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Biotech shakeout?
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May 10, 2001: 6:37 a.m. ET
Execs say smaller biotech firms could go the way of the dot.coms
By Staff Writer Kim Khan
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NEW YORK (CNNfn) - Small biotechnology companies could soon be in for times as tough as those faced by dot.com startups, according to two industry executives.
Speaking at Dain Rauscher Wessels' "From Genes to Drugs" conference in New York Wednesday, Invitrogen Chairman and CEO Lyle Turner and Genencor International Chief Financial Officer Ray Land both said companies with a diverse product base will be looking for buyers as consolidation continues in the sector.
"During the euphoria, the fury to get invested in genomics, some investors invested in biotech companies without fully understanding the companies," Land told CNNfn.com. "A lot of them are reexamining their portfolios."
"The question is with these one-product companies: are they going to be around?" Land said.
Invitrogen's Turner said there was a time when companies with no profits and no business plan could easily get an initial public offering done.
"I don't think these companies will be taken public anymore," Turner said.
Since the beginning of the year, nine biotech companies have withdrawn their IPOs, compared to only two companies going out, according to IPO.com. Of those nine, only one was profitable and none had yearly revenues above $10 million.
The latest company to withdraw its offering is Dynavax Technologies Corp., which focuses on short DNA sequences which boost the immune system to discover and develop drugs.
According to SEC filings the company had revenues in 1999 of $450,000 and lost more than $6.5 million.
But an unkind new issues market could lead to better prices for the more acquisitively inclined biotech companies.
Check on other biotech stocks
Turner said Invitrogen (IVGN: Research, Estimates), which last year bought Life Technologies and Dexter Corp., is not planning any immediate acquisitions buy may be eyeing some bargains down the road.
"Prices (for companies) will get better six months out from now," he said.
According to Land, Genencor (GCOR: Research, Estimates) lists acquisitions among the major points of its strategy, but the company is also looking for cheaper deals, below the $100 million mark.
But both executives agreed that smaller struggling biotech firms are unlikely to completely disappear like the dot.coms, since even a one-product company will have some desirable technology.
Shares of Invitrogen rose $2.61 to $72.05 on the Nasdaq, while Genencor rose 25 cents to $15.05. 
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