This week Wood Mackenzie, an Edinburgh-based research and consulting firm, reviews recent trends in biotechnology stocks. From mid-January, the Nasdaq Biotechnology Index set out on a gradual upward trajectory — only to be interrupted by a sharp drop in late February. This fall wasn't biotechnology-specific, however — it reflected the global market correction at the end of that month.

The biggest mover in the index over the past two months is California-based Onyx, whose stock price more than doubled in the week starting on 12 February. These gains — which survived the correction — came in response to strong data for its oncology drug, Nexavar, in late-stage clinical trials for the treatment of liver cancer. Onyx's partner for Nexavar is the German drug firm Bayer Schering, which already markets the drug for renal cancer treatment in the United States and the European Union.

Other gains were triggered by robust financial performance reported by a small number of biotech firms. Gilead Sciences, also of California, posted a 48% year-on-year rise in fourth-quarter revenues, underpinned by a surge in sales of its HIV drugs. The market liked Gilead's forecast that total sales could reach $3.5 billion in 2007, up 35% from last year: the company's shares duly hit their highest-ever level on 21 February.

The biotechnology index underperformed broader indices last year and is now faced with the challenge of recovering from the February dip. The performances of these Californian companies provide early indications that it may yet manage to do so.