US biotech sector besieged by debt worries, political dysfunction in 3rd-qtr, says Burrill

The fight in the USA over the raising of the debt ceiling and the debt crisis in Europe have fueled turmoil in the stock market that has taken a toll on the performance of biotech stocks, slamming the brakes on a solid year of financing for the sector, reports life sciences-focussed financial services company Burrill & Co.

Public financing in the third quarter fell to just under $3.1 billion compared to $9.1 billion in the previous quarter. The amount raised through IPOs fell 72%, follow-ons fell 79.8% and PIPEs fell 53%. Five life sciences companies filed in September to go public in the USA, but it was the first month this year that no life sciences IPOs were completed.

“While 2011 remains on track to be a year of solid performance for biotech, global financial problems and dysfunction in Congress have turned investors away from risk,” says Steven Burrill, chief executive of San Francisco-based Burrill & Co, noting: “Despite what has been an upbeat year of developments for the sector, broader economic worries have thwarted access to the capital companies will need.”