By Donald Zuhn --
At last week's BIO Investor Forum, the Biotechnology Industry Organization (BIO) announced that the number of publicly traded biotech companies dropped from 394 in the fourth quarter of 2007 to only 294 by the second quarter of 2010. The net loss of 100 biotech companies (or 25% of the sector's publicly traded companies) during this two and a half year period was the result of 52 companies that ceased operations, 62 companies that were acquired, and only 14 new initial public offerings (IPOs). These findings were among those offered by Dr. John Craighead, the Managing Director of Investor Relations & Business Development for BIO, in a presentation entitled "BIO Industry Analysis," the slides for which have been made available on BIO's Blogging the Business of Biotech blog.
The news, however, was not all bad (or at least has been showing small signs of improvement). For example, while the sector has had only 14 IPOs since late 2007, 13 of the IPOs occurred between the fourth quarter of 2008 and the second quarter of 2010. In addition, while 62 companies were lost between the fourth quarter of 2007 and the fourth quarter of 2008 (28 via acquisition and 36 that ceased operations), 50 were lost over the next six quarters (34 via acquisition and 16 that ceased operations). Moreover, the percentage of companies having less than one year of cash on hand, which rose from 29% in the fourth quarter of 2007 to 45% in the fourth quarter of 2008, had dropped to 25% by the second quarter this year.
According to a Bloomberg report, Dr. Craighead noted during his presentation that biotech acquisitions rose from 40 in 2007 to 55 in 2008, dropped to 38 in 2009, and stands at 21 this year.