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12:00 AM
Sep 09, 2002
 |  BioCentury  |  Finance

Ebb & Flow

After slipping 2% last week, the BioCentury 100 index shed 8% over the past two weeks, sucking a lot of air out of the biotech rally that began on July 12. The group remains up 5%, but it was up 14% for the six weeks ended Aug. 23. While it's easy to complain about the bear market, last week's NewsMakers in the Biotech Industry conference highlighted how much the industry has matured and the record attendance demonstrated that investors haven't lost interest even if they aren't yet ready to buy.

When BioCentury and The Carson Group (now TF/Carson) began the conference series nine years ago, a Phase III company was the exception rather than the rule, and finding a parking spot in mid-town was easier than finding a company with a marketed product. At last week's meeting in New York, 14 of the 36 companies had products on the market, and 31 (86%) had a product under review, or in Phase III or Phase II/III trials. Using the commonly held assumption that 50% of all compounds in Phase III trials ultimately get approved, last week's group should put 15 products on the market over the near term.

And, unlike in the early '90s, there were few one-trick ponies: of the 31 companies, 21 had multiple products either under review or in Phase III or Phase II/III trials.

"That type of momentum is just going to feed off itself, and it's going to demand the attention of Wall Street," said Amylin CEO Joseph Cook. AMLN received an approvable letter last October for its Symlin pramlintide to treat Types I and II diabetes, subject to completing an additional trial in Type I patients. That trial has been completed and the company hopes to file an NDA amendment in the first quarter.

Cash muscle

With the lack of an offerings window in sight, it was especially encouraging for the NewsMakers audience that many of the presenting companies are in a position to launch their first product without having to tap the market. Those included CV Therapeutics (CVTX), OSI (OSIP), Neurocrine (NBIX), NPS (NPSP), Cubist (CBST), Regeneron (REGN), Vical (VICL), and Cerus (CERS). The latter recently launched its first product in Europe, the Intercept Blood System for inactivating pathogens in platelets used for transfusion, through partner Baxter (BAX).

Indeed, with Wall Street keeping a close eye on the "survival index" of cash, burn and time to market, many of the presenting CEOs took the time to tout the strength of their balance sheets. The group had a combined checking account of $13.6 billion, or about $380 million per company.

"We have $290 million in cash, which should last us through commercialization," noted Gary Lyons, president and CEO of NBIX. The company hopes to file an NDA by year end for its Indiplon insomnia therapy, with a launch planned for late 2004.

"We want to build a Tier I biotech company and we can launch Ranexa without going to the market. It's why we raised money when we did," said CVTX CEO Louis Lange. CVTX, which raised $150.9 million under a December 2001 follow-on, hopes to submit its NDA by year end for Ranexa to treat chronic angina. CVTX had $432 million in cash at June 30.

"Cash is king, and therefore we maintain a low burn rate," said Vijay Samant, president and CEO of VICL. The naked DNA vaccine company lost only $17 million last year and is on track to lose a modest $29-$32 million this year, despite having a Phase III trial and three...

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