That was the verdict of Steven Burrill, CEO of US merchant bank Burrill & Co, who describes the 2004 market as 'ragged and risk-averse,' in a just-released commentary.
Burrill cited the recent success story of San Francisco, which recruited a top team of biotech industry leaders to stimulate biotech's growth and expansion. Similar endavours are underway around the globe. Including Queensland Australia's biotech hub, the issuance of a 'road map' for biotech development in South Africa, and the establishment of a biotech park in The Philippines.
"The industry has pulled out of the doldrums and, barring any unforeseen catastrophes, the final quarter of the year will be good for biotech," stated Burrill.
However, it was not all good news. Merck's decision to pull its blockbuster arthritis drug, Vioxx (rofecoxib) from the market, was a huge blow to Merck whose stock shed more than a quarter of its value and ended the month down 27 per cent.
The company's top selling drug, Zocor (simvastatin), which is indicated for the treatment of high cholesterol, loses its patent protection early in 2006 and this was its other blockbuster. Some analysts think that Merck will need to seek out a merger/partner to reignite growth.
"The situation with Vioxx is reminder of how important it is to pursue a more personalized approach to medicine which would greatly mitigate the incidence of adverse drug reactions and ultimately save drug makers the cost and aggravation of a recall," noted Burrill.
Highlights in the Biotech sector include Genentech (DNA) and OSI Pharmaceuticals (OSIP), who were both granted priority review from the FDA for their non-small cell lung cancer treatment, Tarceva. The drug is based on a molecule developed by OSI with Genentech conducting the phase III trial and taking the lead in marketing the drug in the US.
The FDA also granted fast track status in September for BLP25 Liposome Vaccine from Biomira (BIOM) and Merck KGaA. The Liposomal Vaccine is being used to extend survival among patients with non-small cell lung cancer following first line chemotherapy. The vaccine is a synthetic MUC1 peptide vaccine, designed to induce an immune response to cancer cells.
Much has happened in the antidepressant and clinical trials area, which is sure to have a bearing in the biotech's future prosperity. FDA advisory committee voted to have antidepressants carry a 'black box' warning about the risks of increased suicidal tendencies in youth.
The agency's analysis found that in perhaps 2 per cent to 3 per cent of the time, the pills increased suicidal thoughts, however none of the patients studied actually committed suicide. The FDA also decided to conduct a study examining the link between widely prescribed antidepressants and suicide in adult patients.
The US Securities and Exchange Commission (SEC) is continuing its investigation regarding the misleading of investors by not being forthcoming about both negative and positive clinical trial results. The activities have prompted a group of editors from prestigious journals, to publish results only from those trials that are registered in a central database
For the fourth quarter in a row, several biotech firms entered the public market. In Q3 04, IPO's generated $256 million for five biotech firms, down significantly from the previous quarter in which $603 million was raised for 12 companies. Indeed, while four companies went public in July, Xenogen Crop, Idenix Pharmaceuticals, Auxilium and Mannkind Corporation, there was only one IPO in August, New River Pharmaceuticals and none in September.
One unusual method of raising funds was taken by pharmaceutical firm Medicinova, which is planning an initial public offering to sell $100 million of its common shares in Japan and to investors outside of the US.
Medicinova is developing drugs primarily for urology, obstetrics and gynaecology markets, but has also partnered with other companies to cultivate treatments for asthma and anxiety. It plans to use the proceeds to continue development of its drug candidates, which include treatments for bladder and pelvic region pain.
The company currently has one drug - aimed at treating solid tumours - undergoing early stage clinical trials, and expects to begin mid-stage trials of four other drug candidates by the middle of 2005.
Biotech raised $1.5 billion year to date through initial public offerings, and that is more than three times what IPOs brought in during all of 2002 or 2003. Venture capital (VC) investment to date has reached nearly $3 billion, compared to $2.8 billion for all of 2003 and $2.7 billion for 2002.
Burrill added: "2004 will be a record year for VC investment. Moreover, we believe VC investment will be even stronger in 2005. In Q3 04, 16 private biotech firms received infusions of between $25 and $50 million."