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 793nature 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