Market Crash = Biotech Carnage

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On a day when the Dow Jones Industrial Average (INDEX: ^DJI) crashed 389 points as the European debt drama continues to unfold, significantly larger moves happened in the health-care sector. Let's find out which stocks were today's big movers and big newsmakers.

On days when the market is plummeting, the instinctual flight to safety often means defensive sectors like health care perform better. For instance, major pharmaceutical makers were, on average, down less than a 1 percentage point. However, that doesn't mean individual biotech stocks weren't left battered and bruised. A trio of companies reported earnings, and investors are the poorer for it.

Zalicus (NAS: ZLCS) closed down 10% after reporting a $9 million loss for the quarter. Cash burn is a concern, but Zalicus still has $49 million in the bank, so dilution isn't imminent. Investors were probably hoping for a detailed update on rheumatoid-arthritis medicine Synavive, but management left them hanging on until 2012, when the company plans "to report top-line clinical results for both Synavive and our clinical-stage Ion channel programs."

Complete Genomics (NAS: GNOM) suffered a similar 10% plunge, but it brought its contemporaries down with it. Pacific Biosciences (NAS: PACB) fell 8% and Illumina (NAS: ILMN) 4%. The hits keep coming for the gene-sequencing industry; shares of all three have collapsed by more than 55% since mid-May. A disappointing earnings season combined with tough industry conditions will do that. Complete Genomics manages a larger $21.6 million loss on flat revenue of $4.2 million. One good sign for investors: Complete Genomics insiders have been snapping up shares, so there may be brighter days ahead for this company than the market suspects.

Arena Pharmaceuticals (NAS: ARNA) reported third-quarter earnings after the close, but shares were down 5% leading up to it. Revenue fell 54% and its net loss came in 2 cents worse than expected at $0.16 per share. Like Zalicus, the numbers aren't that important; it's the operational update that's on center stage. Arena's weight-loss drug lorcaserin was rejected by the FDA with a laundry list of concerns, but management is confident that it can respond to the FDA before "year end" and intends to submit lorcaserin for European approval in 2012. With rival VIVUS (NAS: VVUS) making headway toward approval for Qnexa , Arena investors are probably getting antsy waiting for their second shot at biotech riches.

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At the time this article was published David Williamsonholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Illumina and Pacific Biosciences of California. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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