Wednesday, October 20, 2010

Piper Jaffray Exits Euro Stocks

Europe's biotechs have long suffered from a lack of decent analyst coverage; now there's even less. Piper Jaffray's six-strong European-based analyst team (led by Sam Fazeli) got the chop last night, victims of a 'restructuring of European operations' made public today by the Minnesota-based investment bank and securities house.

The bank says it wants to instead focus on 'two areas of strength: distributing US and Asian securities to European institutional investors' and providing M&A advice to European-based clients. In other words, its European-focused investment research operation--across health care (biotech/medtech), IT, software and consumer--wasn't driving enough lucrative deals to justify its existence; indeed it was dragging the overall Euro operation into the red. "Our goal with this change is to return our European operation to profitability," declared chairman and CEO Andrew Duff in the release.

Perhaps the news isn't so much of a surprise: whatever one thinks about the quality of European stocks (no worse, given careful selection, than anywhere else, we'd argue), PJ never really made the full commitment to the region that other banks like Jefferies International have, and as such,"it was a question of either investing, or chopping," says one insider. "We only covered three sectors; you really need five or six to make it worthwhile," the source continues. PJ's US coverage universe is far wider.

No doubt Fazeli and his colleagues will find pastures new, if they haven't already. The companies they covered, though--especially smaller fry like Germany's MediGene, or Ark, Antisoma or Vernalis in the UK--won't likely see many fresh analysts knocking at their doors. Not the traditional kind, anyway, that live within investment banks--too many questions are being posed more widely within the financial sector about their internal ROI.

Life's not much rosier for Europe's private biotechs, either: we hear that VCs including Atlas Venture and Alta Partners have also decided to throw in the towel in Europe. Roll on government grants and corporate VC.

image by flickr user billselak used under a creative commons license.

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