Hang onto your seats -- it could get uglier out there in the wild world of biotech.

With brutal efficiency, investors Monday slashed biotech shares for the third day in just over a

week, in the absence of notable sectorwide news. The selloff swiped a third of the

market capitalizations

of some companies, as though some giant vacuum cleaner had sucked the hot air out of a great speculative biotech bubble. Faced with collapsing share prices, some investors said they were snatching up newfound bargains even as they admitted the bottom may not be in sight.

"It's just capitulation," says Stuart Weisbrod, chief investment officer for

Merlin BioMed Group

, a New York-based

hedge fund

with about $400 million under management. "All the fast money is just selling and selling ugly."

Like many jarred investors, Weisbrod blames the fall on legions of hot-money speculators, momentum players, daytraders and others who drove biotech to stratospheric heights starting late last year. When the companies didn't immediately deliver multibillion-dollar cures for cancer and heart disease, they were dumped like a spoiled child's playthings. "These people didn't know what they were buying," says Weisbrod.

Humpty Dumpty

The

Nasdaq Biotech Index

fell 125, or 10%, to 1092. It and the

Amex Biotech Index

are each off more than 30% over the last two weeks, as biotech stocks have taken repeated drubbings after surging to unheard-of heights during the preceding six months.

The more-established biotech companies, the ones with marketable products that generate sales and earnings, were hit hard as well, though notably less so than the speculative issues whose promise investors have been so impressed by.

Gravity Returns
Biotechs are routed again Monday

Source: BigCharts

One of the worst hit was

Amgen

(AMGN) - Get Report

, by far the biggest single component of the Nasdaq Biotech Index and already off 25% from its high. Monday Amgen slipped 5 1/8, or 8.1%, to finish at 58.

Immunex

(IMNX)

, off 23 7/8, or 14%, at 150, is down 40% from its high -- but still not in the 60%-plus ditch many of the newer issues are.

Other more speculative stocks, like

Protein Design

(PDLI) - Get Report

, dropped like bombs. Protein Design, which makes genetic proteins called monoclonal antibodies, fell 45 21/32, or 25%, to 135 1/2 Monday, and is now off 60% from its 52-week high of 338.

Celera

(CRA)

, which fell 26 1/2, or 20%, at 103 1/2, is 63% below its high of 276.

Human Genome Sciences

(HGSI)

, off 26 5/16, or 22%, at 93, is 65% off its high of 232 3/4.

All the King's Horses

Nonetheless, the other end of the stocks' 52-week ranges indicates they have room yet to fall. Even after its two-week, 200-point fall, Protein Design trades at more than 10 times its 52-week low. Human Genome's sharp retreat still leaves it 500% above its 52-week low of 15 7/16; recent profit-taking puts Celera some 1,400% above its low of 7 1/8. And none of these companies has earnings.

"There's still a lot of junk out there," says Stefan Loran, analyst with

Legg Mason Wood Walker

, who called the biotech market "an irrational bubble" that investors should probably avoid for now. "It's a pendulum. Stocks go from ridiculously undervalued to ridiculously overvalued. It's hard to say whether we are at the bottom of the cycle."

Also off sharply Monday:

Gene Logic

(GLGC)

, down 21 7/16, or 33%, at 42 5/8, now 72% off its highs;

Aurora

(ABSC)

, off 23 1/4, or 31%, at 52 1/8, and 60% off its highs; and

Medarex

(MEDX)

, off 26 11/16, or 29%, at 66 13/16, 68% off its 52-week high. All those stocks are well over 1,000% above their single-digit 52-week lows, however.