Economic disaster followed by a revival in share prices

My first item for FierceBiotech in 2009 welcomed readers to the Valley of Death. By the end of the year, I predicted, we'd be a leaner industry, shed of the developers who couldn't cut it in the clinic. And it was no surprise that tripping over some bad data this year could prove fatal.

Investment cash--mother's milk to an industry that bets heavily on R&D--dried up considerably in the first half of the year, here in the U.S. as well as in Canada and in Europe. The long, dry stretch ahead claimed some familiar names, which Maureen Martino assembled recently in our Biotech Graveyard report. This was no time to fail a late-stage trial or find yourself working an investment deal with just a few weeks of cash in the bank.

But the second half of 2009 brought some significant changes for the better. The IPO window, long glued shut by investors in no mood to back cash-hungry developers with nothing but red ink on the books, loosened significantly by Q4. And several CEOs who had long put IPO plans on the back shelf brought their SEC filings back out and dusted them off.

The revival of the public market and a renewed appetite for biotech stocks is enormously important for the industry. Just look at Human Genome Sciences, which is nearing approval for a pioneering new lupus drug. It's been able to go back to the market to raise a huge amount of money, just as Dendreon and a slew of other biotechs have. That money is opening the door to a whole new level of development for these companies, and they help point the way for other companies looking to create significant enterprises with long-term growth potential.