Welcome back from the Labor day break. I’m still working on re-establishing my site, so please keep your browser pointed at thehealthcareblog.com and in the meantime I’ll keep posting! When it’s safe to go back to matthewholt.net I’ll let you know here!

So a funny thing has been happening in  the small and medium cap Biotech market. (And by that I’m lumping in virtually any company that is developing pharma products but doesn’t sell them yet).  After getting somewhat swept up in the dotcom fever of 1999 and early 2000. Biotech’s woes grew over the next two years, and by the time of the Iraq war several small biotech companies were selling for close to the value of their cash on hand. Now the Burrils Biotech Indicies have all shot skywards for this year. In particular their Select biotech index is up over 55% (to end July) compared to the NASDAQ’s 33% improvement so far in 2003. The small cap biotech market which tracked by the Burrils index was 84 at the end of 2002 and fell to 68 (down 18%) by the end of February as war loomed. It was 113 at the end of July, up 34% on the year and up roughly 66% since its war-induced lows. Finally we are beginning to see possible signs of life in the Biotech IPO market. For instance Cancervax filed for an IPO in mid-July, albeit selling some insurance stock to current investors in case it doesn’t get out the door.

This tells you a couple of things.  Given that the science hasn’t changed too much in 7 short months, this market remains very, very volatile.  After all , we’re talking about a market for drugs that usually have several years of testing to go through before they are ready for the nod from the FDA. But it also tells you that at least some investors believe that there will be a market for these new and usually very expensive drugs in the medium-term future. So while the major pharmaceutical companies continue to have their problems, the pipeline of new biotech offerings looks to be in good enough financial shape that the rest of the healthcare system will be getting the benefits, and of course the costs, of these drugs in years to come!

And in the interests of full disclosure, I own stock in one small-cap biotech company Pain Therapeutics (PTIE).  I just wish I’d bought a hell of a lot more back in March!