Maybe it’s the cold weather and the gloom of February, but cupid did not bestow any Valentine’s day gifts on the biotech industry for the month of February.

“Although the biotech industry managed to hold its own during much of the month with the Burrill Select Index up slightly into the final weekend of February, the news that Biogen Idec (BIIB) and partner, Elan PLC (ELN) were pulling from the market their new drug for multiple sclerosis, Tysabri, not only gutted the value of both companies immediately, but also dampened the performance of other publicly traded biopharmaceutical firms,” noted G. Steven Burrill, CEO of Burrill & Company, a San Francisco based life sciences merchant bank. The Burrill Biotech Select Index ended February down 2%, compared to the NASDAQ, down less than 1% and the DJIA, up nearly 3% for the month.

“The news about Tysabri couldn’t have come at a worse time, following as it did in the footsteps of tremendous controversy surrounding the use of COX-2 inhibitors,” said Burrill. “Less than two weeks after the FDA expert advisory panel voted in favor of allowing the arthritis painkiller Vioxx and other COX- 2 inhibitors to remain available on the market under strict conditions, Biogen Idec and Elan make the announcement that physicians should suspend dosing of Tysabri until further notice … investors were taken completely off guard,” he explained.

The bad news for Tysabri sent shares of the makers of competitive drugs higher-Serono (SRA), maker of MS drug Rebif, saw its shares rise nearly 20% on the news and shares of Teva Pharmaceuticals (TEVA) which manufactures another popular MS drug, Copaxone, rose 9%.

In addition for February, there were no new FDA approvals of note.

The IPO window remained slightly open in February with three biotech firms joining the publicly traded market. On February 2, Favrille, Inc (FVRL), a biopharmaceutical company focused on cancer and diseases of the immune system, made its debut. While the company had hoped initially to raise $86 million at a range of $12-$14 a share, market conditions forced a different bargain. Despite having a lead drug for the treatment of indolcent B-cell, non- Hodgkin’s lymphoma in Phase III clinical trials, the company was able to raise only $42 million issuing 6 million shares at $7 a piece. The company’s value dipped 3% on opening day and ended the month down less than 1%.

Another biotech firm, Icagen (ICGN), went public on February 3, raising $40 million at $8 a share. Like Favrille, Icagen had hoped to raise $86 million at a range of $10-$12 a share. Abbott Laboratories (ABT) has a 7.7% stake in the company which has four drugs in clinical trials for the treatment of sickle cell anemia, epilepsy and dementia. Icagen also has co-marketing and collaborative deals going with Johnson and Johnson’s (JNJ) McNeil-PPC division. On February 22, the company announced the initiation of enrollment in its pivotal Phase II trial of ICA-17043 for sickle cell disease. But investors were not impressed and shares of ICGN ended the month down 10%.

Finally, Threshold Pharmaceuticals (THLD), priced its IPO at $7 per share on February 4, down significantly form the $14-$16 per share price range originally sought. The company raised $37 million, instead of the $86 million hoped for. Although shares rose 2% in value on day one, they ended the month flat. Threshold makes small moledule drugs that target abnormal glucose metabolism-a fundamental property of most solid tumors and other diseases. The company’s initial focus is on the treatment of cancer and benign prostatic hyperplasia.

There big news out of Washington this month was President Bush’s nomination on February 14 of Dr. Lester M. Crawford, the FDA’s acting commissioner, to head up the agency permanently. Crawford has been serving as acting commissioner or deputy commissioner for nearly three years during the Bush administration.

On a not so bright note, on February 21, the CDC announced that the avian flu poses the single biggest threat to the world right now and that all countries are terribly under-prepared for a possible pandemic. The H5N1 avian flu, can jump from birds to people and kills an estimated 72% of all diagnosed victims, according to CDC Director, Dr. Julie Gerberding. From some of the news reports I’ve heard on NPR, this is now being taken quite seriously in Eastern Asia with several confirmed cases. To hear the interviews of the survivors and those witnessing the people sick the flu is very chilling.

Although the U.S. government has contracted with Chiron and Sanofi-Aventis to make a vaccine which will begin testing in people later this year, capacity may be a serious issue if a pandemic is looming. (Does it bother you, like it bothers me, that Chiron is a partner in this??)

Although the SEC opened a formal investigation into possible violations of securities laws by Chiron (CHIR), shares of the company were buoyed by testimony of a senior FDA official before a congressional committee attesting to Chiron’s progress in fixing the problems at its British vaccine plant that cost the U.S. half its vaccine supplies this past winter. Shares rose 8% in February.

The Burrill Select Index dropped 2% in February and is down 7% since the beginning of the year. The Burrill Mid-Cap Index dropped 8% in February and is 15% below its value at the beginning

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