An oft-discussed theme over the past month has been the decline of biotechnology stocks and exchange traded funds, a conversation that is gaining steam Friday as the iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB), the largest biotech ETF, drifts below its 50-day moving average.
IBB and rival ETFs with significant exposure to the largest biotech stocks, such as the Market Vectors Biotech (NYSEArca: BBH), are being hampered by a 4.5% drop in shares of Biogen Idec (NasdaqGS: BIIB) despite news the company received Canadian approval for its hemophilia B drug Alprolix.
BBH, which holds just 26 stocks, allocates almost 9% of its weight to Biogen. Biogen is IBB’s largest holding at a weight of 8.3%.
Glum performances by biotech ETFs on Friday extend a malaise that has lasted about a month, one that has coincided with increased chatter, focused almost entirely on valuation, that biotech stocks are in bubble territory. [Why This Biotech ETF is Tops]
Accounting for Friday’s declines at this writing, IBB is down 5.7% in the past month while BBH is off about 7%. Perhaps in proof the biotech bubble theory is flawed, the SPDR S&P Biotech ETF (NYSEArca: XBI), an equal weight ETF with ample small-cap exposure, is down just 3.7% since Feb. 21.
Those looking to bet against biotech stocks without shorting those stocks, any of the aforementioned ETFs or heading to the options market can consider the ProShares UltraShort NASDAQ Biotechnology (NasdaqGM: BIS).