This week, Wood Mackenzie, an Edinburgh-based research and consulting firm, reviews recent trends in biotechnology stocks.

Credit: SOURCE: NASDAQ

The Nasdaq Biotechnology Index fell steadily as 2006 drew to a close, but rebounded in early January to its mid-November levels.

Downturns in individual stocks were precipitated by poor data from clinical trials. Shares in Illinois-based Neopharma, for example, plunged by two-thirds on 8 December after news that its oncology therapy cintredekin had not shown a survival benefit in aggressive brain tumours. On the same day, Nuvelo of California met a similar fate, with its stock losing four-fifths of its value when its anti-clotting candidate, alfimeprase, failed to help patients with poor peripheral circulation in two trials. That could also jeopardize Nuvelo's lucrative co-development agreement with Bayer in Germany.

Later gains were bolstered by the announcement of partnership and licensing deals. Shares in Epix Pharmaceuticals of Massachusetts rose by 30% in mid-December, after news of its drug development collaboration with GlaxoSmithKline on a potential treatment for Alzheimer's disease.

And Seattle Genetics climbed by 34% in early January, after licensing commercial rights to its early-stage anticancer monoclonal antibody, SGN-40, to Californian industry leader, Genentech.

Overall, the index is emerging from an indifferent 2006: it made impressive gains at first to end February up by 21%, its high point for the year, only to slide by mid-July to 12% below where it started the year. A subsequent recovery took it to an anaemic 1% gain for all of 2006, underperforming other, broader market indices.