Biotech Mailbag: The Reason(s) for This Selloff

BOSTON (TheStreet) -- The Biotech Stock Mailbag is open for business.

Before I get to the emails, I want to make a pitch for nominations to two very important end-of-year awards -- the best and worst biotech CEOS of 2009. Which chief executive deserves kudos for a job well done this year? Likewise, who would you like to see slapped upside the head for being a total biotech bonehead?

If you have suggestions, please email them to me with "Best CEO" or "Worst CEO" as the subject line. You can reach me at [e-mail]. Final judgment for both awards rests with me, but your feedback will definitely be a big help.

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Now, to the email. Tom writes, "Do you think the recent downturn in the market is what is causing biotech stocks to drag down? What do you attribute this to? I notice some commentary that hedge funds are selling everything due to the problems at Galleon and that they are heavily invested in biotech and tech stocks. What do you think?"

No doubt that the biotech sector has rolled over. The buying frenzy of the late spring and summer, particularly in small-cap biotechs, has definitely given way to more selling since mid- to late September.

I don't have a single, clear explanation for the change. As I mentioned earlier this week, third-quarter earnings reports from big-cap stocks like Genzyme(GENZ Quote), Amgen(AMGN Quote) and Biogen Idec(BIIB Quote) were OK but not spectacular. Health care reform also remains an overhang.