This Wednesday marks the one-year anniversary of the biotech meltdown prompted by the Clinton-Blair comments about the patentability of genetic information. Coincidentally, the NASDAQ Composite also began its precipitous slide that month, and if it's any comfort to biotech players, NASDAQ has fared worse. The BioCentury 100 has shed 47 percent of its value in the ensuing year versus a 59 percent decline in the NASDAQ (see "Not Quite in the Cellar" & "One Year On").

Biotech was helped by its big bounce in the June-November period. But since then it has been closing the gap: the BC100 is down 23 percent this year, compared to a 17 percent decline by NASDAQ. The BioCentury London index is down 30 percent in the past 12 months, with 3 percent lost so far this year.

Overall, the BC100 is down 52 percent from its all-time high of 4369.56 on March 3, 2000, while NASDAQ is off 60 percent from its all-time high of 5132.52 hit during intraday trading on March 10.

Big pharma was the safest place to put money over the past year, with the AMEX Pharma Index trading up 21 percent, despite giving back 11 percent this year.

Could be worse

Biotech's 23 percent fall could be modest given that 439 million shares from 27 IPOs have been released from lockup during the first two months of the year. This month, another five biotech companies have 100.2 million shares releasing, all in the last week of the month (see "Back-End Loaded").

Street watchers don't agree on the best way to manage the process. Lehman banker Eric Roberts supports a rolling release, under which a predetermined number of shares would come off lockup in 30-day intervals. That view was seconded by Michael Meyers of Global Bio Medical Partners, who said the 180-day lockup is "ridiculous and has nothing to do with market efficiencies."

But Farah Champsi of Alta Partners argued that the market already has tried and rejected the staggered approach. "Years ago there was a staggered lockup and what happened then was instead of having one day when your stock is weak, you had four. So we went back to one lockup date," said Champsi, a longtime investment banker at Robertson Stephens before joining Alta last May.

Champsi suggested a "reward-based" strategy under which shares become eligible for release only if the stock is trading at a premium to the IPO price. "If the stock's trading at a 50 percent premium, then some liquidity should be given. That also will increase the supply to meet the excess demand," she said.