NEW YORK (TheStreet) -- The biotech sector has been one of the best performing this year. While the Nasdaq Composite rose 5.3% for the first six months of the year, the Nasdaq Biotech Index rose a whopping 21.6% over the same period. In comparison, the S&P 500 Index barely eked out a positive return for the first two quarters.

Yet, the biotech sector is volatile, with the fortunes of a stock rising and falling on the latest test and drug trials results. Some have done particularly poorly. losing nearly all their value in the first half of the year. Here are the ten worst.

TheStreet
paired each of these tickers with TheStreet Ratings to let you know if you should buy, sell, or hold these best performing stocks. (Note: Because of TheStreet Ratings parameters, not all stocks on this list have a rating.)

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which stocks were among the worst performers in the NASDAQ to date. And when you're done with that be sure to find out which company had the best performance in the S&P 500 for the first quarter.

 

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10. Achillion Pharmaceuticals (ACHN)

Rating: N/A
Market Cap: $1 billion
Year-to-date return: -27.7%

"Achillion applies expertise in biology and structure-guided design and a deep understanding of patient and clinician needs to develop innovative treatment solutions aimed at improving patients' lives. The company's scientific excellence, integrated capabilities and experienced team position it to successfully advance new products along the entire continuum from the bench to the patient," according to its website.

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9. XenoPort, Inc. (XNPT)

Rating: Sell, D-
Market Cap: $392 million
Year-to-date return: -30.1%

XenoPort, Inc., a biopharmaceutical company, focuses on developing and commercializing a portfolio of product candidates for the treatment of neurological and other disorders.

"We rate XENOPORT INC (XNPT) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally high debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly decreased to -$20.41 million or 63.01% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Currently the debt-to-equity ratio of 1.54 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 12.02, which shows the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, XENOPORT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income increased by 0.7% when compared to the same quarter one year prior, going from -$20.55 million to -$20.41 million.
  • XENOPORT INC has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, XENOPORT INC continued to lose money by earning -$0.82 versus -$1.80 in the prior year. For the next year, the market is expecting a contraction of 58.5% in earnings (-$1.30 versus -$0.82).

 

RGLS ChartRGLS data by YCharts
8. Regulus Therapeutics Inc. (RGLS - Get Report)

Rating: Sell, D
Market Cap: $542 million
Year-to-date return: -31.7%

Regulus Therapeutics Inc., a biopharmaceutical company, focuses on the discovery and development of drugs that target microRNAs for the treatment of various diseases in the United States.

"We rate REGULUS THERAPEUTICS INC (RGLS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income has decreased by 13.7% when compared to the same quarter one year ago, dropping from -$12.74 million to -$14.49 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, REGULUS THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$11.25 million or 24.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • REGULUS THERAPEUTICS INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REGULUS THERAPEUTICS INC reported poor results of -$1.32 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$1.16 versus -$1.32).
  • Investors have driven up the company's shares by 27.59% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in RGLS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

 

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7. Versartis VSAR

Rating: N/A
Market Cap: $448 million
Year-to-date return: -32.2%

Versartis is an "endocrine-focused biopharmaceutical company developing long-acting therapeutic proteins for the treatment of endocrine disorders," according to its Web site.


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6. Infinity Pharmaceuticals, Inc. INFI
Rating: Sell, D
Market Cap: $511 million
Year-to-date return: -35.2%

Infinity Pharmaceuticals, Inc., a drug discovery and development company, discovers, develops, and delivers medicines to patients with difficult-to-treat diseases.

"We rate INFINITY PHARMACEUTICALS INC (INFI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 120.7% when compared to the same quarter one year ago, falling from -$42.27 million to -$93.30 million.
  • Net operating cash flow has significantly decreased to -$99.66 million or 128.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of INFINITY PHARMACEUTICALS INC has not done very well: it is down 14.05% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • INFINITY PHARMACEUTICALS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INFINITY PHARMACEUTICALS INC continued to lose money by earning -$0.45 versus -$2.64 in the prior year. For the next year, the market is expecting a contraction of 678.9% in earnings (-$3.51 versus -$0.45).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, INFINITY PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.

 

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5. Pernix Therapeutics Holdings (PTX)

Rating: Sell, D+
Market Cap: $261 million
Year-to-date return: -37%

Pernix Therapeutics Holdings, Inc., a specialty pharmaceutical company, develops, manufactures, markets, and sells branded and generic pharmaceutical products.

"We rate PERNIX THERAPEUTICS HOLDINGS (PTX) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 148.1% when compared to the same quarter one year ago, falling from -$9.54 million to -$23.67 million.
  • The debt-to-equity ratio is very high at 4.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, PTX maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, PERNIX THERAPEUTICS HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$19.04 million or 211.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 138.46% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

 

ACRX ChartACRX data by YCharts
4. AcelRx Pharmaceuticals, Inc. (ACRX - Get Report)

Rating: Sell, D
Market Cap: $190 million
Year-to-date return: -37%

AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company, develops and commercializes therapies for the treatment of acute pain.

"We rate ACELRX PHARMACEUTICALS INC (ACRX) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income has decreased by 4.1% when compared to the same quarter one year ago, dropping from -$9.63 million to -$10.03 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, ACELRX PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to -$10.75 million or 6.08% when compared to the same quarter last year. Despite a decrease in cash flow ACELRX PHARMACEUTICALS INC is still fairing well by exceeding its industry average cash flow growth rate of -23.98%.
  • Looking at the price performance of ACRX's shares over the past 12 months, there is not much good news to report: the stock is down 59.33%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • ACELRX PHARMACEUTICALS INC's earnings per share declined by 22.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ACELRX PHARMACEUTICALS INC reported poor results of -$0.97 versus -$0.68 in the prior year. This year, the market expects an improvement in earnings (-$0.53 versus -$0.97).

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3. Aerie Pharmaceuticals Inc. (AERI - Get Report)

Rating: N/A
Market Cap: $446 million
Year-to-date return: -39.5%

Aerie Pharmaceuticals is a "clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye," according to its Web site.


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2. Avalanche Biotechnologies (AAVL)
Rating: N/A
Market Cap: $420 million
Year-to-date return: -70%

Avalanche Biotechnologies is a "clinical-stage biotechnology company focused on discovering and developing novel gene therapies to transform the lives of patients with sight-threatening ophthalmic diseases," according to its Web site.


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1. Celladon Corp. (CLDN)
Rating: N/A
Market Cap: $31 million
Year-to-date return: -93.5%

Celladon Corporation is a "clinical-stage biotechnology company with industry-leading expertise in the development of cardiovascular gene therapy," according to its Web site.