The stock market might be in the doldrums, but the biotechnology index has fallen off a cliff. One measure says it all: Dozens of publicly traded biotechs have dropped so much that they are now valued below the amount of cash they have in the bank.
Some healthcare investors have been pointing to that trend as a sign things have started to bottom. The argument goes that biotech has become so cheap that big pharma—staring down a patent cliff and armed with hundreds of billions of dollars of dry powder for acquisitions—will come to the rescue. Indeed, a popular biotech exchange-traded fund, the SPDR S&P Biotech ETF, has rebounded by around 20% from its recent lows.