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Europe: Less of a cash crunch

2Q Financial Markets Review

Europe: Less of a cash crunch

The first six months of 2002 have ended with no sign of an IPO or follow-on window, and an increasingly cautious venture community. In Europe, several public companies are now trading at or below cash, giving no value to their technologies.

That said, the public companies that raised money at the height of the biotech bubble in 2000 are not yet starting to feel the pinch, and most private companies are able to raise money, albeit more slowly and at lower valuations. But to avoid a meltdown, the group needs good news that will bring investors back. Unfortunately, there are few major European milestones coming up over the rest of the year that could spark investor interest.

To date, only 17 of the 111 public European companies tracked by BioCentury are up on the year. Of these only two have market valuations over $300 million. Drug delivery play SkyePharma plc (LSE:SKP; SKYE, London, U.K.), gained 15% to £363 million ($543.7 million) in the first six months (6% in the second quarter), and nitric oxide drug company NicOx S.A. (NM:Nicox, Nice, France) gained 24% to E384 million ($373 million) (21% in the second quarter).

On the downside, 19 companies have fallen 20-30% this year, a group that includes protein pharmaceutical play Serono S.A. (SWX:SEO; SRA, Geneva, Switzerland) with a market cap of CHF15.7 billion ($10.4 billion) (off 27% last quarter); cancer and cardiovascular company Xenova Group plc (LSE:XEN; XNVA), valued at £71 million ($106 million) (off 16%); and gene therapy and drug delivery company november AG (NMarkt:NBX, Erlangen, Germany), valued at E28 million ($28 million) (off 33%).

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