Pummeling the microcaps
If there's a silver lining to biotech's performance in the third quarter, it's that a 12% decline in the BioCentury 100 made it the second best performer of the key equity indexes tracked by BioCentury in the 13-week period. Biotech "outperformed" the NASDAQ Composite, the Dow Jones Industrials, and the S&P 500, each of which fell at least 18% on the quarter. Only the pharma group outperformed the sector (see "Everyone Sees Red").
But the year-to-date performance underscores that biotech remains in a deep funk. The BioCentury 100 is off an uncool 50% on the year. By comparison, the NASDAQ, which fell 20% on the quarter, is down only 40% on the year. Biotech's performance in Europe remains ugly, too: In the third quarter, the BioCentury London Index shed 42%, putting it down 65% on the year. The BioCentury Europe Index also is down 65% on the year, after falling 45% on the quarter.
The technical picture doesn't look rosy either. Friday's 3.9% slide puts the BioCentury 100 perilously close to the 900 level that acted as a support for the group over the summer. The index hit 922 on July 12, before starting a five-week rally to get to 1056 on Aug. 16; it then fell to 932 on Sept. 20. After losing 3.4% last week, it now stands at 907.
To no one's surprise, the smaller cap names are the being hit hardest, as investors sell off illiquid stocks. The group of companies valued between $201 million and $500 million at the beginning of the year slid 31% in the third quarter, putting it off 54% on the year. The microcap group (<$200 million) also is down 31% on the quarter, and now stand down 57% year-to-date. The big cap companies have been relatively unscathed by comparison (see "Third Quarter Results By Market Cap").
The TF/Carson Life Science indexes