"Bubbleology" theorists were out in force last week after biotech hit a few bumps in the road. The industry's stumble left analysts and investors alike wondering if the predicted major correction for the sector was about to start and put an end to biotech's excellent five-year bull run.

There was no doubt that the closing few days of April were ugly, with the share prices of all biotech companies coming under pressure. In fact, the 321 public biotechnology companies tracked by BioWorld Snapshots collectively saw a 5 percent drop in value for the week.

The exodus from biotech began with less-than-stellar first quarter financials from one of the industry's high-flyers, Biogen Inc.

It was a mixed start for the year for that company; while making good progress on the pipeline, CEO George Scangos acknowledged that the firm's commercial results were not as strong as execs would have hoped. The company suffered a number of headwinds during the quarter, including moderating patient growth for its oral multiple sclerosis (MS) therapy Tecfidera (dimethyl fumarate) in the U.S. and Germany. (See BioWorld Today, April 27, 2015.)

Biogen's shares have been on a slide ever since they closed at $475.98 on March 20, a value that vaulted the company briefly into the exclusive $100 billion market cap club along with Amgen Inc. and Gilead Sciences Inc.

Fast forward to market close Thursday and the company's share value was $373.93 a dramatic $100 drop that added weight to the argument that the sector's market correction has started.

CASE FOR BEARS

Factor in short-lived worries over Amgen's cancer immunotherapy drug, talimogene laherparepvec (T-vec) over the critical tone of FDA briefing documents going into the FDA's Cellular, Tissue and Gene Therapies and Oncologic Drugs Advisory Committees, and shares of Celladon Corp. cratering on disappointing trial results, and you have plenty of fuel to support the correction theory. Although T-vec did get a 22-1 vote from the two committees that its overall risk-benefit profile supported traditional approval for the treatment of injectable, regionally or distantly metastatic melanoma, the Thousand Oaks, Calif.-based company's shares (NASDAQ:AMGN) did fall 2.75 percent last week and closed the month down 1.2 percent.

BioWorld's Blue Chip Biotech Index, a price-weighted index that includes 20 of the top biotechnology companies as rated by market cap, tumbled 3 percent last week but is still 16 percent ahead year to date, compared with no change in the Dow Jones Industrial average (DJIA) and 4 percent increase in the Nasdaq Composite during in the same period. (See BioWorld Blue Chip Index, below.)

The headwinds that biotech is currently facing is similar to those it experienced about one year ago when a selloff was triggered by concerns in U.S. government circles over the price of a hepatitis C drug treatment from Foster City, Calif.-based Gilead.

While that negative sentiment did not cause a full scale panic among investors, it certainly got ugly for the sector, with the BioWorld Blue Chip Biotech Index closing down 7.5 percent for a two-day trading period with all companies in the group seeing their share values fall. (See BioWorld Insight, April 7, 2014.)

This time around only 50 percent of the companies in the group recorded negative figures for the month.

It was also a challenging week for companies with market caps in the range of $1 billion to $3 billion comprising the BioWorld Biotech Growth Index, dipping 9 percent, though the BioWorld Emerging Biotech Index, which recorded a strong 9 percent increase for the month of March, gave all those gains back in the final four days of April. (See BioWorld Biotech Growth Index and BioWorld Emerging Biotech Index, below.)

The BioWorld Biotech Growth Index has now dipped underwater year to date, but the BioWorld Emerging Biotech Index is still keeping pace with the blue chip companies and is up 19 percent for the year.

CASE FOR BULLS

Yes, it has been ugly for biotechs for several trading sessions, but it is important to keep in mind that the sector's fundamentals have not changed during this turbulent period.

That is evidenced by the first quarter returns. Gilead, for example, disclosed another strong financial quarter, impressing the Street with soaring profits. The company's total revenues for the first quarter of 2015 were $7.6 billion, compared to $5 billion in the first quarter of 2014. Product sales were $7.4 billion in the first quarter, compared to $4.9 billion for the same period in 2014.

It was the same story for several reporting companies, including Acorda Therapeutics Inc., of Ardsley, N.Y., which said its first quarter sales of MS drug Ampyra (dalfampridine) increased by 27 percent over the same period a year earlier, generating net revenues of $92.4 million, compared to $72.5 million for the same quarter in 2014.

Celgene Corp.'s president and chief operating officer, Mark Alles, had no doubts about a promising future for that company. On a conference call to discuss the first quarter financials, he noted that Celgene is well positioned to achieve its 2015 goals. The Summit, N.J.-based company reported net sales of $2.055 billion, a 20 percent increase over the same period in 2014, with operational growth of 22 percent. (See BioWorld Today, May 1, 2015.)

With plenty of news pending from companies expecting FDA decisions there is much to keep investors engaged. That includes Amgen, which reported last week that the FDA's Endocrinologic and Metabolic Drugs Advisory Committee will review data supporting its biologics license application for much-anticipated anti-PCSK9 drug Repatha (evolocumab) for the treatment of high cholesterol at a meeting on June 10 and a PDUFA date set for Aug. 27.

With execs remaining upbeat despite the prevailing nervousness in the market, biotech will once again burst the bubbleology theories.