MARKET COMPASS · Only a slight dip for discovery companies, but tools providers took a hit in Q3.
By David Hoffer and Lakshmi Nambiar
November 19, 2004 | Overall, companies in the Mirus Index declined in the third quarter of 2004. Whereas the previous quarter saw discovery companies decline 9 percent while tools companies gained 1 percent, the roles reversed in Q3. Tools companies declined sharply by 12 percent, whereas discovery companies dipped a mere 0.4 percent.
In the discovery sector, deCODE genetics saw the largest drop, with market capitalization falling by $155 million, resulting from concerns over financial reporting and the resignation of deCODE's independent accountants. A lawsuit was also filed against deCODE and some executives and directors in connection with allegations of artificially inflating the stock price through the issuance of false and misleading statements.
Other tumblers in the index were Genome Therapeutics and Human Genome Sciences; their market capitalizations declined by $122 million and $114 million, respectively. Incyte Genomics saw the strongest growth in the index, adding $195 million to its market capitalization (a 37-percent boost in share price). Analysts seem optimistic about Incyte's prospects for long-term growth as a result of its emerging clinical pipeline, strong management team, and cash balance of more than $400 million.
The Mirus Index Index is calculated as the sum of the market caps of all included companies ($ billions) and is consequently a value-weighted index.
Mirus Capital Advisors does not assume any liability for errors or omissions.
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M&A activity in the discovery sector during this period included DNAPrint Genomics' acquisition of a majority stake in German pharmaceutical company Biofrontera AG, and Exelixis' acquisition of X-Ceptor Therapeutics, a leader in the discovery and development of small molecules that modulate nuclear hormone receptors.
The 12-percent decline in the tools index is largely attributable to Applied Biosystems Group and Invitrogen. Invitrogen's market capitalization dropped by $837 million, and its share price fell 23 percent, due to a lowered forecast for 2004. Applied Biosystems saw a $620-million decline in its market capitalization, with a 12-percent loss in share price. The resignation of CEO Michael Hunkapiller and the announcement of a new organization structure, which resulted from the strategic review of the group's entire product portfolio, surprised and disappointed some investors.
M&A activity during this period included the merger of Epoch Biosciences and Nanogen, a developer of advanced in vitro diagnostic products; Qiagen's acquisition of key assets of Molecular Staging, a privately held company that has developed a range of proprietary products and services based on its multiple displacement amplification technology; and Varian's acquisition of certain molecular spectroscopy assets of Digilab.
Mirus Genomic Index
The Mirus Genomic Index, prepared exclusively for Bio·IT World, is calculated as the sum of the market capitalizations of all included companies and is a value-weighted index. It serves as an indicator of the financial health of the industry. The index was developed at Mirus Capital Advisors (www.merger.com), an investment banking firm, by David Hoffer and colleagues at the firm’s Boston headquarters.
| Company Names |
Market Cap1) |
Revenues TTM2) |
Net Income TTM2) |
| Celera Genomics (CRA) |
854.0 |
60.1 |
(51.8) |
| CuraGen Corporation (CRGN) |
275.0 |
6.2 |
(53.0) |
| DeCODE genetics, Inc. (DCGN) |
411.0 |
44.4 |
(23.9) |
| DNAPrint Genomics (DNAP.OB) |
14.0 |
0.9 |
(5.4) |
| Exelixis, Inc. (EXEL) |
582.0 |
50.7 |
(106.4) |
| Oscient Pharmaceuticals Corp. (OSCI)3 |
266.0 |
7.1 |
(43.9) |
| Human Genome Sciences (HGSI) |
1420.0 |
8.2 |
(210.6) |
| Nuvelo (NUVO) |
316.0 |
2.2 |
(48.9) |
| Incyte Genomics, Inc. (INCY) |
707.0 |
35.4 |
(185.1) |
| Interleukin Genetics, Inc (ILGN) |
72.0 |
2.7 |
(3.4) |
| Lexicon Genetics Incorporated (LEXG) |
418.0 |
48.4 |
(61.7) |
| Millennium Pharmaceutical (MLNM) |
4171.0 |
468.1 |
(333.2) |
| Myriad Genetics, Inc. (MYGN) |
524.0 |
56.6 |
(40.6) |
| Rigel Pharmaceuticals Inc (RIGL) |
462.0 |
7.2 |
(48.3) |
| Sequenom, Inc. (SQNM) |
38.0 |
26.3 |
(38.5) |
| Vertex Pharmaceuticals (VRTX) |
840.0 |
73.3 |
(212.2) |
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Q3 2004 Index = 11,367
1) Market cap is the number of shares outstanding x share price as of June 25, 2004 (in $ millions) |
| 2) TTM is trailing twelve months ending March 31, 2004 for all companies except as otherwise specified (all financials in $ millions) |
| Company Names |
Market Cap1) |
Revenues TTM2) |
Net Income TTM2) |
| Aclara Biosciences (ACLA) |
143.0 |
2.0 |
(17.2) |
| Affymetrix, Inc. (AFFX) |
1863.0 |
323.7 |
27.0 |
| Applied Biosystems Group (ABI) |
3693.0 |
1741.1 |
172.3 |
| Ciphergen Biosystems (CIPH) |
114.0 |
57.6 |
(32.6) |
| Compugen Ltd. (CGEN) |
136.0 |
4.9 |
(9.7) |
| Epoch Biosciences, Inc. (EBIO) |
56.0 |
7.9 |
(1.2) |
| Harvard Bioscience, Inc. (HBIO) |
132.0 |
89.9 |
3.0 |
| Illumina, Inc. (ILMN) |
223.0 |
41.3 |
(17.0) |
| Invitrogen Corporation (IVGN) |
2897.0 |
910.0 |
56.5 |
| LION bioscience AG (ADR) (LEON)3) |
31.0 |
20.3 |
(12.9) |
| Luminex Corporation (LMNX) |
222.0 |
24.8 |
(1.5) |
| Qiagen N.V. (QGENF) |
1679.0 |
380.3 |
41.0 |
| Third Wave Technologies (TWTI) |
278.0 |
46.9 |
(0.3) |
| Transgenomic, Inc. (TBIO) |
34.0 |
33.5 |
(33.6) |
| Varian, Inc. (VARI) |
1314.0 |
920.6 |
55.5 |
Q3 2004 Index = 12,814
1) Market cap is the number of shares outstanding x share price as of June 25, 2004 (in $ millions) |
| 2) TTM is trailing twelve months ending March 31, 2004 for all companies except as otherwise specified (all financials in $ millions) |
| 3) TTM is ending December 31, 2003 |
Mirus Capital Advisors does not assume any liability for errors or omissions. David Hoffer is a managing director, and Lakshmi Nambiar an analyst, at Boston investment bank Mirus Capital Advisors.