NEW YORK (CNNMoney.com) -- It wasn't that long ago that fast-rising biotech stocks were selling for boutique prices. Well, those days are done, and biotech's slumping performance this year has put them within reach of the bargain bin.

Biotech stock prices have dipped 4 percent year-to-date, underperforming the S&P 500, which has gained 5 percent. The industry leaders fared worse than average, with the stock price for Amgen (up $0.70 to $71.00, Charts) and Genentech (down $0.43 to $83.29, Charts) both down more than 10 percent.

Last year, biotechs as a group surged 21 percent, four times the gain of the S&P.

Chris Raymond, analyst for Robert W. Baird, said the biotech stocks in 2005 had simply become too expensive. "I think the stocks got ahead of themselves, valuation-wise, towards the end of the year," said Raymond. Referring to Genentech's 73 percent stock price surge in 2005, Raymond said, "You can't support a valuation like that for very long."

Moreover, investors who had been enchanted by biotechs were soured by the sorry performance of some experimental drugs.

One example was Indiplon, a sleeping pill from Neurocrine Biosciences (up $0.01 to $10.82, Charts), in partnership with the world's biggest drug company, Pfizer (up $0.03 to $28.34, Charts). Neurocrine's stock price has plunged more than 80 percent since May 16, when the Food and Drug Administration gave Indiplon a mixed review. Pfizer, which has seen its stock price rise 16 percent this year, severed its contract with Neurocrine.

The stock price for Threshold Pharmaceuticals (down $0.09 to $2.52, Charts) has tanked more than 82 percent since May, when the biotech started having trouble with TH-070, its experimental treatment for a prostate condition. The FDA put a partial block on the late-stage tests for TH-070 in May because of poor test results. The stock kept falling in July, when the company announced it was giving up on the drug.

The Canadian biotech Vasogen (down $0.02 to $0.65, Charts) has seen its stock price sink more than 80 percent since June, when the late-stage trial for its experimental drug Celacade showed that the drug failed to cut the risk of death and hospital treatment related to chronic heart failure.

Investment funds have flowed from the biotechs to Big Pharma, reversing last year's fortunes, when the traditional drugmakers suffered a 4 percent decline compared to the biotech stock price surge of more than 20 percent.

Biotechs are generally considered riskier than Big Pharma, but that was not the case in 2005.

Merck (up $0.26 to $41.93, Charts), for example, was still stinging from the debacle surrounding Vioxx, the painkiller it had to pull off the market in 2004, causing thousands of lawsuits to be filed against the company during the following year.

Pfizer pulled Bextra, a blockbuster painkiller, off the market in 2005. Bristol-Myers Squibb (up $0.07 to $24.75, Charts) was one of Big Pharma's worst stock performers in 2005, which is one of the factors that led to the recent ouster of former CEO Peter Dolan.

But the biotech story might have a happy ending. "The biotech sector might have been expensive [last year], but it's really cheap now," said Michael King, analyst for Rodman & Renshaw.

Lured by the plunging stock prices, bargain hunters could snatch up biotech stocks in the final quarter of 2006.

Needham analyst Mark Monane wrote, in a note published Sept. 21, that the biotech Arena Pharmaceuticals (down $0.18 to $12.47, Charts), which is testing an obesity drug, the Dutch biotech Crucell (Charts), which is expected to launch clinical trials for six experimental drugs this year, and Vertex Pharmaceuticals (up $0.07 to $34.13, Charts), which is developing a treatment of hepatitis C, could all see significant increases in stock price.

Monane anticipates an industry-wide increase of 15 percent for biotech stocks towards the end of 2006 and into the the first quarter of 2007.

Big Pharma's biotech strategy: Buy it