BIO CEO '09: Small Biotech's Time to Shine

I didn't make many friends at BIO, the biotech industry's trade association, around this time last year after I attended, then slammed, the group's annual BIO CEO and Investor Conference.

The problem wasn't with BIO or the conference itself, the problem was the faltering economy and the dark storm clouds over the market that imperiled the outlook for small- and mid-cap biotech stocks. As I wrote last February:

"Institutional investors were hard to find at the Waldorf Astoria hotel, with many dedicated biotech buy-siders apparently deciding to sit this conference out. That's a problem, because BIO CEO is supposed to be the confab where Wall Street gets to meet the small and under-covered biotech companies that typically have trouble snagging invites to other, larger institutional investor conferences."

The observations turned out to prescient. Investors largely shunned small- and mid-cap biotech stocks in 2008, causing valuations to fall 50-70%. It was, to put it mildly, a horrendous year.

Now, the calendar swings forward, and BIO is getting ready to throw the 2009 BIO CEO and Investor Conference, scheduled for Feb. 9 and 10 in New York City. If the message coming out of last year's gathering was to avoid small bios to avert big losses, this year's event promises (I hope) some real opportunities for investors to kick the tires on biotech companies trading at historically low valuations.

For this reason, I think biotech investors should pay close attention to the BIO CEO conference this year.

More than 150 companies will be presenting at the conference next month, and more than half of those have market capitalizations less than $250 million. More than half of these are early-stage biotech firms with market values less than $100 million.

Companies of this size don't get invited to many Wall Street investor conferences anymore, explains John Craighead, BIO's director of investor relations. Craighead knows this firsthand because he used to be a sell-side analyst for Lehman Brothers.