Public companies in San Diego’s biotech industry have been on quite the roller coaster, a trend reflected in how that sector is represented in the San
Diego Business Journal’s new list of the 50 largest local public companies, ranked by revenue in fiscal 2013.
Almost exactly a year ago a boom in initial public offerings began nationally in the sector, building momentum that helped boost stock value across the board for San Diego’s life sciences companies. Indeed, about a dozen area biotechs have either filed for or completed IPOs since last April.
There has been, however, a recent downturn in the markets that has affected the stock for each area company, tempering price upticks with, in many cases, sharp decreases. The sector also lost a few players in the past year to acquisitions — most notably Life Technologies Corp., San Diego’s third-largest company last year, which was acquired by Massachusetts-based Thermo Fisher Scientific Inc. last April for $13.6 billion.
Other companies that were formerly on the list and have since been acquired by out-of-towners include Santarus Inc., which was No. 30 on the Business Journal’s 2013 Book of Lists, before it was acquired for $2.6 billion by Salix Pharmaceuticals Inc.; life sciences software maker Accelrys Software Inc., acquired for $750 million; and drugmakers Optimer Pharmaceuticals Inc. and Cadence Pharmaceuticals Inc., bought out for $551 million and $1.3 billion, respectively. That activity boosted some of the lower-ranking companies.
Illumina Inc. climbed three rungs — to No. 7 — on this year’s list and has certainly led the charge in biotech company buzz. Illumina (Nasdaq: ILMN) announced early this year that it reduced the cost of sequencing the entire human genome to $1,000 — a significant milestone that has far-reaching implications in health care and technology.
Like every other company on this list, its stock value has yo-yoed, but it remains markedly improved from a year ago. Its share price closed April 16 at $136.22 per share — practically in the middle of its 52-week range, which showed a high of $183.30 and a low of $54.84.
Illumina has had a number of breakthrough announcements of late, launching what it calls the “world’s first” genomics incubator, teaming with technology billionaire Yuri Milner and Silicon Valley Bank to invest hundreds of thousands of dollars into startups.
Filling Up List’s Bottom Half
One has to scan 21 positions down the list to reach Quidel Corp., the second-highest revenue-generating public biotech in San Diego, at No. 28. The diagnostics company has received a number of Food and Drug Administration clearances in the past year, including simple, handheld tests for strep throat and two strains of herpes. Shares for Quidel (Nasdaq: QDEL) rose across the board for its many FDA clearances; however, it closed at $24.21 on April 16, when previously the $825 million market cap company had reached a stock high of about $32 per share.
Including Quidel, biotechs account for more than a third of the companies in the second half of the list.
Sequenom Inc. has shown marked change this year. Last month it shook up its leadership, with veteran CEO Harry Hixson announcing his retirement this June, to be replaced with William Welch, the company’s current president and chief operating officer. It also announced a new chief financial officer, Carolyn Beaver, and chief scientific and strategy officer, Dirk van den Boom.
Sequenom is enmeshed in a patent infringement lawsuit with San Jose-based Ariosa Diagnostics Inc., having received an unfavorable ruling last November. The company is in the midst of appealing the decision in the Federal Circuit Court of Appeals. The San Diego developer of genetic tests that diagnose fetal conditions like Down syndrome also laid off 75 workers in August to help conserve funds as it attempts to collect revenue from Medicare, Medicaid and other insurers. The company has performed well overall, however, reporting positive growth in its key business unit — the MaterniT test. Nevertheless, its stock value has staggered up and down, closing at $2.59 on April 16 — nearly half its 52-week high.
Isis Pharmaceuticals Inc. has been a stock darling in the past year and change. In January 2013, its stock was trading around a mere $10 per share. Since then, it has released a number of positive clinical trial outcomes and launched its first drug, Kynamro, which treats a rare form of high cholesterol. Its stock skyrocketed to around $60 per share before cooling off; as of April 16, it was trading at $34.57.
Busting Fat, Killing Pain
Another company that made a lot of waves this year has been Arena Pharmaceuticals Inc., which finally launched its weight loss drug, Belviq, in the middle of last year. The company is working to commercialize the drug, with the general conceit that a fat-busting drug could have wide public health implications in a nation — world — that is grappling with an obesity epidemic. It has faced reticence, however, from physicians unwilling to test out a fat-busting pill when many have failed in the past, such as FenPhen and Ephedra. It has bulked up its marketing and sales efforts, however, and the $1.4 billion market cap company appears to be holding steady at around $6 per share, though it peaked above $9. It is also exploring the drug’s use in smoking cessation.
Zogenix Inc. has faced its share of trouble this year as well, with its opioid painkiller under fire from politicians, health officials and the media for its potential to be abused. The company is vigorously defending the pill, however, which received FDA approval last October and hit pharmacy shelves in March. The stock was met with a sharp downturn in recent months, and closed April 16 at $2.82 — up from a 52-week low of $1.25 but below its high of $5.19.
Other biotechs on the list — Halozyme Therapeutics Inc., Ligand Pharmaceuticals Inc., Regulus Pharmaceuticals Inc. and Senomyx Inc. — have shown sinusoidal patterns much like every other biotech in the country, but their progress is more reflective of market dynamics than company adversity.
One company on the list that falls under the auspices of health care but isn’t in drugmaking is AMN Healthcare Inc., a staffing company that outsources nurses and other health care professionals. It has shown solid performance this year, closing out April 16 at $12.65 per share.