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Biotech Is Down but Far From Out

Biotechnology stocks are starting to look wobbly after a record run, but recent history suggests the sector is better equipped than ever to handle sour stock performance.

Biotech has been a hot corner in which to invest for much of this decade. Some 269 companies have gone public since 2013. That tally is nearly as high as total biotech IPO formation from 1995 through 2007, according to Leerink Partners Research. Meanwhile, startups that already have gone public have had no problem accessing additional financing. There have...