上海交通大学：《生物工程导论》课程教学资源（阅读资料）Public biotech 2009—the numbers

FEATURE Public biotech 2009-the numbers Brady Huggett,John Hodgson Riku Lahteenmaki The public biotech sector sustained more losses in 2009,but the year ended on a positive note,and the industry has regained its footing. hat whooshing sound at the end of 2009 I was the biotech sector letting out its col- Box 1 The numbers lective breath.The year began as a hard slog, Nature Biotechnology has published an annual report on public biotech companies since so when it came to a close on an upward swing,the industry rightfully felt a measure 1996.As the industry has grown and changed,so have our definition of what constitutes of relief.That's not to say there weren't casual- a biotech company and our methods for gathering the information that serves as the backbone to this piece.We generally include companies built upon applying biological ties:a distressingly large number of companies organisms,systems or processes,or the provision of specialist services to facilitate the departed the scene last year.But it was not as understanding thereof.We exclude pharmaceutical companies,medical-device firms and bad as some pundits had estimated,and the contract research organizations to better focus on the unique attributes and situations industry proved itselfto be strong and creative. that make up the biotech sector. It was helped by a recovering economy in the This year's data was provided by Ernst Young,which has broadened the report's reach second half of the year.Overall,counting the into international exchanges and increased our total number of companies.Additional vast financial potential of collaborations,the reporting was done via individual financial reports.The top-ten lists and other aggregate industry recorded one of its best years for lists are sourced appropriately,with most data supplied by BioCentury.As investors do not fundraising.That has left the sector brightly stratify the biotech sector as stringently as Nature Biotechnology,we used money figures looking ahead again-a far cry from how from across the biotech and biopharmaceutical arena to best highlight trends.In some things appeared at the end of 2008. cases,full-year data were not available and fourth-quarter numbers were extrapolated; this is noted in the company-by-company data table(Supplementary Table 1).Companies Economic woes delisted in 2009 from major exchanges were excluded. The 2009 data from Nature Biotechnology's © annual survey of public biotech firms,which now number 461 (owing to a change in Intelligence Agency estimates unemployment Catastrophic shrinkage in the sector has our data-gathering process;see Box I and numbers increased around the world,some- not happened.There were losses (Table 1), Supplementary Table 1),show little trace of times drastically-Ireland's unemployment but they were not as far-reaching as feared. how terribly the year began or how tightly nearly doubled to 12%,whereas the US went And among all this detritus,a surprise:the the public markets had been hammered shut from5.8%in2008to9.3%. biotech sector was again profitable in 2009. at the end of 2008.The reality is that 2009 So although biotech wasn't alone in the started bleakly for biotech,and it continued dark,as an industry made up mainly of small The money trail that way for most of the first quarter. companies devoid of revenue-and thus Financing levels for biotech are a useful Of course,not just biotech suffered-the more dependent on raising public funds- gauge of the sector's overall health,because recession affected all countries and sectors. the sector was hit particularly hard.The fear, without repeated investment,the industry Along with the other indices,shares on the expressed by pundits,the Biotechnology shrivels.In this regard,2009 turned out bet- Nasdaq Biotechnology Index bottomed out Industry Organization (Washington,DC) ter than expected.The third quarter saw on 9 March,resting at 59.05,a low it had not and even biotech executives themselves,was the first month of positive growth in the seen since May 2003.The global economy con- that the industry would lose up to 25%of its US economy since the recession started in tinued to shed jobs last year:the US Central companies to bankruptcy. December 2007,and as the economy recov- But the Nasdag Biotech Index steadily ered,money again began moving.By year's Data retrieval for this article was by Ernst recovered from that March low and closed end,overall biotech financing was up 84% Young(Boston)with additional reporting by 2009 at 81.83.Overall funding for the sector from the depressed figures seen in 2008. Riku Lahteenmaki.Brady Huggett is business jumped in the second half,and although the In 2008,as first the United States and then editor at Nature Biotechnology,John Hodgson National Bureau of Economic Research has the world slid into recession,overall funding is editor-at-large at Nature Biotechnology, yet to officially declare the end of the reces- was at its lowest since at least 2002(Fig.1), and Riku Lahteenmaki is a freelance writer in sion in the United States,consensus pegs it with debt financings,private investments in Turku,Finland. around the second quarter of 2009. a public entity(PIPEs),follow-on offerings NATURE BIOTECHNOLOGY VOLUME 28 NUMBER 8 AUGUST 2010 793

nature biotechnology volume 28 number 8 august 2010 793 Public biotech 2009—the numbers Brady Huggett, John Hodgson & Riku Lähteenmäki The public biotech sector sustained more losses in 2009, but the year ended on a positive note, and the industry has regained its footing. That whooshing sound at the end of 2009 was the biotech sector letting out its col￾lective breath. The year began as a hard slog, so when it came to a close on an upward swing, the industry rightfully felt a measure of relief. That’s not to say there weren’t casual￾ties: a distressingly large number of companies departed the scene last year. But it was not as bad as some pundits had estimated, and the industry proved itself to be strong and creative. It was helped by a recovering economy in the second half of the year. Overall, counting the vast financial potential of collaborations, the industry recorded one of its best years for fundraising. That has left the sector brightly looking ahead again—a far cry from how things appeared at the end of 2008. Economic woes The 2009 data from Nature Biotechnology’s annual survey of public biotech firms, which now number 461 (owing to a change in our data-gathering process; see Box 1 and Supplementary Table 1), show little trace of how terribly the year began or how tightly the public markets had been hammered shut at the end of 2008. The reality is that 2009 started bleakly for biotech, and it continued that way for most of the first quarter. Of course, not just biotech suffered—the recession affected all countries and sectors. Along with the other indices, shares on the Nasdaq Biotechnology Index bottomed out on 9 March, resting at 59.05, a low it had not seen since May 2003. The global economy con￾tinued to shed jobs last year: the US Central Intelligence Agency estimates unemployment numbers increased around the world, some￾times drastically—Ireland’s unemployment nearly doubled to 12%, whereas the US went from 5.8% in 2008 to 9.3%. So although biotech wasn’t alone in the dark, as an industry made up mainly of small companies devoid of revenue—and thus more dependent on raising public funds— the sector was hit particularly hard. The fear, expressed by pundits, the Biotechnology Industry Organization (Washington, DC) and even biotech executives themselves, was that the industry would lose up to 25% of its companies to bankruptcy. But the Nasdaq Biotech Index steadily recovered from that March low and closed 2009 at 81.83. Overall funding for the sector jumped in the second half, and although the National Bureau of Economic Research has yet to officially declare the end of the reces￾sion in the United States, consensus pegs it around the second quarter of 2009. Catastrophic shrinkage in the sector has not happened. There were losses (Table 1), but they were not as far-reaching as feared. And among all this detritus, a surprise: the biotech sector was again profitable in 2009. The money trail Financing levels for biotech are a useful gauge of the sector’s overall health, because without repeated investment, the industry shrivels. In this regard, 2009 turned out bet￾ter than expected. The third quarter saw the first month of positive growth in the US economy since the recession started in December 2007, and as the economy recov￾ered, money again began moving. By year’s end, overall biotech financing was up 84% from the depressed figures seen in 2008. In 2008, as first the United States and then the world slid into recession, overall funding was at its lowest since at least 2002 (Fig. 1), with debt financings, private investments in a public entity (PIPEs), follow-on offerings Box 1 The numbers Nature Biotechnology has published an annual report on public biotech companies since 1996. As the industry has grown and changed, so have our definition of what constitutes a biotech company and our methods for gathering the information that serves as the backbone to this piece. We generally include companies built upon applying biological organisms, systems or processes, or the provision of specialist services to facilitate the understanding thereof. We exclude pharmaceutical companies, medical-device firms and contract research organizations to better focus on the unique attributes and situations that make up the biotech sector. This year’s data was provided by Ernst & Young, which has broadened the report’s reach into international exchanges and increased our total number of companies. Additional reporting was done via individual financial reports. The top-ten lists and other aggregate lists are sourced appropriately, with most data supplied by BioCentury. As investors do not stratify the biotech sector as stringently as Nature Biotechnology, we used money figures from across the biotech and biopharmaceutical arena to best highlight trends. In some cases, full-year data were not available and fourth-quarter numbers were extrapolated; this is noted in the company-by-company data table (Supplementary Table 1). Companies delisted in 2009 from major exchanges were excluded. Data retrieval for this article was by Ernst & Young (Boston) with additional reporting by Riku Lähteenmäki. Brady Huggett is business editor at Nature Biotechnology, John Hodgson is editor-at-large at Nature Biotechnology, and Riku Lähteenmäki is a freelance writer in Turku, Finland. FEATURE © 2010 Nature America, Inc. All rights reserved

FEATURE Sciences (HGS,Rockville,Maryland,USA). Table 1 Casualties in 2009 which raised about $850 million in two fol- Company Reason for status change low-on offerings.As its stock price rocketed Alpha Innotech Acquired by Cell Biosciences after positive pivotal trial results for the lupus Altus Pharmaceuticals Bankruptcy drug Benlysta (belimumab),it tapped the Arthrokinetics Delisted public markets in late July for more than $373 Autoimmune Inactive million and again in December for about $477 Avalon Pharmaceuticals Acquired by Clinical Data million.The company's stock,which opened Avigen Acquired by Medicinova the year at $2.12,ended it at $30.58. Biopure Corporation Bankruptcy This is a similar story to Dendreon's BioXell Acquired by Cosmo (Seattle),which in April reported positive CelSis Acquired by JM Hambro phase 3 results for its prostate cancer vac- Cellegy Merged with Adamis Pharmaceuticals cine Provenge (sipuleucel-T),sending its Cell Genesys Acquired by BioSante stock up more than 100%on the day the Cobra Merged with Recipharm results were announced.This set the stage for a $427-million public offering in May,fol- Curagen Acquired by CellDex lowed by another in December.Provenge has Curalogic Bankruptcy now been approved,the company has priced CV Therapeutics Acquired by Gilead the drug aggressively,and Dendreon's stock, EPIX Pharmaceuticals Liquidated at the time of publication,sat just above $34; Evolutec Transformed into investment company it began 2009 at $4.59. Genaera Dissolved Whereas many of biotech's established Genentech Acquired by Roche companies completed debt deals last year, Hemacare Inactive returning that funding category to levels Hemagen Diagnostics Inactive seen before a well-below-average 2008,it IDM Pharma Acquired by Takeda was hardly a year worth mentioning for IPOs Introgen Bankruptcy (Table 3).Just ten occurred in 2009,none Isologen Bankruptcy before August,and none could be considered Intercytex Delisted a typical biotech IPO,either in the type of Liponex Merged with ImaSight company or the amount of money raised. Medarex Acquired by BNS For instance,the JSC Human Stem Cell Metabasis Therapeutics Acquired by Ligand Pharmaceuticals Institute(with sites in Russia,Germany and the Monogram Acquired by LabCorp Ukraine)raisedamere $4.8 million.The institute Napo Pharma Inactive doesn't look much like the usual biotech enter- Nastech Changed name to MDRNA prise preparing to go public:it has a research Neos Inactive laboratory and a center for storage of cellular Inactive materials,and it publishes the journal Cellular ⑨ Neurogen Northfield Laboratories Inactive Transplantation and Tissue Engineering. Nucryst Inactive What's more,an IPO is no longer the cash Nuvelo Merged with Arca windfall and viable exit for investors it once Nventa Biopharmaceuticals Inactive was.Consider D-Pharm(Rehovot,Israel), Phynova Delisted which raised about $7.4 million on the Tel Replidyne Aviv Stock Exchange to fund clinical testing Merged with Cardiovascular Targanta Acquired by The Medicines Company of its small-molecule stroke drug,DP-b99,a membrane-active derivative of the calcium ViRexx Medical Acquired by Paladin chelator 1,2-bis-(2-aminophenoxy)eth- XLT Biopharmaceuticals Delisted ane-N,N,N',N'-tetraacetic acid (BAPTA). Alongside the IPO,the company also com- pleted a rights offering (which gives existing and initial public offerings(IPOs)all declin- as once the general markets (and individual shareholders the right to buy shares during a ing substantially from previous years.Only stock prices)improved,the need for private defined period,usually at a discount),raising venture capital remained aloft,although investment faded. NIS 57 million($14.8 million).The existing venture capitalists were more inclined to put The largest follow-on offering of the year investors didn't exit-they instead had the money into companies previously invested (S640 million)was conducted by Qiagen choice to increase their stake. in,rather than new ventures. (Venlo,The Netherlands),a profitable pro- In truth,the average amount raised per This pattern reversed last year.Debt vider of sample and assay technologies IPO is hardly enough to alleviate finan- financings,venture capital and money raised (Table 2).It had the best year of its existence cial concerns for long.In 2008,our survey in follow-ons and IPOs all increased,almost in 2009,with overall revenues above $1 bil- showed IPOs raised on average $22.3 million. achieving the level seen in 2007,before the lion,and is the type of stable company that In the previous two years,it was considerably markets tanked.Only one category went can easily reach into the secondary-offering more,$58 million in 2007 and $41 million in backward,PIPEs-which was to be expected, market.The sexier story is Human Genome 2006.Figure 2 shows an IPO in 2009 raised, 794 VOLUME 28 NUMBER 8 AUGUST 2010 NATURE BIOTECHNOLOGY

794 volume 28 number 8 august 2010 nature biotechnology Sciences (HGS, Rockville, Maryland, USA), which raised about $850 million in two fol￾low-on offerings. As its stock price rocketed after positive pivotal trial results for the lupus drug Benlysta (belimumab), it tapped the public markets in late July for more than $373 million and again in December for about $477 million. The company’s stock, which opened the year at $2.12, ended it at $30.58. This is a similar story to Dendreon’s (Seattle), which in April reported positive phase 3 results for its prostate cancer vac￾cine Provenge (sipuleucel-T), sending its stock up more than 100% on the day the results were announced. This set the stage for a $427-million public offering in May, fol￾lowed by another in December. Provenge has now been approved, the company has priced the drug aggressively, and Dendreon’s stock, at the time of publication, sat just above $34; it began 2009 at $4.59. Whereas many of biotech’s established companies completed debt deals last year, returning that funding category to levels seen before a well-below-average 2008, it was hardly a year worth mentioning for IPOs (Table 3). Just ten occurred in 2009, none before August, and none could be considered a typical biotech IPO, either in the type of company or the amount of money raised. For instance, the JSC Human Stem Cell Institute (with sites in Russia, Germany and the Ukraine) raised a mere $4.8 million. The institute doesn’t look much like the usual biotech enter￾prise preparing to go public: it has a research laboratory and a center for storage of cellular materials, and it publishes the journal Cellular Transplantation and Tissue Engineering. What’s more, an IPO is no longer the cash windfall and viable exit for investors it once was. Consider D-Pharm (Rehovot, Israel), which raised about $7.4 million on the Tel Aviv Stock Exchange to fund clinical testing of its small-molecule stroke drug, DP-b99, a membrane-active derivative of the calcium chelator 1,2-bis-(2-aminophenoxy)eth￾ane- N,N,N′,N′-tetraacetic acid (BAPTA). Alongside the IPO, the company also com￾pleted a rights offering (which gives existing shareholders the right to buy shares during a defined period, usually at a discount), raising NIS 57 million ($14.8 million). The existing investors didn’t exit—they instead had the choice to increase their stake. In truth, the average amount raised per IPO is hardly enough to alleviate finan￾cial concerns for long. In 2008, our survey showed IPOs raised on average $22.3 million. In the previous two years, it was considerably more, $58 million in 2007 and $41 million in 2006. Figure 2 shows an IPO in 2009 raised, as once the general markets (and individual stock prices) improved, the need for private investment faded. The largest follow-on offering of the year ($640 million) was conducted by Qiagen (Venlo, The Netherlands), a profitable pro￾vider of sample and assay technologies (Table 2). It had the best year of its existence in 2009, with overall revenues above $1 bil￾lion, and is the type of stable company that can easily reach into the secondary-offering market. The sexier story is Human Genome and initial public offerings (IPOs) all declin￾ing substantially from previous years. Only venture capital remained aloft, although venture capitalists were more inclined to put money into companies previously invested in, rather than new ventures. This pattern reversed last year. Debt financings, venture capital and money raised in follow-ons and IPOs all increased, almost achieving the level seen in 2007, before the markets tanked. Only one category went backward, PIPEs—which was to be expected, Table 1 Casualties in 2009 Company Reason for status change Alpha Innotech Acquired by Cell Biosciences Altus Pharmaceuticals Bankruptcy Arthrokinetics Delisted Autoimmune Inactive Avalon Pharmaceuticals Acquired by Clinical Data Avigen Acquired by Medicinova Biopure Corporation Bankruptcy BioXell Acquired by Cosmo CelSis Acquired by JM Hambro Cellegy Merged with Adamis Pharmaceuticals Cell Genesys Acquired by BioSante Cobra Merged with Recipharm Curagen Acquired by CellDex Curalogic Bankruptcy CV Therapeutics Acquired by Gilead EPIX Pharmaceuticals Liquidated Evolutec Transformed into investment company Genaera Dissolved Genentech Acquired by Roche Hemacare Inactive Hemagen Diagnostics Inactive IDM Pharma Acquired by Takeda Introgen Bankruptcy Isologen Bankruptcy Intercytex Delisted Liponex Merged with ImaSight Medarex Acquired by BNS Metabasis Therapeutics Acquired by Ligand Pharmaceuticals Monogram Acquired by LabCorp Napo Pharma Inactive Nastech Changed name to MDRNA Neos Inactive Neurogen Inactive Northfield Laboratories Inactive Nucryst Inactive Nuvelo Merged with Arca Nventa Biopharmaceuticals Inactive Phynova Delisted Replidyne Merged with Cardiovascular Targanta Acquired by The Medicines Company ViRexx Medical Acquired by Paladin XLT Biopharmaceuticals Delisted feat u re © 2010 Nature America, Inc. All rights reserved

FEATURE on average,$92.8 million.On the surface 0.928 that seems a marked increase,but further 6.041 2.95 2277 inspection shows that the figure is distorted 203 5.19 by the unique case of Talecris Biotherapeutics 4.748 10.335 36.92 IPO 1859 (Research Triangle Park,NC,USA).The 2.556 11.68 0.134 11B53 22.35 company develops nonrecombinant protein 2.661 9.796 Follow-on 3.143 therapeutics from plasma and is profitable.It 2231 .12 PIPES was pegged as an acquisition target by rival 1 8833 268 3.232 07 10933 20.023 CSL (Victoria,Australia)in 2008 for $3.1 bil- 8.933 Venture capital lion,but the US government challenged the Debt and other purchase as anticompetitive,and the deal fell apart.Talecris instead conducted an IPO in artnerships 2009 for a whopping $550 million.Toss aside Talecris,and the figure falls more in line with 2003 2004 2005 2006 2007 20082009 recent years:$42 million.Talecris is again in Year line for an acquisition,by Grifols(Barcelona, Spain)for $3.4 billion. Figure 1 Global biotech industry financing.Biotech funding was up 84%to $62 billion in 2009 from Overall,the public markets in Europe $33 billion in 2008.Partnership figures from Burrill Co.are for deals involving a US company. remain relatively parsimonious.They pro- BioCentury makes updates to its financing data on an ongoing basis.Sources:BCIQ:BioCentury Online vided only 15%of all European financing, Intelligence;Burrill Co. whereas US public markets provided 33% of the total US fundraising (Table 4).The main shortfall,as in previous years,was of finance in Europe and nearly half of all nology platform-the program NKTR-118, in follow-on offerings.Where follow-on finance in Europe during 2009(Table 4).which had completed phase 2 for opioid- financings occurred in Europe,they raised Without this money,the amount raised in induced constipation,and NKTR-119,an amounts comparable to those raised by US Europe during 2009 would have been only early-stage program intended to deliver firms-$112 million on average,compared 15%of the global total finance in this survey, products for pain without a constipation side oul with $107 million for US companies.But in rather than 26%. effect.Nektar did receive an up-front pay- 2009,48 US biotech companies got follow- Those IPOs had a small role in the sizable ment of $125 million in the deal,but it's the on offerings away,compared with only seven increase in overall funding from 2008,but potential milestones that give the partner- in Europe.For European public companies, the biggest factor was headline-grabbing ship its $1.5 billion high-end value. secondary offerings are still the exception- partnering deals:$36.9 billion in 2009,up That was one of six deals in 2009 that had leaving them open to acquisition bids and from $20 billion the previous year.This a potential payout of more than $1 billion, investors open to disillusionment. heightened partnering activity was propelled making the average potential of our top-ten Two European firms dominated debt both by pharma's need to bolster fading pipe- group worth more than a billion dollars. 2100 financing this year(Table 5),with giant UCB lines and biotech's need for help of any kind But the average amount of funds received (formed around Celltech,Brussels)taking in during the recession. up front (including equity investments or © more than $2.6 billion in a series of three But here again,that high figure is mis- money for milestones hit at the time of deal notes.Elan(Dublin)also raised $625 billion leading,because a large portion of it repre- signing)was much lower,at about $109 mil. in a bond issue.These two massive chunks sents milestone payments that may never be lion,meaning nearly 90%of the value in these of debt financing distort the European paid.The leading deal among our compa- deals remained unrealized at year's end. fundraising picture,giving it an undue rosy nies (Table 6)was formed between Nektar When considering all partnerships glow.The $3.2 billion raised represents over and AstraZeneca for two programs that use between pharma and biotech (public and three-quarters of the 'Other'categories Nektar's advanced polymer conjugate tech- private),using data from Elsevier's Strategic Table 2 Top ten follow-on offerings of 2009 Amount raised Company name Date completed (millions) Underwriters Qiagen 9/24 640.4 Deutsche Bank,Goldman Sachs,J.P.Morgan,Barclays Capital,Commerzbank,DZ Bank Vertex Pharmaceuticals 12/2 500.5 Goldman Sachs,Merrill Lynch,J.P.Morgan,Morgan Stanley Human Genome Sciences 12/2 476.8 Goldman Sachs,Citigroup,J.P.Morgan,Morgan Stanley,UBS Dendreon 12/10 426.9 J.P.Morgan,Deutsche Bank,Citigroup,Morgan Stanley,Lazard,Leerink Human Genome Sciences 7128 373.8 Goldman Sachs,Citigroup Vertex Pharmaceuticals 218 320 Merrill Lynch,Cowen Cephalon 5/21 300 Deutsche Bank,J.P.Morgan,Barclays Capital Inc.,Credit Suisse,Morgan Stanley Dendreon 5/13 229.9 Deutsche Bank Incyte 9/25 139.7 Goldman Sachs,Morgan Stanley,J.P.Morgan Seattle Genetics 8/11 135.9 J.P.Morgan,Goldman Sachs,Needham,Oppenheimer,RBC Capital Markets Data are matched to the definition of biotech in Box 1.Source:BCIQ:BioCentury Online Intelligence NATURE BIOTECHNOLOGY VOLUME 28 NUMBER 8 AUGUST 2010 795

nature biotechnology volume 28 number 8 august 2010 795 nology platform—the program NKTR-118, which had completed phase 2 for opioid￾induced constipation, and NKTR-119, an early-stage program intended to deliver products for pain without a constipation side effect. Nektar did receive an up-front pay￾ment of $125 million in the deal, but it’s the potential milestones that give the partner￾ship its $1.5 billion high-end value. That was one of six deals in 2009 that had a potential payout of more than $1 billion, making the average potential of our top-ten group worth more than a billion dollars. But the average amount of funds received up front (including equity investments or money for milestones hit at the time of deal signing) was much lower, at about $109 mil￾lion, meaning nearly 90% of the value in these deals remained unrealized at year’s end. When considering all partnerships between pharma and biotech (public and private), using data from Elsevier’s Strategic of finance in Europe and nearly half of all finance in Europe during 2009 (Table 4). Without this money, the amount raised in Europe during 2009 would have been only 15% of the global total finance in this survey, rather than 26%. Those IPOs had a small role in the sizable increase in overall funding from 2008, but the biggest factor was headline-grabbing partnering deals: $36.9 billion in 2009, up from $20 billion the previous year. This heightened partnering activity was propelled both by pharma’s need to bolster fading pipe￾lines and biotech’s need for help of any kind during the recession. But here again, that high figure is mis￾leading, because a large portion of it repre￾sents milestone payments that may never be paid. The leading deal among our compa￾nies (Table 6) was formed between Nektar and AstraZeneca for two programs that use Nektar’s advanced polymer conjugate tech￾on average, $92.8 million. On the surface that seems a marked increase, but further inspection shows that the figure is distorted by the unique case of Talecris Biotherapeutics (Research Triangle Park, NC, USA). The company develops nonrecombinant protein therapeutics from plasma and is profitable. It was pegged as an acquisition target by rival CSL (Victoria, Australia) in 2008 for $3.1 bil￾lion, but the US government challenged the purchase as anticompetitive, and the deal fell apart. Talecris instead conducted an IPO in 2009 for a whopping $550 million. Toss aside Talecris, and the figure falls more in line with recent years: $42 million. Talecris is again in line for an acquisition, by Grifols (Barcelona, Spain) for $3.4 billion. Overall, the public markets in Europe remain relatively parsimonious. They pro￾vided only 15% of all European financing, whereas US public markets provided 33% of the total US fundraising (Table 4). The main shortfall, as in previous years, was in follow-on offerings. Where follow-on financings occurred in Europe, they raised amounts comparable to those raised by US firms—$112 million on average, compared with $107 million for US companies. But in 2009, 48 US biotech companies got follow￾on offerings away, compared with only seven in Europe. For European public companies, secondary offerings are still the exception— leaving them open to acquisition bids and investors open to disillusionment. Two European firms dominated debt financing this year (Table 5), with giant UCB (formed around Celltech, Brussels) taking in more than $2.6 billion in a series of three notes. Elan (Dublin) also raised $625 billion in a bond issue. These two massive chunks of debt financing distort the European fundraising picture, giving it an undue rosy glow. The $3.2 billion raised represents over three-quarters of the ‘Other’ categories 0 10 20 30 40 50 60 70 IPO Follow-on PIPES Venture capital Debt and other Partnerships 2003 2004 2005 2006 2007 2008 2009 Financing raised ($ billions) Year 0.544 3.883 2.231 4.018 9.075 8.933 2.556 3.335 2.93 5.318 8.833 10.933 1.859 4.838 2.661 5.398 6.112 17.268 2.03 5.578 4.695 5.682 11.853 19.796 2.95 4.377 4.748 6.809 11.68 22.365 0.134 1.867 3.143 5.177 3.232 20.023 0.928 6.041 2.277 5.198 10.335 36.923 Figure 1 Global biotech industry financing. Biotech funding was up 84% to $62 billion in 2009 from $33 billion in 2008. Partnership figures from Burrill & Co. are for deals involving a US company. BioCentury makes updates to its financing data on an ongoing basis. Sources: BCIQ: BioCentury Online Intelligence; Burrill & Co. Table 2 Top ten follow-on offerings of 2009 Company name Date completed Amount raised ($ millions) Underwriters Qiagen 9/24 640.4 Deutsche Bank, Goldman Sachs, J.P. Morgan, Barclays Capital, Commerzbank, DZ Bank Vertex Pharmaceuticals 12/2 500.5 Goldman Sachs, Merrill Lynch, J.P. Morgan, Morgan Stanley Human Genome Sciences 12/2 476.8 Goldman Sachs, Citigroup, J.P. Morgan, Morgan Stanley, UBS Dendreon 12/10 426.9 J.P. Morgan, Deutsche Bank, Citigroup, Morgan Stanley, Lazard, Leerink Human Genome Sciences 7/28 373.8 Goldman Sachs, Citigroup Vertex Pharmaceuticals 2/18 320 Merrill Lynch, Cowen Cephalon 5/21 300 Deutsche Bank, J.P. Morgan, Barclays Capital Inc., Credit Suisse, Morgan Stanley Dendreon 5/13 229.9 Deutsche Bank Incyte 9/25 139.7 Goldman Sachs, Morgan Stanley, J.P. Morgan Seattle Genetics 8/11 135.9 J.P. Morgan, Goldman Sachs, Needham, Oppenheimer, RBC Capital Markets Data are matched to the definition of biotech in Box 1. Source: BCIQ: BioCentury Online Intelligence feat u re © 2010 Nature America, Inc. All rights reserved

FEATURE Table 3 Initial public offerings of 2009 Amount raised Company name Location Date completed (millions) Underwriters CanBas Shizuoka,Japan 9/17 14.8 Mitsubishi UFJ Securities International plc,Mizuho,Ichiyoshi,JPMorgan Mizuho Investors,Takagi China Nuokang Beijing 12/9 40.7 Jefferies,Oppenheimer Bio-Pharmaceutical Cumberland Nashville,TN,USA 8/10 85 UBS,Jefferies,Wells Fargo,Morgan Joseph and Co. Pharmaceuticals D.Western Therapeutics Aichi,Japan 10/13 9.7 Nomura,Mitsubishi UFJ Securities International plc,Takagi.SBI Securities Institute Co.Ltd.,Tokai Tokyo,Mizuho D-Pharm Rahovot,Israel 8/17 7.3 Clal Finance,Rosario,Meitav Human Stem Cell Institute Moscow 12/10 4.8 CJSC Alor Invest Movetis N.V. Turnhout,Belgium 12/3 146 Credit Suisse,KBC,Piper Jaffray Omeros Corp. Seattle 107 68.2 Deutsche Bank.Wedbush,Canaccord,Needham,Chicago Investment Group,National Securities Talecris Biotherapeutics Research Triangle Park, 9/30 549.9 Morgan Stanley,Goldman Sachs,JPMorgan,Citigroup,Wells Fargo, NC.USA Barclays Capital T-Ray Science Inc. Vancouver 12/9 1.4 Research Capital Corp Source:BCIQ:BioCentury Online Intelligence Transactions database,we found the average Buyouts and climbing sales hormone-refractory prostate cancer,so it had total amount paid up front in 2009 was about Mergers and acquisitions fell in 2009,both seen the product up close.Perhaps that's the $58.9 million.That's the highest average over in total number and in the values assigned to reason it offered a greater than 90%premium 豆 the past 10 years (only 2006 came close,at the companies acquired(Table 7).Leading to the trading price of Medarex shares;the deal $55.7 million),and a long way from the up- our list is Roche's buyout of Genentech,but went through at $16 apiece,or $2.4 billion. front money paid out in 2000,which was just that deal was actually announced in 2008. Ipilimumab,a monoclonal antibody $12.4 million.Still,it also drives home the Although it closed in the spring of last year, designed to block the inhibitory signal of reality that a deal with a potential value of the acquisition is old news. cytotoxic T lymphocyte-associated anti- $1 billion is just that:potential But also high on the list is the purchase of gen-4(CTLA-4),had failed in a phase 3 trial 2009 also provided an interesting wrinkle Medarex by Bristol-Myers Squibb(BMS,New in 2007,and there was uncertainty around for equity investments around partnerships. York),an acquisition that gained a validation the new pivotal program for melanoma. Over the past 10 years,the average equity of sorts in 2010.The purchase gave BMS But BMS announced in June 2010 at the bought as part of a deal in each year was access to Medarex's antibody-drug conjugate American Society of Clinical Oncology's 2100 well below $10 million,with the exception technology and UltiMAb human antibody annual meeting in Chicago that ipilimumab of 2001,when it leaped to $32.3 million.Last development system,but the main draw was met the primary endpoint of survival in © year,it leaped again,to $20.6 million.In both ipilimumab.BMS was already partnered with advanced melanoma in a phase 3 double- 2001 and 2009,the public markets had come Medarex on ipilimumab in phase 3 for meta- blind randomized trial,and BMS said it down from peaks,and thus selling equity as static melanoma,in phase 2 for lung cancer expects to submit for regulatory approval part of partnering deals rose in favor. and in phase 3 for adjuvant melanoma and of ipilimumab this year.Should the drug win approval,the $2.4 billion price tag for Medarex will seem a steal. Number of IPOs Also ofinterest last year was Gilead's(Foster Average amt City,CA,USA)buyout of CV Therapeutics, 10 raised (SM) giving a company typically known for its 53 92 100 51 49 45 90 80 Average HIV franchise a presence in the cardio- vascular space.The move brought aboard Ranexa(ranolazine extended-release tablets), 70 60 amount approved for chronic angina,and Lexiscan (regadenoson)injection for use as a pharma- 30 14 50 1 cologic stress agent in radionuclide myocardial 2 22 40 30 raised perfusion imaging.Gilead remains a leader in HIV drugs-its highest-selling product was 20 (millions) Truvada at about $2.5 billion last year,and 90%of Gilead's product sales came from its 2002 20032004200520062007 2008 2009 antiviral franchise-but through this acquisi- Year tion it is seeking growth in other areas. Big sellers like Truvada are the beacons in the Figure 2 Global biotech initial public offerings.IPOs in 2009 seemingly made a recovery in amount biotech fog,promising a move into the black raised,if not number of offerings.But the data is skewed by one large offering. after years spent dumping money into R&D and 796 VOLUME 28 NUMBER 8 AUGUST 2010 NATURE BIOTECHNOLOGY

796 volume 28 number 8 august 2010 nature biotechnology hormone-refractory prostate cancer, so it had seen the product up close. Perhaps that’s the reason it offered a greater than 90% premium to the trading price of Medarex shares; the deal went through at $16 apiece, or $2.4 billion. Ipilimumab, a monoclonal antibody designed to block the inhibitory signal of cytotoxic T lymphocyte-associated anti￾gen-4 (CTLA-4), had failed in a phase 3 trial in 2007, and there was uncertainty around the new pivotal program for melanoma. But BMS announced in June 2010 at the American Society of Clinical Oncology’s annual meeting in Chicago that ipilimumab met the primary endpoint of survival in advanced melanoma in a phase 3 double￾blind randomized trial, and BMS said it expects to submit for regulatory approval of ipilimumab this year. Should the drug win approval, the $2.4 billion price tag for Medarex will seem a steal. Also of interest last year was Gilead’s (Foster City, CA, USA) buyout of CV Therapeutics, giving a company typically known for its HIV franchise a presence in the cardio￾vascular space. The move brought aboard Ranexa (ranolazine extended-release tablets), approved for chronic angina, and Lexiscan (regadenoson) injection for use as a pharma￾cologic stress agent in radionuclide myocardial perfusion imaging. Gilead remains a leader in HIV drugs—its highest-selling product was Truvada at about $2.5 billion last year, and 90% of Gilead’s product sales came from its antiviral franchise—but through this acquisi￾tion it is seeking growth in other areas. Big sellers like Truvada are the beacons in the biotech fog, promising a move into the black after years spent dumping money into R&D and Buyouts and climbing sales Mergers and acquisitions fell in 2009, both in total number and in the values assigned to the companies acquired (Table 7). Leading our list is Roche’s buyout of Genentech, but that deal was actually announced in 2008. Although it closed in the spring of last year, the acquisition is old news. But also high on the list is the purchase of Medarex by Bristol-Myers Squibb (BMS, New York), an acquisition that gained a validation of sorts in 2010. The purchase gave BMS access to Medarex’s antibody-drug conjugate technology and UltiMAb human antibody development system, but the main draw was ipilimumab. BMS was already partnered with Medarex on ipilimumab in phase 3 for meta￾static melanoma, in phase 2 for lung cancer and in phase 3 for adjuvant melanoma and Transactions database, we found the average total amount paid up front in 2009 was about $58.9 million. That’s the highest average over the past 10 years (only 2006 came close, at $55.7 million), and a long way from the up￾front money paid out in 2000, which was just $12.4 million. Still, it also drives home the reality that a deal with a potential value of $1 billion is just that: potential. 2009 also provided an interesting wrinkle for equity investments around partnerships. Over the past 10 years, the average equity bought as part of a deal in each year was well below $10 million, with the exception of 2001, when it leaped to $32.3 million. Last year, it leaped again, to $20.6 million. In both 2001 and 2009, the public markets had come down from peaks, and thus selling equity as part of partnering deals rose in favor. Table 3 Initial public offerings of 2009 Company name Location Date completed Amount raised ($ millions) Underwriters CanBas Shizuoka, Japan 9/17 14.8 Mitsubishi UFJ Securities International plc, Mizuho, Ichiyoshi, JPMorgan, Mizuho Investors, Takagi China Nuokang Bio-Pharmaceutical Beijing 12/9 40.7 Jefferies, Oppenheimer Cumberland Pharmaceuticals Nashville, TN, USA 8/10 85 UBS, Jefferies, Wells Fargo, Morgan Joseph and Co. D. Western Therapeutics Institute Aichi, Japan 10/13 9.7 Nomura, Mitsubishi UFJ Securities International plc, Takagi, SBI Securities Co. Ltd., Tokai Tokyo, Mizuho D-Pharm Rahovot, Israel 8/17 7.3 Clal Finance, Rosario, Meitav Human Stem Cell Institute Moscow 12/10 4.8 CJSC Alor Invest Movetis N.V. Turnhout, Belgium 12/3 146 Credit Suisse, KBC, Piper Jaffray Omeros Corp. Seattle 10/7 68.2 Deutsche Bank, Wedbush, Canaccord, Needham, Chicago Investment Group, National Securities Talecris Biotherapeutics Research Triangle Park, NC, USA 9/30 549.9 Morgan Stanley, Goldman Sachs, JPMorgan, Citigroup, Wells Fargo, Barclays Capital T-Ray Science Inc. Vancouver 12/9 1.4 Research Capital Corp. Source: BCIQ: BioCentury Online Intelligence 0 10 20 30 40 50 60 Number of IPOs 2002 2003 2004 2005 2006 2007 2008 2009 0 10 20 30 40 50 60 70 80 90 100 Average amt Average amount raised ($ millions) raised ($M) Number of IPOs Year 10 92.8 10 28 14 39 53 48 45 41 49 41 51 58 6 22 Figure 2 Global biotech initial public offerings. IPOs in 2009 seemingly made a recovery in amount raised, if not number of offerings.But the data is skewed by one large offering. feat u re © 2010 Nature America, Inc. All rights reserved

FEATURE Table 4 Comparison of US and EU financing in 2009 EU financing EU as a Amount Amount EU financing minus UCB percentage EU as a US as a raised in US Number of raised in EU Number of UCB and Elan minus UCB (of US+ of US+EU percentage percentage (millions) US deals (millions) EU deals (millions) (millions) EU total) total of EU total of US total Venture capital 3.939 197 1.114 87 1.114 22% 22% 18% 22% IPO 703 3 158 3 158 18% 18% 3% 4% Follow-on offering 5.166 48 785 > 785 13% 13% 12% 29% Other 7,756 236 4,253 108 3,200 1,053 12% 35% 67% 44% Total 17.564 484 6,310 205 3.200 3.110 15% 26% 100% 100% Source:BCIQ:BioCentury Online Intelligence the clinic.Achieving that level of revenue usu- 2009,although the company's adjusted net revenues of only $48.4 million the previous ally follows this path:drug approval,then a mar- income for the year was more than $5 bil- year.The company logged its first product keting push and physician acceptance,followed lion,compared with $4.9 billion in 2008,a sales-$180.2 million for delivering to the by subsequent approvals in other indications 3%increase. US Strategic National Stockpile raxibacumab to further increase sales.Most of the biologics Affymetrix (Santa Clara,CA,USA)also (human monoclonal antibody drug for treat- in our list of the top ten drugs(Table 8)went saw its revenue decrease in 2009,though the ment of inhalation anthrax)under a gov- that route.Enbrel (etanercept),from Amgen reason has more to do with accounting:the ernment contract.That helped HGS earn (Thousand Oaks,CA,USA),exemplifies this figures had been buoyed in 2008 by a one- a net income of $5.7 million for the year, tactic.Originally approved in 1998 for rheuma- time intellectual property payment of $90 compared with a net loss of $268.9 million toid arthritis,Amgen has received approvals in million.So while a comparison year-by-year in 2008.The company also reported posi- four other indications(ankylosing spondyli- shows the company lost 20%of revenue in tive results for Benlysta (belimumab)phase tis,psoriasis,psoriatic arthritis and juvenile 2009,in truth the business ground along 3 trials announced in July and November rheumatoid arthritis),and its worldwide rev- smoothly.It had product revenue of $279.2 2009.The good news drove up HGS's stock oul enue has jumped from $2.6 billion in 2005 to million and service revenue of $39.6 million price considerably,and as we noted earlier,it an estimated $6.4 billion in 2009,according to last year,both up from the previous year raised public funds twice during the year. BioMedTracker.The drug,which inhibits the (2008 product revenue was $270.4 million tumor necrosis factor (TNF)pathway,is the and service revenue was $32.1 million.) End of the line top-selling biologic in the world. Like Amgen and Affymetrix,other estab- Whereas 2008 saw 34 companies depart from In fact,three of the top five revenue-pro- lished firms fared well.Gilead experienced the the public biotech landscape-11 because of ducing drugs target TNF:Remicade(inflix- largest increase in revenues,posting product delisting or bankruptcy-those numbers imab,JohnsonJohnson,New Brunswick, sales that increased 27%over 2008 to nearly increased in 2009.The total number of 2100 NJ,USA)and Humira(adalimumab,Abbott, $6.5 billion,driven mostly by its HIV franchise companies departing for any reason (buy- Abbott Park,IL,USA),are the other two, of Truvada(emtricitabine and tenofovir diso- out or merger included)climbed to 44,and selling $5.9 billion and $5.5 billion world- proxil fumarate)and Atripla (efavirenz 600 the number removed owing to financial dif- wide,respectively.Those numbers,like the mg,emtricitabine 200 mg,tenofovir disoproxil ficulty also went up,reaching 20.But a 9.5% revenues for all the drugs in this table,are an fumarate 300 mg).Truvada sales increased drop in the number of companies is fewer improvement over the previous year. 18%to about $2.5 billion,and Atripla brought casualties than was feared.Of those that tee- Given the lack of generic competition for in $2.4 billion,up 51%over 2008. tered but survived,some were helped par- biologics,it's almost an anomaly when a HGS also reported impressive revenues tially by the markets opening back up in the drug does not increase sales year on year;it of $275.7 million for 2009,compared with spring:by the ability to conduct debt deals, suggests something must have gone wrong. That's been the case with Amgen's Aranesp. Peaking at S4.1 billion in worldwide sales in Table 5 Top ten debt financings of 2009 2006,the drug has lost ground yearly since Amount raised then,and in 2009 declined 15%to about Company name Financing type Date completed (millions) $2.7 billion,falling off our list of the top ten Amgen Sr notes (other) 1/14 2.000 biotech drugs.Amgen attributes the decline UCB Group Bond (other) 10/27 1,128 to the negative impact,mostly in support- UCB Group Bond (other) 12/3 751.9 ive cancer care,of a"product label change' UCB Group Sr convert notes (other) 9/30 730.3 that came in August 2008.In fact,Aranesp Elan Sr notes (other) 9/29 625 serves as an example of the downside of Cephalon Sr subord convert notes (other) 5/22 500 product growth:the drug was being used off- Gilead Sciences Debt(other) 4/20 400 label in various indications until reports of Incyte Convert notes (other) 9/25 400 adverse effects caused the US Food and Drug Bio-Rad Laboratories Sr notes (other) 5/19 300 Administration(FDA)to tighten its label. PDL BioPharma Sr notes(other） 10/28 300 The decline of Aranesp revenue meant Source:BCIQ:BioCentury Online Intelligence Amgen reported lower overall revenues for NATURE BIOTECHNOLOGY VOLUME 28 NUMBER 8 AUGUST 2010 797

nature biotechnology volume 28 number 8 august 2010 797 revenues of only $48.4 million the previous year. The company logged its first product sales—$180.2 million for delivering to the US Strategic National Stockpile raxibacumab (human monoclonal antibody drug for treat￾ment of inhalation anthrax) under a gov￾ernment contract. That helped HGS earn a net income of $5.7 million for the year, compared with a net loss of $268.9 million in 2008. The company also reported posi￾tive results for Benlysta (belimumab) phase 3 trials announced in July and November 2009. The good news drove up HGS’s stock price considerably, and as we noted earlier, it raised public funds twice during the year. End of the line Whereas 2008 saw 34 companies depart from the public biotech landscape—11 because of delisting or bankruptcy—those numbers increased in 2009. The total number of companies departing for any reason (buy￾out or merger included) climbed to 44, and the number removed owing to financial dif￾ficulty also went up, reaching 20. But a 9.5% drop in the number of companies is fewer casualties than was feared. Of those that tee￾tered but survived, some were helped par￾tially by the markets opening back up in the spring; by the ability to conduct debt deals, 2009, although the company’s adjusted net income for the year was more than $5 bil￾lion, compared with $4.9 billion in 2008, a 3% increase. Affymetrix (Santa Clara, CA, USA) also saw its revenue decrease in 2009, though the reason has more to do with accounting: the figures had been buoyed in 2008 by a one￾time intellectual property payment of $90 million. So while a comparison year-by-year shows the company lost 20% of revenue in 2009, in truth the business ground along smoothly. It had product revenue of $279.2 million and service revenue of $39.6 million last year, both up from the previous year (2008 product revenue was $270.4 million and service revenue was $32.1 million.) Like Amgen and Affymetrix, other estab￾lished firms fared well. Gilead experienced the largest increase in revenues, posting product sales that increased 27% over 2008 to nearly $6.5 billion, driven mostly by its HIV franchise of Truvada (emtricitabine and tenofovir diso￾proxil fumarate) and Atripla (efavirenz 600 mg, emtricitabine 200 mg, tenofovir disoproxil fumarate 300 mg). Truvada sales increased 18% to about $2.5 billion, and Atripla brought in $2.4 billion, up 51% over 2008. HGS also reported impressive revenues of $275.7 million for 2009, compared with the clinic. Achieving that level of revenue usu￾ally follows this path: drug approval, then a mar￾keting push and physician acceptance, followed by subsequent approvals in other indications to further increase sales. Most of the biologics in our list of the top ten drugs (Table 8) went that route. Enbrel (etanercept), from Amgen (Thousand Oaks, CA, USA), exemplifies this tactic. Originally approved in 1998 for rheuma￾toid arthritis, Amgen has received approvals in four other indications (ankylosing spondyli￾tis, psoriasis, psoriatic arthritis and juvenile rheumatoid arthritis), and its worldwide rev￾enue has jumped from $2.6 billion in 2005 to an estimated $6.4 billion in 2009, according to BioMedTracker. The drug, which inhibits the tumor necrosis factor (TNF) pathway, is the top-selling biologic in the world. In fact, three of the top five revenue-pro￾ducing drugs target TNF: Remicade (inflix￾imab, Johnson & Johnson, New Brunswick, NJ, USA) and Humira (adalimumab, Abbott, Abbott Park, IL, USA), are the other two, selling $5.9 billion and $5.5 billion world￾wide, respectively. Those numbers, like the revenues for all the drugs in this table, are an improvement over the previous year. Given the lack of generic competition for biologics, it’s almost an anomaly when a drug does not increase sales year on year; it suggests something must have gone wrong. That’s been the case with Amgen’s Aranesp. Peaking at $4.1 billion in worldwide sales in 2006, the drug has lost ground yearly since then, and in 2009 declined 15% to about $2.7 billion, falling off our list of the top ten biotech drugs. Amgen attributes the decline to the negative impact, mostly in support￾ive cancer care, of a “product label change” that came in August 2008. In fact, Aranesp serves as an example of the downside of product growth: the drug was being used off￾label in various indications until reports of adverse effects caused the US Food and Drug Administration (FDA) to tighten its label. The decline of Aranesp revenue meant Amgen reported lower overall revenues for Table 5 Top ten debt financings of 2009 Company name Financing type Date completed Amount raised ($ millions) Amgen Sr notes (other) 1/14 2,000 UCB Group Bond (other) 10/27 1,128 UCB Group Bond (other) 12/3 751.9 UCB Group Sr convert notes (other) 9/30 730.3 Elan Sr notes (other) 9/29 625 Cephalon Sr subord convert notes (other) 5/22 500 Gilead Sciences Debt (other) 4/20 400 Incyte Convert notes (other) 9/25 400 Bio-Rad Laboratories Sr notes (other) 5/19 300 PDL BioPharma Sr notes (other) 10/28 300 Source: BCIQ: BioCentury Online Intelligence Table 4 Comparison of US and EU financing in 2009 Amount raised in US ($ millions) Number of US deals Amount raised in EU ($ millions) Number of EU deals UCB and Elan ($ millions) EU financing minus UCB ($ millions) EU financing minus UCB (% of US + EU total) EU as a percentage of US + EU total EU as a percentage of EU total US as a percentage of US total Venture capital 3,939 197 1,114 87 – 1,114 22% 22% 18% 22% IPO 703 3 158 3 – 158 18% 18% 3% 4% Follow-on offering 5,166 48 785 7 – 785 13% 13% 12% 29% Other 7,756 236 4,253 108 3,200 1,053 12% 35% 67% 44% Total 17,564 484 6,310 205 3,200 3,110 15% 26% 100% 100% Source: BCIQ: BioCentury Online Intelligence feat u re © 2010 Nature America, Inc. All rights reserved

FEATURE Table 6 Top ten research partnership and licensing deals of 2009 Date Deal value Researcher Investor announced (millions) Details Nektar AstraZeneca 9/21 1.505 Worldwide rights to NKTR-118 for opioid-induced constipation and NKTR-119 for pain Incyte Novartis 11/25 1,310 Ex-US rights to oral INCB18424,which is in phase 3 for myelofibrosis,and world- wide rights to preclinical cancer compound INCB28060 Targacept AstraZeneca 123 1.240 Worldwide rights to develop and commercialize major depressive disorder com- pound TC-5214 Exelixis Sanofi-aventis 5/29 >1.161 Exclusive,worldwide rights to XL147 and XL765,oral phosphoinositide 3-kinase inhibitors in phase 1b/2 and phase 2 to treat cancer ZymoGenetics Bristol-Myers Squibb 1/12 1,105 Codevelop and commercialize phase 1 HCV compound PEG-Interferon lambda (IL-29) Amylin Takeda 11/1 1.075 Codevelop and commercialize therapeutics for obesity and related indications Santaris Pharma Wyeth 1/12 847 Worldwide rights to ALD518 for all indications except cancer Algeta Bayer 9/3 800 Codevelop Alpharadin for bone metastases Medivation Astellas Pharma 10/27 765 Codevelop MDV3100 for the treatment of prostate cancer Cytokinetics Amgen 5/26 650 Exclusive world-wide (except Japan)license for cardiac contractility program Acorda Bayer 71 510 Exclusive collaboration and license agreement to develop Fampridine-SR for multiple sclerosis Data are matched to the definition of biotech in Box 1.Source:BCIQ:BioCentury Online Intelligence which returned to a more normal level after as part of the purchase price.It's a small fac- companies surveyed had an average of 489 suffering through the battered credit markets tor,and biotech-biotech mergers are less com- employees per company.In 2009,although in 2008;and by partners supplying up-front mon and of lesser value than those between our pool of biotech firms surveyed grew to money and other funding. biotech and pharma,but still noteworthy. 461 and with it the total number of employees Also,considering that Genentech (and The second is that some companies sim- increased,the average number of employees its $3.4 billion of net income in 2008)is no ply had good years,and their revenue growth per company actually dropped to 442. longer in our survey (now part of Roche),it helped make up for the loss of Genentech. Second,the biotech sector collectively seemed unlikely the sector would be able to We've seen this with companies such as reduced its R&D spending.In 2008,even as repeat its performance from 2008,when it Gilead,which pushed its revenue up 31%and it faced financial turmoil,biotech increased posted a net profit of $3.8 billion.But it did, net income up 33%from 2008,and Biogen its spending on R&D,as it had for years,from drawing a collective net income in 2009 of Idec (Weston,MA,USA),which posted a $22.8 billion in 2007 to $25.5 billion.This $8 billion-with the heavy lifting,unsurpris- net income of $970 million,up 24%over the pattern came to a halt last year,when the 2100 ingly,done by the large-cap firms(Fig.3). previous year. sector's overall R&D spending fell to $22.3 Three main drivers contributed to the But the major reason for the collective billion,with the greatest decrease seen in the unexpected profitability in 2009.The first profit is the same one that kept the number microcaps,which went from $5.4 billion in is an accounting change by the US Federal of bankruptcies lower than feared:a cut- 2008 to $4.0 billion (a fall of nearly 30%)in Accounting Standards Board,issued in late back on expenses.When the money isn't 2009.(Large caps reduced their R&D spend- 2007 but applicable in fiscal year 2009.Called there,spending has to decrease,and biotech ing by just under 10%.)This considerable SFAS 141R,the new guidance allows the costs tightened its belt in 2009.Companies spent drop helped keep biotech profitable,but it is associated with mergers and acquisitions to less in two notable ways.First,they carried likely that it penalized the sector's ability to be expensed over time,rather than all at once smaller payrolls than previously.In 2008,the carry out innovative science. The horizon Table 7 Top ten announced mergers and acquisitions of 2009 Compared with other business sectors,bio- Month Deal value Target Acquirer completed (millions) tech will continue to face the challenges of Genentech Roche March 46,800 long timelines for product development. Medarex Bristol-Myers Squibb The heavy costs of R&D have shaped this September 2.400 CV Therapeutics 1,400 industry since its inception,and that's not Gilead Sciences April about to change.But precisely because bio- ESBATech Alcon September 589 tech remains centered on the provision of BiPar Sciences Sanofi-aventis April 500 medical products,it has had the advantage of Noven Hisamitsu Pharmaceuticals August 428 being considered 'recession proof'-people ViroChem Vertex March 413 need drugs no matter how the economy is Peplin Leo Pharma November 288 performing.The bottom lines of biotech's Dow Pharmaceutical Sciences Valeant Pharmaceuticals January 285 big producers-Amgen,Gilead,Biogen-in Arana Therapeutics Cephalon August 276 2008 and 2009 reflect this. Data are matched to the definition of biotech in Box 1.Source:BCIQ:BioCentury Online Intelligence Yet the sector's ability to fund itself ebbs and flows with the global economy,and this 798 VOLUME 28 NUMBER 8 AUGUST 2010 NATURE BIOTECHNOLOGY

798 volume 28 number 8 august 2010 nature biotechnology companies surveyed had an average of 489 employees per company. In 2009, although our pool of biotech firms surveyed grew to 461 and with it the total number of employees increased, the average number of employees per company actually dropped to 442. Second, the biotech sector collectively reduced its R&D spending. In 2008, even as it faced financial turmoil, biotech increased its spending on R&D, as it had for years, from $22.8 billion in 2007 to $25.5 billion. This pattern came to a halt last year, when the sector’s overall R&D spending fell to $22.3 billion, with the greatest decrease seen in the microcaps, which went from $5.4 billion in 2008 to $4.0 billion (a fall of nearly 30%) in 2009. (Large caps reduced their R&D spend￾ing by just under 10%.) This considerable drop helped keep biotech profitable, but it is likely that it penalized the sector’s ability to carry out innovative science. The horizon Compared with other business sectors, bio￾tech will continue to face the challenges of long timelines for product development. The heavy costs of R&D have shaped this industry since its inception, and that’s not about to change. But precisely because bio￾tech remains centered on the provision of medical products, it has had the advantage of being considered ‘recession proof ’—people need drugs no matter how the economy is performing. The bottom lines of biotech’s big producers—Amgen, Gilead, Biogen—in 2008 and 2009 reflect this. Yet the sector’s ability to fund itself ebbs and flows with the global economy, and this as part of the purchase price. It’s a small fac￾tor, and biotech-biotech mergers are less com￾mon and of lesser value than those between biotech and pharma, but still noteworthy. The second is that some companies sim￾ply had good years, and their revenue growth helped make up for the loss of Genentech. We’ve seen this with companies such as Gilead, which pushed its revenue up 31% and net income up 33% from 2008, and Biogen Idec (Weston, MA, USA), which posted a net income of $970 million, up 24% over the previous year. But the major reason for the collective profit is the same one that kept the number of bankruptcies lower than feared: a cut￾back on expenses. When the money isn’t there, spending has to decrease, and biotech tightened its belt in 2009. Companies spent less in two notable ways. First, they carried smaller payrolls than previously. In 2008, the which returned to a more normal level after suffering through the battered credit markets in 2008; and by partners supplying up-front money and other funding. Also, considering that Genentech (and its $3.4 billion of net income in 2008) is no longer in our survey (now part of Roche), it seemed unlikely the sector would be able to repeat its performance from 2008, when it posted a net profit of $3.8 billion. But it did, drawing a collective net income in 2009 of $8 billion—with the heavy lifting, unsurpris￾ingly, done by the large-cap firms (Fig. 3). Three main drivers contributed to the unexpected profitability in 2009. The first is an accounting change by the US Federal Accounting Standards Board, issued in late 2007 but applicable in fiscal year 2009. Called SFAS 141R, the new guidance allows the costs associated with mergers and acquisitions to be expensed over time, rather than all at once Table 7 Top ten announced mergers and acquisitions of 2009 Target Acquirer Month completed Deal value ($ millions) Genentech Roche March 46,800 Medarex Bristol-Myers Squibb September 2,400 CV Therapeutics Gilead Sciences April 1,400 ESBATech Alcon September 589 BiPar Sciences Sanofi-aventis April 500 Noven Hisamitsu Pharmaceuticals August 428 ViroChem Vertex March 413 Peplin Leo Pharma November 288 Dow Pharmaceutical Sciences Valeant Pharmaceuticals January 285 Arana Therapeutics Cephalon August 276 Data are matched to the definition of biotech in Box 1. Source: BCIQ: BioCentury Online Intelligence Table 6 Top ten research partnership and licensing deals of 2009 Researcher Investor Date announced Deal value ($ millions) Details Nektar AstraZeneca 9/21 1,505 Worldwide rights to NKTR-118 for opioid-induced constipation and NKTR-119 for pain Incyte Novartis 11/25 1,310 Ex-US rights to oral INCB18424, which is in phase 3 for myelofibrosis, and world￾wide rights to preclinical cancer compound INCB28060 Targacept AstraZeneca 12/3 1,240 Worldwide rights to develop and commercialize major depressive disorder com￾pound TC-5214 Exelixis Sanofi-aventis 5/29 >1,161 Exclusive, worldwide rights to XL147 and XL765, oral phosphoinositide 3-kinase inhibitors in phase 1b/2 and phase 2 to treat cancer ZymoGenetics Bristol-Myers Squibb 1/12 1,105 Codevelop and commercialize phase 1 HCV compound PEG-Interferon lambda (IL-29) Amylin Takeda 11/1 1,075 Codevelop and commercialize therapeutics for obesity and related indications Santaris Pharma Wyeth 1/12 847 Worldwide rights to ALD518 for all indications except cancer Algeta Bayer 9/3 800 Codevelop Alpharadin for bone metastases Medivation Astellas Pharma 10/27 765 Codevelop MDV3100 for the treatment of prostate cancer Cytokinetics Amgen 5/26 650 Exclusive world-wide (except Japan) license for cardiac contractility program Acorda Bayer 7/1 510 Exclusive collaboration and license agreement to develop Fampridine-SR for multiple sclerosis Data are matched to the definition of biotech in Box 1. Source: BCIQ: BioCentury Online Intelligence feat u re © 2010 Nature America, Inc. All rights reserved

FEATURE Table 8 Top ten biologic drugs in terms of sales in 2009 2009 revenue Name Lead company Approved indication(s) (million) Enbrel Amgen Rheumatoid arthritis(RA),ankylosing spondylitis,psoriasis,psoriatic arthritis(PA),juvenile -6,400 rheumatoid arthritis Remicade JohnsonJohnson Psoriasis,ulcerative colitis (UC),ankylosing spondylitis,Crohn's disease,PA,RA 5,892 Avastin Roche Colorectal cancer,breast cancer,brain cancer,renal cell cancer,non-small cell lung cancer 5,747 Rituxan Biogen IDEC Non-Hodgkin's lymphoma,RA,chronic lymphocytic leukemia 5,617 Humira Abbott Laboratories RA,ankylosing spondylitis,juvenile rheumatoid arthritis,Crohn's disease,PA,psoriasis 5,488 Herceptin Roche Breast cancer 4,833 Lantus Sanofi-aventis Diabetes mellitus type ll,diabetes mellitus type I 4,295 Gleevec Novartis Chronic myelogenous leukemia,hypereosinophilic syndrome,dermatofibrosarcoma protuber- 3.944 ans,myeloproliferative disorders,gastrointestinal stromal tumor,acute lymphocytic leukemia, myelodysplastic syndrome,mastocytosis Neulasta Amgen Neutropenia,leucopenia 3,355 Prevnar Pfizer Prevention of otitis media.Streptococcus pneumoniae pneumonia -3,100 Source:BioMedTracker is especially true for the smaller-cap firms. (sipuleucel-T)for prostate cancer,both of pharmaceutical industry.In short,it has often These companies require investors,they which are expected to be huge sellers. seemed like biotech was built to deal with require the support of the public markets, Biotech,with its small firms and entrepre- adversity.After surviving the past two years, and they require lending,and when the neurial spirit,has long thought of itself as the it now knows it can. world's money locks up the way it did over underdog,made up of fast,nimble companies 2008 and the beginning of 2009,they suffer. built to innovate,overachieve,withstand hard- ACKNOWLEDGMENTS At times like these,some will break,and R&D ship and adapt.This attitude has always been The authors would like to acknowledge the insight of G. expertise and know-how will be dispersed- part of the industry's culture,and these days Giovannetti and G.Jaggi in crafting this article. or worse,will be gone for good. it's also a carefully cultivated personality used Note:Supplementary information is available on the But what biotech showed us in 2008 and to distance biotech from the more troubled Nature Biotechnology website. 2009 is its ability to hibernate until money flows again.The industry has long had to make do with less-a valuable trait when the tap runs dry.It forces the sector's executives to a look constantly for new ways to trim expenses 58.7 2100 and to partner.This can be seen through col- Micro cap laborations by Symphony Capital(New York), Small cap which invests in clinical programs rather than Mid-cap a company itself,or the low-infrastructure Large cap 20 model espoused by groups such as Talaris 10 Advisors (Hopkinton,MA,USA),or the use of 3.74.0 1.6 0 24- contract research organizations to outsource 0 Rand D Net profit/loss portions of drug development. The economic upswing seen in the second half of 2009 has continued.Overall funding in the first six months of 2010 is on pace to easily surpass 2009 for both private and Number of companies public biotechs.The FDA approved 16 bio- b Number of employees logics last year,an increase over both 2008 97.207 350 334 100.000 (11 biologic approvals)and 2007(9biologic approvals).The Nasdaq biotech index has 300 250 80.000 Number held ground for the first six months of 2010. 63.876 200 J.Craig Venter and colleagues caught the 6 60.000 150 world's attention by creating a bacterium with 100 82 emp 40.000 an artificial genome.Biotech made its way 50 32 13 24:394 225 to the Supreme Court,winning a decision 0 Mid-cap J20.000 Large cap cap favorable to Monsanto(St.Louis,MO,USA) Micro cap and others developing genetically modified seeds.And so far this year,there have been Figure 3 Public biotech company revenue,R&D spending,profits and number of employees by approvals of Amgen's Prolia(denosumab)for market cap.Large cap,2$5 billion;mid-cap,$1 billion to <$5 billion;small cap,$250 million to post-menopausal osteoporosis and Provenge <$1 billion;microcap,<$250 million NATURE BIOTECHNOLOGY VOLUME 28 NUMBER 8 AUGUST 2010 799

nature biotechnology volume 28 number 8 august 2010 799 pharmaceutical industry. In short, it has often seemed like biotech was built to deal with adversity. After surviving the past two years, it now knows it can. ACKNOWLEDGMENTS The authors would like to acknowledge the insight of G. Giovannetti and G. Jaggi in crafting this article. Note: Supplementary information is available on the Nature Biotechnology website. (sipuleucel-T) for prostate cancer, both of which are expected to be huge sellers. Biotech, with its small firms and entrepre￾neurial spirit, has long thought of itself as the underdog, made up of fast, nimble companies built to innovate, overachieve, withstand hard￾ship and adapt. This attitude has always been part of the industry’s culture, and these days it’s also a carefully cultivated personality used to distance biotech from the more troubled is especially true for the smaller-cap firms. These companies require investors, they require the support of the public markets, and they require lending, and when the world’s money locks up the way it did over 2008 and the beginning of 2009, they suffer. At times like these, some will break, and R&D expertise and know-how will be dispersed— or worse, will be gone for good. But what biotech showed us in 2008 and 2009 is its ability to hibernate until money flows again. The industry has long had to make do with less—a valuable trait when the tap runs dry. It forces the sector’s executives to look constantly for new ways to trim expenses and to partner. This can be seen through col￾laborations by Symphony Capital (New York), which invests in clinical programs rather than a company itself, or the low-infrastructure model espoused by groups such as Talaris Advisors (Hopkinton, MA, USA), or the use of contract research organizations to outsource portions of drug development. The economic upswing seen in the second half of 2009 has continued. Overall funding in the first six months of 2010 is on pace to easily surpass 2009 for both private and public biotechs. The FDA approved 16 bio￾logics last year, an increase over both 2008 (11 biologic approvals) and 2007 (9 biologic approvals). The Nasdaq biotech index has held ground for the first six months of 2010. J. Craig Venter and colleagues caught the world’s attention by creating a bacterium with an artificial genome. Biotech made its way to the Supreme Court, winning a decision favorable to Monsanto (St. Louis, MO, USA) and others developing genetically modified seeds. And so far this year, there have been approvals of Amgen’s Prolia (denosumab) for post-menopausal osteoporosis and Provenge Table 8 Top ten biologic drugs in terms of sales in 2009 Name Lead company Approved indication(s) 2009 revenue ($ million) Enbrel Amgen Rheumatoid arthritis (RA), ankylosing spondylitis, psoriasis, psoriatic arthritis (PA), juvenile rheumatoid arthritis ~6,400 Remicade Johnson & Johnson Psoriasis, ulcerative colitis (UC), ankylosing spondylitis, Crohn’s disease, PA, RA 5,892 Avastin Roche Colorectal cancer, breast cancer, brain cancer, renal cell cancer, non–small cell lung cancer 5,747 Rituxan Biogen IDEC Non-Hodgkin’s lymphoma, RA, chronic lymphocytic leukemia 5,617 Humira Abbott Laboratories RA, ankylosing spondylitis, juvenile rheumatoid arthritis, Crohn’s disease, PA, psoriasis 5,488 Herceptin Roche Breast cancer 4,833 Lantus Sanofi-aventis Diabetes mellitus type II, diabetes mellitus type I 4,295 Gleevec Novartis Chronic myelogenous leukemia, hypereosinophilic syndrome, dermatofibrosarcoma protuber￾ans, myeloproliferative disorders, gastrointestinal stromal tumor, acute lymphocytic leukemia, myelodysplastic syndrome, mastocytosis 3,944 Neulasta Amgen Neutropenia, leucopenia 3,355 Prevnar Pfizer Prevention of otitis media, Streptococcus pneumoniae pneumonia ~3,100 Source: BioMedTracker –10 0 10 20 30 40 50 60 Micro cap Small cap Mid-cap Large cap Revenue R and D Net profit/loss 0 50 100 150 200 250 300 350 Number of companies Large cap Mid-cap Small cap Micro cap 20,000 40,000 60,000 80,000 100,000 Number of employees Number of employees Number of companies Amount ($ billions) a b 58.7 21.0 7.1 4.8 10.3 4.3 3.7 4.0 12.9 1.6 –2.4 –4.0 97,207 63,876 24,394 22,954 13 32 82 334 Figure 3 Public biotech company revenue, R&D spending, profits and number of employees by market cap. Large cap, ≥$5 billion; mid-cap, $1 billion to <$5 billion; small cap, $250 million to <$1 billion; microcap, <$250 million. feat u re © 2010 Nature America, Inc. All rights reserved