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Poof! Biotech's 2014 Outperformance is Gone

Biotech stocks continue to melt down. I know, broken record, but like a car wreck, it's hard not to look. 

Warning: The following chart contains violent images not suitable for all investors.

Biotech stocks are no longer outperforming the broader market.

IBB Chart
IBB data by YCharts

The selling in March has been unstoppable.

IBB Chart
IBB data by YCharts

Heres some interesting Morgan Stanley research from yesterday (March 27) which provides some insight into the biotech sector weakness.  

Must Read: Northwest Bio CEO Discloses More Problems With DC-Vax Brain Cancer Study

Our desk has been getting a lot of questions regarding inflows/outflows in Healthcare & Biotech ETFs. To put things into perspective: Healthcare ETFs saw $5 billion of inflows through March 19th. Since then, they've seen $1 billion of outflows in the sector (20% of YTD inflows.) Biotech ETFs in particular saw $1.3 billion inflows through March 19th and have had $380mm outflows over the past week (30% of YTD inflows.) US-listed ETFs have had $13 billion total inflows YTD. Through March 19th, about 40% of these inflows had been into health-care related ETFs.

As I mentioned earlier this week, Gilead Sciences (GILD - Get Report) is the bellwether biotech stock to watch. Where it goes, the sector goes, and right now, that's down. Gilead lost another 4% today on a weekly dip in Sovaldi script growth. 

IBB Chart
IBB data by YCharts

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.


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