The biotechnology industry experienced a remarkable turnaround in 1999, one that was unexpected for even the closest watchers of the sector. The industry started the year mired in a long slump marked by dwindling cash and depressed stock prices for all but the top-tier companies. It ended with a broad stock rally and the beginning of an open window for financing that continued even stronger into 2000.
The closing months of 1999 and the first few in 2000 marked the hottest time for biotechnology, which has gone through its share of down periods over the past decade.
The turnaround may have started when Roche Holdings Ltd., which in June completed its purchase of Genentech Inc., sold back some of the company to the public six weeks later in a $2 billion initial public offering. The high profile of Genentech and the success of the offering, as well as the subsequent run-up in the price, turned heads, including many that had been wowed by profits in Internet stocks.
Those investors and others then turned to biotechnology in general, and genomics companies in particular, creating a momentum never before seen in the industry. Many of the genomics companies ended the year with stock gains of 200 percent to 400 percent and more, with most of that gain coming in the last quarter. Similarly, companies developing antibody-based products saw their stocks take off late in the year as that therapeutic approach regained favor.
The rest of the biotech industry then went along for the ride, even though product approvals and widespread success in the clinic had not picked up significantly over years past. Public and private biotechnology companies through the first three quarters of 1999 had raised about $867 million; through the first quarter of 2000, the money raised was about nine times that amount, or $7.7 billion.
Even if the momentum slows a number of biotechnology companies have secured the financing needed to give their drugs a fair chance in clinical trials, acquire complementary and supplementary technologies ¿ and have the cash and market capitalization to get those drugs through the clinic without giving up too much in partnerships.