Ebb & Flow

Historically, when biotech markets turned south, investors headed to the big cap group in droves to ride out the storm. However, investors following that strategy this year have been stung significantly harder than the general markets. The seven biotechs valued above $10 billion at the beginning of the year have collectively lost $62.4 billion (40%) of market cap so far this year (see "Safe Havens?").

By comparison, the Amex Pharmaceutical Index - to which most of these companies would be "comped" on a valuation basis - has fallen only 21%. The BioCentury 100 is down 44% on the year, but the comparison is misleading thanks to autocorrelation.

Word on the Street is that much of the big cap under-performance is coming from big institutional names getting out of the sector before the end of the quarter, when many funds report holdings. But while some selling pressure can be chalked up to window dressing, some in the group are giving investors plenty of reasons for pause.

Genzyme(GENZ) was the latest big cap disappointment, tumbling $7.81 (29%) to $18.94 last week after falling $6.17 (24%) to $19.70 on 23.1 million shares on Thursday after it ratcheted back 2002 revenue and EPS growth, primarily due to lower sales expectations of Renagel sevelamer to treat end-stage renal disease. The weekly drop erased $1.7 billion in market cap from GENZ, putting its down 68% on the year.

If you think it's stunning that investors could lose more than half of their money in a "safe haven", GENZ has plenty of company. Investors have lost more than half their money in three

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