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Rebalancing act

Biotech specialists look for value buys in wake of mid-August market meltdown

Companies in the midst of launching products or with weak balance sheets have been sold off or avoided by most investors during the market roller-coaster of the past two weeks. However, a handful of companies have been insulated from the carnage - their common threads being strong sales, pending or potential acquisitions, or positive data. Large caps as a group also held up relatively well.

In the last two weeks, the NASDAQ Biotechnology Index (NBI) fell 13%. The BioCentury 100 was off 12%, while the NYSE Arca Biotechnology Index (BTK) lost 17%. Over the same time, the S&P 500 and the NASDAQ were both off 9%, while the Dow Jones Industrial Average shed 7%(see "Seeing Red," A2).

A sliver of good news emerged on Thursday and Friday last week - the NBI, BC100 and BTK each gained 6% over the two days - as biotechnology buysiders started shopping for discounts on companies with strong fundamentals and balance sheets.

Lumps on launch

Almost every buysider contacted by BioCentury noted the punishment of companies with recent or upcoming launches.

The start of the market slide coincided with scaled down expectations for Dendreon Corp.'s Provenge prostate cancer vaccine following the

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