Pop goes that bubble, in a manner reminiscent of the Tech Wreck. From Wolf Richter at wolfstreet.com:
Biotech stocks got crushed today, got crushed all week, got crushed since their peak in early July. “Bloodletting” comes to mind. But who the heck did the crushing? That’s what everyone wants to know. And the finger-pointing has started.
Early in the week, they blamed the New York Times because it had ran an article on Sunday on a hedge fund guy named Martin Shkreli who’d founded Turing Pharmaceuticals, which bought the rights to a generic drug that has been around for six decades, called Daraprim, “the standard of care for treating a life-threatening parasitic infection.” In his hedge-fund manner, knowing he had a monopoly, he jacked up the price from $13.50 to $750, raising the “annual cost of treatment for some patients to hundreds of thousands of dollars.”
This caused a national stink. Presidential candidate Hillary Clinton jumped into the fray with a proposal to cap prices of specialty drugs to prevent “price gouging.” Drug makers absolutely adore that kind of language.
Among the biotech giants, Biogen dropped 2.8% today, 9.5% for the week, and is down 40.6% from its high in March. Celgene plunged 4.8% today, 11.6% for the week, and is down 23.6% from its high. Gilead fell 2.3% today, 7.8% for the week, and 22% from its high in June. Smaller biotechs fared worse.
The iShares Nasdaq Biotech ETF (IBB) plunged 4.9% today, 12.9% for the week, and is down 22.5% from its peak in early July. This weekly chart shows just how bloody the week was – in percentage terms, the worst since 2008; in points, the worst ever:
To continue reading: It Gets Ugly in Biotech
