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Wall Street Darling Biotech Reports Record 12-month Investing Streak Through July

WASHINGTON, DC, Oct. 5 - Biotechnology firms raised a record $33 billion from investors between July 2000 and July 2001, according to an industry report released on Thursday at a venture capital meeting here.

Accounting giant Ernst & Young also reported that more than half of all publicly traded biotech companies, which include genomics, proteomics, bioinformatics, and bioarray firms, had at least three years of cash on hand, while 42 percent had five years’ worth in the bank. These stockpiles might come in handy if the industry is asked to weather a slowing economy and cooling stock market, the firm said.

Ernst & Young did not break down the industry into its niche tool and technology sectors.

The report notes, however, that biotech-related initial public offerings were cut in half from a total of 24 in the third quarter 2000 to 12 in the following quarter. Several firms were unable to stage IPOs this year, although three, including Seattle Genetics, Third Wave Technologies, and Exact Sciences, did for a total of $187.5 million.

“The public market window has been slammed shut,” Rene Salas, an Ernst & Young analyst who authored the report, said at the Biotechnology Industry Organization’s venture forum, which ended on Thursday.

Still, market capitalization for 339 publicly traded biotech companies was down only 6 percent to $331 billion from a record 2000 level. In context, total market capitalization for publicly traded companies was just $47 billion in 1996. Research and development expenses were up 29 percent to reach $13.8 billion last year, according to the report.

Meanwhile, industry revenues hit a record of $25 billion in 2000, up from $22 billion the year before, and the private equity market  continues to have the hots for the sector.

“We’re very high on where this industry is headed,” Salas said. He told forum attendees that with record amounts of cash on hand, most companies are in a good position to settle in for the long term.

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