News | July 5, 2000

Burrill reports biotech recovery

Genomics companies led the biotech recovery with a 52% increase in value in June alone, according to the latest report by Burrill & Co. (San Francisco), a private merchant bank focused exclusively on life sciences. The industry had started its recovery at the end of the first quarter when the Clinton-Blair pronouncement in mid-March sent it into a tailspin. (For details, read Setting Free the Genes.)Though growth in the second quarter was not as great as in the first, June was a strong month, thanks to the announcement by Celera Genomics and the Human Genome Project.

"Biotech's strong showing in June was a direct result of the much-anticipated announcement made by both Celera and the Human Genome Project regarding the sequencing of the human genome," said G. Steven Burrill, CEO of Burrill & Co. "As the expected announcement finally turned into front page news, investors came back to biotech and those companies predicted to benefit from this astounding scientific achievement benefited tremendously."

The Burrill Life Science Composite Index1, an overall index of the market performance of stocks in companies involved in human healthcare, agbiotech, animal health, bioprocess/biomaterials, and nutraceuticals, rose 24% for the month, showing continued strong recovery following the Clinton-Blair comments. As a barometer of the life science industry, the Burrill Composite Index outperformed the other major stock indices for the month, quarter, and year-to-date:

Burrill Life Science Composite: 34.1% YTD Increase
NASDAQ: -2.54% YTD Increase
Dow Jones Industrials: -9.13% YTD Increase
Russell 2000: 2.47% YTD Increase

"The genomics and the human healthcare-related companies were the real drivers of the Composite Index's good showing," said Burrill. "The excitement over the human genome announcement reignited interest in the life sciences in general, as investors began to understand the powerful impact that news will have on human healthcare and well-being, and biotech companies, specifically, both from a product and profitability standpoint."

The Burrill Biotech Select Index2 was up 37% for June, 21% for the quarter, and up almost 53 % year-to-date. The Select Index demonstrated a similar pattern to the Composite Index, with both indices' best performance being year-to-date 53% and 34%, respectively.

The Burrill Agbio Index3 continued its downward trend, ending down almost 6% for June. The GMO issue continues to plague this sector and will likely do so for the foreseeable future. The ongoing disposition of the ag units of many life science companies also makes this sector somewhat unpredictable and investors wary.

The Burrill Animal Health Index4 saw a 2% decrease during the month. Similar to the agbio companies, many of the animal health and nutrition companies are "in play" and the industry is beginning to feel the effects of the GMO issue.

The Burrill Biomaterials/Bioprocess Index5 was up just 4%. This slight increase was caused by two opposing factors: companies like Invitrogen (Carlsbad, CA) and Qiagen (Venlo, The Netherlands) were dramatically up for the quarter, but their increases were mitigated by the large earnings shortfalls of some of the more traditional chemical companies represented in the index.

The Burrill Nutraceuticals Index6 (which tracks 20 companies in the nutraceuticals, supplements, and medical and functional foods arenas) was down 17% for June. This sector continues to be on a very slow growth pattern, but as consumers become more comfortable with nutraceutical products and as the large food and pharma companies move further into this arena, we can expect this sector to show dramatic increases in the coming months and quarters.

Burrill & Co.
Burrill & Co. is a private merchant bank, focused exclusively on life science companies (biotechnology, pharmaceuticals, healthcare, related medical technologies, agricultural technologies, animal health, nutraceuticals, and bioprocess/biomaterials). The Burrill family of venture capital funds, with over $200 million under management, include the Burrill Biotechnology Capital Fund, the Burrill Agbio Capital Fund, the Burrill Animal Health Capital Fund, the Burrill Bioprocess/ Biomaterials Capital Fund, the Burrill Nutraceuticals Capital Fund, and the Burrill Life Sciences Capital Fund.

For more information: Burrill & Co., 120 Montgomery St., Suite 1370, San Francisco, CA 94104. Tel: 415-743-3160. Fax: 415-743-3161. E-mail: burrill@b-c.com.

Footnotes

  1. The Burrill Composite Life Sciences Index is the average of all of the other Burrill Life Sciences indices, except for the Biotech Select Index and the Burrill Genomics Index.
  2. The Burrill Biotech Select Index is a price-weighted index, representing twenty of biotech's best blue-chip companies, similar to the Dow Jones Industrial Average, which tracks 30 blue chip U.S. stocks. The companies tracked through the Burrill Biotech Select Index have been selected on the basis of long-term growth potential -- not necessarily on the highest market capitalizations (though many of the highest market cap companies are included in this index).
  3. The Burrill Agbio Index tracks the performance of 15 agbio companies.
  4. The Burrill Animal Health Index tracks 10 public animal health-focused companies.
  5. The Burrill Biomaterials/Bioprocess Index tracks 20 companies, most of which are large chemical companies that use biotech in their development and product base.
  6. The Burrill Nutraceuticals Index tracks 20 companies in the nutraceuticals, supplements, and medical and functional foods arenas.

Edited by Laura DeFrancesco