Biotechnology stocks managed to gain ground during a highly volatile third quarter as potential blockbuster drugs and multibillion-dollar buyout bids gave the largest players a steady footing on top of tumbling markets.
The Standard & Poor's 500 index shed about 9 percent over the quarter, with a large chunk falling Monday as Congress failed to approve a $700 billion bailout package for the financial sector. Though stocks rallied Tuesday, it was not enough to offset the drop.
The Dow Jones industrial average is down about 5 percent for the quarter, again, with most of the fall occurring Monday. Meanwhile, the Nasdaq composite index fell about 10 percent during the quarter.
Overall though, the large-cap biotech stocks held their own, with the American Stock Exchange's biotechnology index gaining 6.3 percent during the period. The index contains several bellwether stocks, including Thousand Oaks, Calif.-based Amgen Inc. and South San Francisco, Calif.-based Genentech Inc.
Both of those stocks are poised to end their quarters Tuesday on top of the biotech sector, on a mix of product outlooks and large buyout offers.
Amgen shares rose about 26 percent over the quarter, as Wall Street anticipated study data showing its osteoporosis drug candidate denosumab has the potential to be a blockbuster. The company is still recovering from a drop in sales of its anemia drugs because of safety issues and stricter regulations.
In September, the company said denosumab dramatically cut the risk of spinal and hip fractures in postmenopausal women, compared with placebo. Several analysts expect eventual sales of the drug to breach $1 billion.
Meanwhile, shares of Genentech gained about 17 percent over the quarter, with most of the boost coming after a $43.7 billion buyout offer from cancer drug partner Roche. Genentech rejected the $89 per share bid, calling it too low.
Roche already owns about 55.9 percent of Genentech, which makes most if its revenue from cancer treatments including Avastin.
Another buyout bid boost came for New York-based ImClone Systems Inc., which gained 54 percent over the quarter as it was courted by cancer drug partner Bristol-Myers Squibb Co. ImClone, though, is playing hard-to-get and has rejected $60 and $62-per-share offers saying it is mulling a higher $70 bid.
On the other end of the spectrum, shares of San Diego-based Amylin Pharmaceuticals Inc. fell about 20 percent over the quarter as the company deals with issues surrounding its diabetes treatment Byetta. During the quarter, the company and FDA announced that a total of six patients taking Byetta died of acute pancreatitis.
Shares of Foster City, Calif.-based Gilead Sciences Inc. fell about 14 percent over the quarter, as Wall Street remained concern over whether the HIV treatment maker can continue making strong profit.