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Biotechnology stocks have come crashing down to earth in recent weeks after soaring to unprecedented heights since December.
But although the hot money is gone, most biotechnology stocks are still trading at higher prices than last year and analysts remain optimistic about the industry's future.
Those were major conclusions from the Biotechnology Industry Organization's annual conference, BIO 2000, held last week in Boston.
"The sector had been down for so long that some people were wondering if this cyclical business had flatlined," said Arthur J. Klausner, general partner of Princeton, N.J.-based Domain Associates. "The latest run shows that is not so."
Analysts at the conference said the recent sell-off indicates that biotech stocks had become overvalued in recent months. The sector had risen too far and too fast, said May-Kin Ho, a New York-based analyst with Goldman Sachs.
They also agreed that the industry's slide, albeit sooner than expected, came at a good time as "lower-quality companies" began crowding the initial public offering field. Eric Roberts, managing director and biotech...