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Biotech Sell-Off Continues As Sovaldi Demand Dips

Biotech stocks took another beating Friday, led by Gilead Sciences as concerns grew about its blockbuster drug Sovaldi.

Gilead (GILD) tumbled 4% to close at 68.55, a four-month low. The stock was already hit the previous Friday on word of a congressional inquiry into its high price for Sovaldi, launched in December as a revolutionary treatment for hepatitis C. This Friday, IMS Health prescription data for the week ended March 21 showed total prescriptions up 2.1%, but new prescriptions down 5%.

Analysts pointed out that Sovaldi is still on track to beat both Wall Street's consensus and all previous drug launches — ISI Group's Mark Schoenebaum wrote that if the numbers don't grow at all for the rest of the year, it will still draw $9 billion. Nonetheless, worries about sustainability have dogged the Sovaldi launch all along, as it will likely face competition later this year from AbbVie (ABBV) and Bristol-Myers Squibb (BMY).

Other big-cap biotechs were also hurting. Biogen Idec (BIIB) fell 5% to close at 294.12 — 18% off its March 19 intraday peak. The IMS data showed its big new multiple sclerosis drug Tecfidera tracking to sell around $445 million this quarter, according to RBC Capital Markets analyst Michael Yee, vs. consensus estimates of $450 million.

Regeneron Pharmaceuticals (REGN) fell 4% to 300.09, Celgene (CELG) 2% to 139.29 and Amgen (AMGN) 1% to 120.55. Initially, Alexion Pharmaceuticals (ALXN) bucked the tide, rising 3% by midday, but eventually closed down 1%.

This seemed to play into larger fears that after a five-year bull run, the biotech "bubble" may be collapsing.

The Medical-Biotech/Biomed group — still No. 1 out of IBD's 197 industries, has tumbled xx% in March alone.

ISI's head of portfolio strategy research, Dennis Debusschere, said he's seeing a rotation from growth into value stocks across the market in general. Schoenebaum noted that this may be why big pharma stocks have been holding up relatively well.

But that was small comfort to biotech investors.

"Biotech clients super depressed today," Schoenebaum tweeted Friday. "I'm seeing 19 clients later. group therapy. i still think we are no more than 5-10% from bottom."