Despite the continuing economic crisis, investment in China biopharma continued apace last week. There weren’t any spectacularly huge deals, only the normal-sized deals on which biopharmas depend to steadily build their businesses.

Government contributed its share to the theme. The Municipal Government of Beijing, operating under the 11th Five Year Plan (2006-2010), will invest 505 million RMB ($74 million) into the biotech sector during 2009-10, funding eight major projects (see story). The goal is to foster an annual output from Beijing’s biotech sector of 54 billion RMB ($7.4 billion) by the end of 2010. That would equal 16 billion RMB ($2.3 billion) of added value, representing a growth rate of 15% in 2009 and 13% in 2010. Three of the main areas of interest are from the pharmaceutical sector, three from agriculture and the remaining two are unnamed.

Pharmacyclics, Inc. (NSDQ: PCYC), a Sunnyvale, CA biopharma with four drugs in clinical development, may be developing a business model that involves China. However, at this stage, the evidence for such a move is sketchy, at best. The following is what we know, and you can decide for yourself whether the company's business plan will soon include a China component.

At some point over the past few months, Pharmacyclics took on Glen Rice, PhD, as its President and COO. Rice has a strong China connection. He established Bridge Labs a few years ago, a US-headquartered CRO whose only laboratory (at the time) was established in Beijing in 2004. The point of the organization was to establish a fully FDA compliant pre-clinical lab that could offer more cost-effective services.

As 2007 winds down, investors in Genitope (GTOP) are keyed up for the final results of its experimental, personalized cancer immunotherapy treatment MyVax in the treatment of B-cell non-Hodgkin's lymphoma. Results are expected some time this month, so the wait should not be much longer in what has been a long ride for the Company and its investors as two previously planned interim analyses failed to halt the trial early and demonstrate convincing effectiveness for MyVax. The most recent interim analysis of July 2006 was especially disheartening as the Company had expected to achieve statistical significance at that point for MyVax that would have allowed for an early end to the trial, but instead resulted in a tanking stock price from the $6 range to around $2 per share. Shares have since recovered, most recently trading around $3.50 per share with increasing volumes and volatility in anticipation of the make-or-break MyVax results due any day now. The most recent tally of short interest reveals a brazenly bearish stance with just over 11 million shares held short, which equates to about 26% of all shares outstanding and about 39% of the float. The opinion of analysts following the stock also varies widely from a low target of just $1 to a high of $17.50 per share.

The lists below, with data from StockVal, are comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.

There were even fewer outliers in this holiday-shortened week, with 4 double-digit gainers and just one double-digit decliner. The median return of 1.6% was slightly ahead of the S&P 500 return (for the first time after ASCO), and the average of 1.4% was in line. The volatility decline within the group over the past two weeks reflects the seasonality of quarter-end as well as the normal “calming” that follows all the reaction to the news out of ASCO.

The list below, with data from StockVal, is comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week.

The 14 double-digit declines exceeded the 12 that plunged immediately following the ASCO meeting, with just a single double-digit gainer. The median return of -4.2% and the average return of -4.9 trailed the S&P 500 significantly (-2.3% and -3.0% respectively). Clearly, cancer-related stocks have been very weak this month and are now lagging the market, on average, for the year-to-date.

The list below, with data from StockVal, is comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week.

The number of double-digit declines decreased from 12 to just 4, but there were no double-digit gainers. The median return of 0.0 and the average return of -0.3 trailed the S&P 500 significantly (-1.6% and -2% respectively). Of all the weaker stocks, only IDM Pharma (IDMI) remains up month-to-date. The 20% decline this week almost erased the strong gains thus far in June. The company suffered management losses and a tough FDA rejection in May but is still up year-to-date. Telik (TELK) continued its death march after an FDA failure for its lead drug in the prior week. Late Friday, though, the company received news that the full hold had been converted to a partial hold on Telcyta clinical trials. Genvec (GNVC) is having a horrible month, but it remains up strongly year-to-date. It is sitting on pretty solid support at this point and remains in an uptrend. For those not familiar, the company is working on a vaccine to treat pancreatic cancer. Finally, Zila (ZILA) saw its CEO depart as the corporate governance investigation nears an end. Zila focuses on oral cancer detection.

In any event, cancer-related stocks plunged in the week that followed the ASCO meeting in Chicago (June 1-5).

Last week’s huge winner, Novacea (NOVC), gave back about 1/3 of its gains.

Last week’s big winner, Bioenvision (BIVN), received an offer from partner Genzyme (GENZ) at a disappointing premium but well ahead of multi-year lows reached in early May.

The list below is comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week.

I recently created a list of companies with market capitalization in excess of $50mm at the beginning of May that derive a significant amount of their market value from cancer-related pursuits. The group includes primarily biotech companies seeking cures, but it also has diagnostic and other types of treatment companies.

I ask the reader to please let me know if there are any omissions or erroneous inclusions. Here is the list, ranked on price performance over the past week:

BioVeris brings with it the electrochemiluminescence [ECL] technology used in its Elecsys product line, an addition to the Diagnostics subsidiary of Roche that will increase its offerings in the immunochemistry sector. Samuel J. Wohlstadter, Chairman and CEO of BioVeris, will vote his 20% bloc of BioVeris shares in favor of the merger. He will also buy vaccine IP from BioVeris and a non-exclusive license to the ECL technology. BioVeris posted a 52% gain, rising $7.06 to $20.66.

Also known as 415, the patent is the source of royalty revenue for Genentech, but MedImmune (MEDI) is contesting its legitimacy. MedImmune pays royalties to Genentech on Synagis, a drug for pediatric respiratory virus. A few months ago, the Supreme Court ruled that MedImmune could contest the patent, even though it was continuing to make the royalty payments.

Ansoft Corp. (ANST) - AMC
FQ1 2007 Revenue Estimate: $14.79M
FQ1 2007 EPS Estimate: $0.06
FQ2 2007 Revenue Estimate: $18.03M
FQ2 2007 EPS Estimate: $0.17
Last Quarter FQ4 2006 reported on 05/23/06 AMC
EPS Estimate: $0.23 ¦ EPS Actual: $0.35
05/23/06 Close: $18.53 Change($): ($0.42) Change(%): -2.3%
05/24/06 Close: $20.57 Change($): $2.04 Change(%): 9.9%

• Reason for selloff: Phase 3 trials for the company’s Xcytrin drug (designed to treat certain lung cancer patients whose cancer has spread to the brain) lacked statistical significance. The primary endpoint of the study was to show that Xcytrin improves time to neurologic progression (how quickly the disease gets worse in the brain). In the intent-to-treat analysis the median time for patients receiving radiation + Xcytrin was 15.4 months, compared to 10.0 months for those receiving radiation alone—a difference of over 50%. The problem is that the difference compared to patients in the control arm did not reach statistical significance.