over the world attended ... a huge change from the last time the
convention met in San Francisco in 1995 when 2,700 people came,"
Burrill noted.
"The numbers also tell a heartening tale," continued
Burrill. "Last year at this time, the industry had raised a total
of nearly $8.9 billion, with $5.4 billion coming from financings and
some $3.5 billion from partnering transactions. This year, we've
raised $14.5 billion with $10.2 billion from financings (almost
double last year's numbers) and $4.3 billion from
partnering deals," he noted. "Certainly a portion of the increase
is coming
from the 21 IPOs that have gotten done in 2004 which have raised a
total of
more than $1.2 billion. While the performance of the majority of
these
companies has been relatively flat, Eyetech, which entered the
market in
January, has seen a spectacular increase in value ... up 104%,"
Burrill
said.
Eyetech and Pfizer announced on June 17 that they had completed the
filing
of
a New Drug Application with the FDA for Macugen(TM) as a treatment
for wet
age-related macular degeneration, the leading cause of adult
blindness in
the
US.
Another newcomer, Pharmion, has enjoyed an even more dramatic
ascent
with
shares up nearly 250% since its IPO in November 2003. The company's
main
focus is on the development and commercialization of treatments for
haematology and oncology patients. Pharmion owns the development
rights for
thrombosis medications, Innohep and Refludan and also purchased
rights to
both
myelodysplastic syndrome treatment Vidaza (from Pharmacia) and blood
cancer
treatment thalidomide from Celegene. On June 3, the company
announced that
its thalidomide medication was approved in Turkey for the treatment
of
multiple myeloma after failure of standard therapies as well as for
the
treatment of a severe and debilitating complication of leprosy.
Turkey is
the
third country outside the US to approve thalidomide, following the
registrations in Australia and New Zealand for the same indications
in Q4
03.
"It's clear that investors have changed considerably since the
genomics
bubble of 1999-2000," noted Burrill. "The companies that are
entering the
market today are all more mature with strong product stories to
tell, and
yet
only two have really taken off. When you look at the performance of
the
companies that forced open the IPO window in 1999, there's a sharp
contrast,"
he explained. The four companies that debuted in the final days of
the last
century all enjoyed amazing rides, experiencing phenomenal gains on
Wall
Street during their first six months. Symyx saw shares rise 204%
from
November 17, 1999 to June 30, 2000. Likewise, shares of Tularik
rose 111%,
Caliper's share values jumped 188% and Maxygen's shares rose 255% --
all in
the same time period. But this IPO window is different, with
average share
prices up only 29% since entering the market.
"There are two big reasons that we're not seeing the same kind of
momentum
today," explained Burrill. "One is that the general markets are
skittish and
extremely discerning, with both the DJIA and NASDAQ treading water.
The
other
reason is that biotech investors are very tentative and risk
adverse ...
investors are only backing firms with products that have either
reached the
market or are in late stage clinical trials. You can see that there
is far
less in the way of risk taking this time around," Burrill noted.

Financings

IPOs
The biotech IPO window was tight in Q2 04. but open nonetheless,
with 12
new biotech firms entering the publicly traded market, bringing the
total of
new entrants to the publicly traded biotech market from the IPO
class of
2003-
2004 to 28 (7 in 2003, 21 so far this year). In 2Q 04, all but two
companies
-- Barrier Therapeutics and Cytokinetics -- had to discount their
paper in
order to get aloft. Four delivered reasonably good returns since
their
IPO --
Memory Pharmaceuticals, up 30%; Cytokinetics, up 14%; Alnylam, up
26% and
Momenta Pharma, up 36%.
In April, five companies completed IPOs -- Memory
Pharmaceuticals which
develops drugs for the treatment of central nervous system disorders
raised
$40 million and has seen its shares increase 30% since its debut on
April 4.
Corcept Therapeutics which develops drugs for treating psychotic
major
depression and Alzheimer's, launched on April 13, raising $54
million with
share prices dropping 36% thereafter. Immunicon, a cancer
diagnostics
company, raised $48 million on April 15 and has also seen its share
value
drop
by 2%. Barrier Therapeutics, which makes dermatology products, and
drug
discovery company Cytokinetics made their entry on April 28 raising
$75
million and $90 million, respectively. Shares of Cytokinetics were
up 14% at
the end of the quarter while Barrier's shares were trading down 6%.
In May, only three companies managed to go public. Alnylam
Pharmaceuticals, which focuses on RNAi-based treatments for
hepatitis C and
wet age-related macular degeneration raised $30 million with shares
up 26%
since the IPO. Acadia Pharmaceuticals, which is developing a small-
molecule
serotonin receptor inverse agonist for treatment of induced
dysfunction
resulting from Parkinson's disease, raised $35 million but shares
are down
11%
in value since the IPO. Critical Therapeutics, which has remained
unchanged
in
value since the IPO raised $42 million. The company already has an
approved
product, Zyflo -- an immediate-release asthma therapy -- which the
company
expects to market next year.
Four new companies entered the market in June -- Inhibitex,
Metabasis
Therapeutics, Senomyx, and Momenta Pharmaceuticals. Inhibitex, which
develops
antibody-based vaccines and drugs to combat Staphylococcus
infections,
raised
$35 million and ended the month of June up 3%. Metabasis, which
also raised
$35 million, has seen a drop in value of 1% since its IPO on June
16. The
company is developing drugs to treat liver and metabolic diseases
and has
drugs in Phase II testing for diabetes and hepatitis B. Senomyx has
identified about 350 human receptor genes related to the detection
of smells
and tastes. The company raised $35 million and share values have
increased
4%
since the IPO. Also raising $35 million, Momenta Pharmaceuticals is
up 36%
since its IPO making this company the top performer for the quarter.
Momenta
specializes in engineering complex sugars to improve versions of
existing
drugs as well as to create new ones.
In Q2 04 the 12 IPO offerings garnered $599 million, a bit less
than the
previous quarter, which brought in $653 million. The seven
companies that
went public in Q4 03 have, on average, delivered an 11% increase in
value
since their debut. The value of that group of companies has
increased an
average of 15% since the start of the year. On average, the nine
companies
that went public during Q1 04 have delivered a 15% increase in value
since
their IPOs and a 4% increase in value from Q1 to the end of Q2 04.
In
contrast, the twelve companies that got IPOs done during Q2 04
delivered an
average increase of just 2% since entering the market. "We're now
seeing a
slow down in offerings and the market is likely to stay depressed
through
the
summer doldrums," said Burrill. "But there are still 14 deals on
file and
we're expecting more companies to file before the year is out ... so
we've
not
seen the end of this window yet," he added.

Q4 2003 Biotech IPOs
Share Share %
Change
Issue Price Price % Change
since
Price 3/31/03 6/30/04 Q2 IPO
Company Ticker ($USD) ($USD) ($USD) 2004
(6/30/04)

Acusphere ACUS $14.00 $8.35 $6.40 -23% -
54%
Advancis AVNC $10.00 $9.14 $6.73 -26% -
33%
Genitope GTOP $9.00 $11.42 $9.87 -14% 10%
CancerVax CNVX $12.00 $10.61 $7.61 -28% -
37%
NitroMed NTMD $11.00 $7.85 $6.06 -23% -
45%
Pharmion PHRM $14.00 $22.54 $48.92 117%
249%
Myogen MYOG $14.00 $10.95 $7.74 -29% -
45%

AVERAGE $12.00 $11.55 $13.33 15%
11%

Q1 2004 Biotech IPOs

Share Share %
Change
Issue Price Price % Change
since
Price 3/31/03 6/30/04 Q2 IPO
Company Ticker ($USD) ($USD) ($USD) 2004
(6/30/04)

Eyetech
Pharma EYET $21.00 $33.20 $42.92 29%
104%
GTx GTXI $14.50 $10.40 $10.41 0% -
28%
Renovis RNVS $12.00 $10.15 $9.16 -10% -
24%
Corgentech CGTK $16.00 $18.72 $16.12 -14%
1%
DynaVax Tech DVAX $7.50 $7.58 $6.66 -12% -
11%
Xcyte
Therapies XCYT $8.00 $7.49 $4.40 -41% -
45%
Tercica TRCA $9.00 $10.22 $8.11 -21% -
10%
Anadys Pharma ANDS $7.00 $7.18 $7.10 -1%
1%
Santaurus SNTS $9.00 $10.10 $14.74 46%
64%

AVERAGE $11.56 $12.78 $13.29 4%
15%

Q2 2004 Biotech IPOs
Share % Change
Issue Price since
Price 6/30/04 IPO
Company Ticker ($USD) ($USD)
(6/30/04)

Memory Pharma MEMY $7.00 $9.10 30%
Corcept Therapeutics CORT $12.00 $7.72 -36%
Immunicon IMMC $8.00 $7.85 -2%
Barrier Therapeutics BTRX $15.00 $14.03 -6%
Cytokinetics CYTK $13.00 $14.88 14%
Acadia Pharma ACAD $7.00 $6.20 -11%
Critical Therapeutics CRTX $7.00 $7.00 0%
Alnylam ALNY $6.00 $7.56 26%
Inhibitex INHX $7.00 $7.21 3%
Metabasis Therapeutics MBRX $7.00 $6.95 -1%
Momenta Pharma MNTA $6.50 $8.85 36%
Senomyx SNMX $6.00 $6.25 4%

AVERAGE $8.46 $8.63 2%

Convertible Debt
Once again, the most popular financing vehicle in Q2 04 was
convertible
debt through which the industry raised nearly $1.9 billion. The
largest
such
offering was ImClone's pricing in mid May of $500 million of
Convertible
Senior Notes due 2024. The notes will bear interest at 1.375% per
annum and
initial purchasers have a 30-day option to purchase up to an
additional $100
million of the notes on the same terms. Chiron also announced a
convertible
stock offering of 30-year convertible debentures to qualified
institutional
buyers. The company expects gross proceeds of approximately $350
million.
In
addition, the initial purchasers of the debentures will also have a
13-day
option to purchase additional debenture which could provide up to $35
million
more. Holders of the notes will also have the option to require
Chiron to
purchase their debentures at par value in years 6, 10, 15, 20 and 25
for
cash
and accrued and unpaid interest.
"In the uneven market environment that is prevailing,
convertible debt
still looks pretty attractive for some companies," explained
Burrill. "But
it's important to remember that this financing vehicle is only
viable for
companies with a strong balance sheet and good product stories.
ImClone, for
example, now has a drug -- Erbitux -- that's expected to be a
billion dollar
blockbuster," he noted.

Selected Convertible Debt offerings during 2Q 04:

Company Month Est. Value ($USD, M)

ImClone Systems May 500
Chiron Corp. Jun 350
Amylin Pharmaceuticals Apr 200
Medarex Inc. May 150
CV Therapeutics Inc. May 150
deCode genetics Inc. Apr 150
Oscient Pharmaceuticals May 125
Epix Medical Inc. Jun 100

Follow-Ons
During Q2 04, $700 million was raised through follow-on
offerings,
compared to $130 raised during the same period in 2003. The largest
follow-on
for the quarter was Eyetech Pharmaceutical's secondary offering of
4,439,000
shares of its common stock at $38.50 per share. This includes
579,000 shares
sold upon full exercise of the underwriters' over-allotment option.
Eyetech
didn't sell any shares in, or receive any proceeds from, the
offering; it
was
an offering to liquidate various investors whose shares were locked
up
during
the offering period.. The joint book-running managers of the
offering were
Merrill Lynch & Co. and Morgan Stanley. Another recent entrant to
the
market,
Genitope sold an aggregate of 7,013,646 shares of common stock at
$8.50 per
share. This resulted in estimated net proceeds to Genitope of
approximately
$55.5 million. WR Hambrecht + Co was the lead underwriter of the
offering.

Selected Follow-ons during Q2 04:

Share
Amount Share Price
Raised Price 6/30/04
Company Ticker ($M, USD) ($USD) ($USD) %
Change

Eyetech
Pharmaceuticals
Inc. EYET 171 $38.50 $42.92
11%
Bone Care
International BCII 98 $21.75 $23.42 8%
Cypress Bioscience
Inc. CYPB 79 $11.50 $13.73
19%
Genitope Corp. GTOP 60 $8.50 $9.87
16%
Isolagen Inc. ILE 60 $8.50 $10.28
21%
Myriad Genetics Inc. MYGN 54 $16.01 $14.92 -
7%
Pharmacyclics Inc. PCYC 42 $13.00 $10.14 -
22%
IntraBiotics
Pharmaceuticals IBPI 39 $13.00 $3.89 -
70%

PIPES
PIPEs (Private Investment in Public Equities) accounted for $472
million
for the quarter, compared to nearly $1.3 billion during the previous
quarter.
Illumina, which announced in May that it was selling its Sentrix(R)
BeadChips
for large-scale gene expression experiments for as low as $100 per
array
raised $30 million in a registered direct offering. Under the terms
of the
transaction, Illumina sold approximately 4.5 million shares of its
common
stock at $6.75 per share to a select group of institutional
investors.
Oncology biopharmaceutical firm Cytogen raised $26 million in April
through
the sale of 2,570,000 shares of common stock at $10.10 per share
through a
registered direct offering.

Selected PIPES during Q2 04:

Company Month Amount Raised ($USD,
M)

Illumina Inc. May 30
Cytogen Corp. Apr 26
Spectrum Pharmaceuticals Apr 25
Northfield Laboratories May 23
Axonyx Inc. May 20
StemCells Inc. Jun 20
Viragen Inc. Jun 20
Prana Biotechnology Ltd. May 20
Sirna Therapeutics Inc. May 19
BioSante Pharmaceuticals May 18
Sonus Pharmaceuticals May 15
Adventrx Pharmaceuticals Inc. Apr 15

VC Investments
Venture capital accounted for $815 million in investments this
quarter,
compared to nearly $1.4 billion in Q1 04. Corus, a biotech and
specialty
pharmaceutical development company, completed a Series C preferred
stock
financing with an additional $5 million, bringing the total raised
to $65
million. Investors included Bear Stearns Health Innoventures,
Hambrecht &
Quist Capital Management, AIG Sun America Ventures, MPM BioEquities,
Burrill
&
Company, and others. Funds will be used for advancing clinical
Phase II
studies for both Corus 1020 (an inhaled antibiotic for the treatment
of
pseudomonal infections in patients with cystic fibrosis) and Corus
1030 (a
treatment for oral corticosteroid-dependent asthma). Additionally,
the
company plans to use the funds to complete Phase III studies and to
increase
its R&D pipeline.
ARYx Therapeutics completed a $55 million Series D financing in
Q2 04
which was led by Nomura Phase4 Ventures. Other new investors
participating
in
the round include JAFCO Life Science Investments, Scottish Widows
Investment
Partnership, Montreux Equity Partners, and Novel Bioventures, among
others.
ARYx anticipates that through the application of its proprietary
retrometabolic chemistry approach, the company can engineer-out
metabolism
and
other safety problems in valuable drugs. The company has forwarded
two
products into Phase I clinical trials: ATI-2042, a treatment for
atrial
fibrillation and ATI-7505, a treatment for gastroesophageal reflux
disease.

Selected venture financings during Q2 04:

Company Month Amount Raised
($USD, M)

Corus Pharma Inc. Apr 65
ARYx Therapeutics Inc. Jun 55
Altus Pharmaceuticals May 51
Archemix Corp. Apr 50
Dynogen Pharmaceuticals Apr 50
Nucleonics Inc. Apr 49
Favrille Inc. Apr 44
Acologix Inc. May 40
Microbia Inc. May 40
Cardiokine Inc. Apr 37
Rejuvenon Corp. Jun 37
ChemoCentryx Inc. Jun 33
Amicus Therapeutics May 31
Merrimack Pharmaceuticals May 28
Idun Pharmaceuticals Inc. Jun 27

M & A and Alliances
M&A activity in Q2 04 was robust with the announcement of more
than 20
transactions totalling $67 billion. In a huge pharma/pharma deal,
Aventis
S.A.
accepted a sweetened takeover offer from Sanofi-Synthelabo S.A.
valued at
$63.2 billion. Approved by the European Commission, the deal
confirms the
complementary nature of the combined group's existing product
portfolio.
Sanofi-Aventis brings together 94 NCE's and vaccines in development
from
Aventis and 56 from Sanofi. The deal also gives Sanofi a significant
number
of
technology partnerships that Aventis has with other companies. In
preparation
for the merger, Sanofi sold global rights to two of its injectable
anti-
thrombotics, Arixtra and Fraxiparine, to GlaxoSmithKline for $547
million in
cash. Sanofi also sold Aventis' rights to its colorectal cancer drug
Campto
to
Pfizer for $620 million.
Belgium's UCB S.A., a chemicals and pharmaceuticals maker,
agreed to pay
$2.7 billion for British biotech company Celltech Group PLC, a
merger which
will create Europe's largest biotechnology company and the fifth
largest
worldwide. "Pharma's reliance on biotech companies to fill their
pipelines
continues unabated," commented Burrill. Celltech's most promising
compound,
CDP 870, is a treatment for rheumatoid arthritis and Crohn's disease
and is
in
late-stage development. UCB's biggest selling drug is the allergy
medication
Zyrtec, which has already lost patent protection in some countries.
In mid June, Canadian drug maker QLT agreed to purchase one of
Colorado's
largest biotechs, Atrix Laboratories, for $750 million in cash and
stock.
The
deal will diversify QLT's revenue base and portfolio and bring
together two
leading products -- QLT's Visudyne for age-related macular
degeneration and
Atrix' prostate-cancer treatment Eligard.
Also in June, Bradley Pharmaceuticals agreed to acquire Bioglan
Pharmaceuticals, the specialty dermatology products subsidiary of
Quintiles
Transnational Corporation, in a transaction valued at $183 million
in cash,
plus direct costs for transferred inventory.

Selected M&A transactions announced during Q2 2004:

Est.
Value
Acquired Acquiree
(USD, $M)

Aventis SA Sanofi-Synthelabo SA
63200
Celltech Group plc UCB Pharma
2600
Atrix Laboratories Inc. QLT Inc.
750
Bioglan Pharmaceuticals Bradley Pharmaceuticals Inc.
183
Verdia (Maxygen subsidiary) DuPont 64
MJ Research Inc. Bio-Rad Laboratories Inc. 47
Respironics Inc. Profile Therapeutics plc 45
pSivida Ltd. QinetiQ Ltd. 41
OrthoLogic Corp. Chrysalis BioTechnology Inc. 34
V.I. Technologies Inc. Panacos Pharmaceuticals Inc. 27
SeraCare Life Sciences Inc. Genomics Collaborative Inc. 14

Partnering deals generated $2.3 billion in Q2 04, up from $2
billion in
the first quarter and on track with partnering activity in 2003. The
largest
deals centered on big pharma's appetite for development and
marketing rights
for promising drugs to add to their pipelines.
Merck, which has no cancer-fighting drug on the market, has been
aggressively pursuing licensing and partnership deals over the past
year to
give the company a presence in this lucrative market. On June 22,
Vertex
Pharmaceuticals and Merck entered into a collaborative agreement to
co-develop
Vertex's VX-680 experimental cancer drug that targets proteins
called Aurora
kinases, which are believed to help promote tumor growth. Under the
agreement,
Vertex will receive $20 million up front from Merck and an
additional $14
million in research funding over the next two years to develop the
compound.
Vertex could also receive up to $350 million in milestone payments
if VX-680
is successfully developed against one or more cancers.
Swiss pharmaceutical giant, Roche Holding AG, entered into a
partnership
with ArQule Inc. to develop ArQule's E2F cancer fighting agents
aimed at
killing diseased cells without damaging healthy ones. The agreement,
valued
at
$276 million, involves an up front cash payment of $15 million to
support
research and development and additional payments to support research
and
development in 2005. Roche will receive an option to in-license
certain E2F
compounds at a future date and if the company decides to exercise its
option,
ArQule will receive a lump sum license payment and will be eligible
for
milestone and royalty payments depending on further progress of one
or more
E2F compounds.
Eisai entered into a product acquisition agreement worth $240
million
for
Elan which gives Eisai the exclusive North American and European
rights to
market Zonegran(R), Elan's drug for the adjunctive treatment of
epilepsy.
GlaxoSmithKline (GSK) entered into a strategic alliance with
Theravance,
Inc., a private-held pharmaceutical company, to develop and
commercialize
novel medicines across a variety of important therapeutic areas.
Under the
terms of the alliance, Theravance received $129 million, a
significant part
of
which relates to GSK's purchase of shares to increase its ownership
position
in Theravance from 6% to 19% with an option for a further extension
of GSK
ownership in 2007. In exchange GSK receives an exclusive option to
license
potential new medicines from all current and future programs through
August
2007 on a worldwide basis. This alliance builds on the companies'
existing
collaboration in respiratory diseases.
Finally, in June Vernalis plc and Biogen Idec agreed to advance
research
into Vernalis' adenosine A2A receptor antagonist program which
targets
Parkinson's disease and other CNS disorders. Under the agreement,
Biogen
Idec
receives exclusive worldwide rights to develop and commercialize
Vernalis'
lead compound, V2006, which recently completed an initial Phase I
clinical
study in healthy volunteers. Biogen Idec also has the right to
develop one
back-up compound to V2006 and receives option rights over Vernalis'
A2A
antagonist research program. The deal is valued at $100 million.

Selected partnering transactions during Q2 2004:

Est.
Value
Biotech Pharma/Biotech (USD, $M)

Vertex Pharmaceuticals Inc. Merck & Co. Inc. 384
Arqule Roche 276
Elan Eisai 240
Indevus Pharmaceuticals Inc. Pliva d.d. 215
Theravance Inc. GlaxoSmithKline plc 129
Vernalis plc Biogen Idec Inc. 100

"Considering that the public equity markets have been choppy all
year,
this level of fundraising this quarter is pretty impressive," noted
Burrill.
"Investors have been reticent of late, waiting for the news in Iraq
to
improve
and for the Feds to increase interest rates. Now that the US has
completed
the Iraq handover and Alan Greenspan has announced the .25% increase
in
rates,
we can anticipate some evening out ... but there's still the election
looming
and that will make for some uncertainty," he said. "There is no
question
that
we're on track for a great year and we're sticking by our prediction
that
we'll see a total of 25-30 successful IPO's (21 are done year to
date) and
at
least $20 billion in new financings before year end ($10.1 billion
has
already
been raised in 2004)," Burrill added.
"This doesn't mean guaranteed smooth sailing for the next six
months,
however," said Burrill. "Biotech has become a very competitive
industry.
There is more competition for investment dollars, more competition
for each
government contract, more competition in the marketplace, and more
competition
for coverage and reimbursement," he explained. "The good news is
that more
and more people are looking to become part of this business in one
way or
another. Truly, biotech has become a ubiquitous, global endeavour
with
exploding momentum. With each passing year, hundreds of dreams take
shape
in
real world settings and hope becomes truth, all because of
biotechnology,"
Burrill said. "Plus, there is a payback -- biotech's combined
revenues in
2003 were about $50 billion -- a far cry from just five years'
previous when
the industry pulled in only $20 billion in revenues. But there also
are
huge
costs and huge risks associated with technological advancement and
commercialization, factors that will continue to make biotech a
volatile
segment of the publicly traded market," he added.

2003 2004

YTD
2002 Q1 Q2 Q3 Q4 2003 Q1 Q2
2004

Public
IPO $445 $-- $-- $-- $453 $453 $653
$599
$1,252
Follow-
on 979 517 130 1,340 1,549 $3,536 984
700
$1,684
PIPEs 907 204 522 676 649 $2,051 1,274
472
$1,746
Debt 5,251 152 2,487 2,764 1,767 $7,170 1,363
1,851
$3,214

Private
VC 2,688 549 628 670 994 $2,841 1,369
815
$2,184

Other 178 217 12 15 50 $294 137
$11
$148

Total
Finan-
cings $10,448 $1,639 $3,779 $5,465 $5,462 $16,345 $5,780
$4,448
$10,228

Part-
nering $7,496 $1,203 $2,256 $2,556 $2,918 $8,933 $2,010
$2,262
$4,272

Total $17,944 $2,842 $6,035 $8,021 $8,380 $25,278 $7,790
$6,710
$14,500

Investment Outlook
Whenever the volatile biotech market rallies, there is always
some
momentum trading which may or may not reflect a company's true value
over
the
long run. Investors who wish to avoid being caught up in the tide of
enthusiasm are well advised to remember a few pointers:
Patience is what investors need to remember most. This is not a
segment
in which one makes a killing overnight. The return can take three
to five
years to materialize ... maybe a little less and maybe a little more.
Biotech's wild ride is not for the faint of heart.
Portfolio diversity is a must. Mix up the innovative neophytes
with the
more seasoned pros and vary your therapeutic markets and hotshot
technologies.
Products are biotech's jewels and while it is difficult to
predict a
promising compound's ultimate success, it pays to keep track of
clinical
trial
progress and regulatory setbacks.
Partnering (with larger pharma or biotech companies) has never
been more
important to the survival of biotech. We are seeing increased
activity in
this area and it's good to know how these collaborations are working
out.
Probability or probably sustainability is key to any company's
success.
If there isn't a strong business model or products are failing early
in
clinical trials, you may have to rethink your choice.
Profitability, though hardly a necessary prerequisite for going
public,
is
the goal. The nearer a company is to profitability, the more Wall
Street
likes it.

About Burrill & Company
Burrill & Company is a life sciences merchant bank, focused
exclusively
on
companies involved in biotechnology, pharmaceuticals, diagnostics,
human
healthcare and related medical technologies, wellness and
nutraceuticals,
agricultural technologies, and industrial biotechnology
(biomaterials/bioprocesses).

Venture Capital
The Burrill family of venture capital funds, with over $500
million
under
management, includes the Burrill Life Sciences Capital Fund, the
Burrill
Biotechnology Capital Fund, the Burrill Agbio Capital Fund and its
successor
-- the Burrill Agbio Capital Fund II, and the Burrill Nutraceuticals
Capital
Fund.

Strategic Partnering
Burrill & Company assists life science companies in identifying,
negotiating and closing strategic partnerships between large and
small
companies providing access to resources, technologies or
collaborations
essential for executing their business plans.
Burrill & Company also works with major life science companies to
spinout
internal assets and capitalize on their value, ranging from the
outright
sale
of products or businesses to creation of new companies to exploit
these
assets. Burrill uses its extensive network to help companies
identify,
assess
and capture ("spin-in") products and companies strategic to building
their
businesses.
We have completed more than 25 strategic partnerships with a
value in
excess of $1.5 billion.

Strategic Advisory Services
Burrill & Company works with leaders of life science companies
of all
sizes (from start-up to big pharma) on growth strategy with a focus
on how
strategic transactions and partnerships can enable and accelerate the
achievement of corporate objectives. We combine our scientific,
business,
operations, financial and technical skill sets within an objective
advisory
approach. We then work with our external clients to implement these
plans,
whether it is to succeed through an M&A/partnering transaction or a
financing,
divestiture or a restructuring.

Biotech 2004/Burrill Datacenter
Burrill & Company's annual analysis of the "State of the
Industry" has
been an important part of the biotech industry's view of itself over
the
last
18 years. Biotech 2004 -- Life Sciences: Back on Track, is a
perspective on
where the industry has been and is going and was released Q1 04. In
addition,
the newly created Burrill Datacenter is an online resource for
keeping
up-to-
date information from the biotech industry at your fingertips,
including
updated data from Biotech 2004. To order Biotech 2004 or to
subscribe to the
Burrill Datacenter, visit Burrill & Company's website at
http://www.burrillandco.com
or call (415) 591-5400.

SOURCE Burrill & Company
Web Site: http://www.burrillandco.com

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