Don't Bail On These Biotechs

The biotechnology sector has been hit especially hard as investors flee high-risk assets amid recent market uncertainty. Compounding this heightened risk aversion is increased concern regarding product concentration for one-drug operations and the ability of development-stage biotechs to access equity markets in the wake of plummeting stock values. Furthermore,  Dendreon's  (DNDN) announcement that sales of prostate cancer drug Provenge will come in well under the market's initial expectations for the year caused a ripple effect throughout the sector as investors dumped shares of firms nearing the launch of other highly anticipated drugs. Investors also appear to be unloading shares of unprofitable biotechs with dwindling cash balances on the concern that volatile market conditions will limit firms' ability to raise capital.