U.K. biotech stocks are starting to experience some of the effects of bad news that their U.S. brethren have been warning them about. After a series of disappointing product news at the leading companies, the sector is down about 25 percent over the year and many companies are trading close to their 52-week low (see chart).

Among the negative events, Celltech was hurt after Bayer's TNF antibody failed in sepsis, after which the pharma company said it wouldn't pick up its option on CTP's version. Scotia Holdings was hit by the news that the U.K. Medicines Control Agency turned down its Tarabetic compound for diabetic neuropathy (the company has submitted more data). The third hit was disappointment over the slow pace of British Biotech's U.S. Phase III study of Zacutex for acute pancreatitis.