With the SPDR S&P Biotech Index up 41% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.

Despite generally positive earnings data for some of the biotech sectors largest companies, it was a week riddled with bad news for a handful of small-cap companies.

Steal of a deal?
I really had to dig deep to find an encouraging way to end the week and the best I could muster was the early week report from Bloomberg News that the struggling Dendreon (NASDAQ: DNDN) had hired JPMorgan Chase to act as its advisor and potentially help put it up for sale. Sales of Dendreon's only drug approved by the Food and Drug Administration, Provenge, which is used to treat advanced prostate cancer, have struggled mightily as its lack of a marketing partner and higher pricing relative to its peers have stymied sales growth. The potential for a sale certainly put some pep in Dendreon's step earlier this week with shares temporarily trading back above $3.00, however Dendreon finished the week up by just 1%. Dendreon's technology platform could certainly be worth a bid from a competing company, but I wouldn't get your hopes up too much considering Provenge's bleak outlook.

The four remorse-men
Instead of the four horsemen coming to the rescue, four small-cap biotech stocks acted more like the remorse-men, causing feelings of remorse and regret for shareholders this week.

Shareholders in Merrimack Pharmaceuticals (NASDAQ:MACK) had an absolutely miserable week, with shares down 28%, after Merrimack and collaborative partner Sanofi reported on Wednesday that a mid-stage study of MM-121 in combination with Paclitaxel for the treatment of platinum-resistant or refractory-advanced ovarian cancer failed to hit its primary endpoint. The really disappointing aspect wasn't just that MM-121 missed the mark, but that relative to the control arm of just Paclitaxel it failed to provide any benefit whatsoever (a hazard ratio of 1)! Merrimack did note a select subset of patients with two specific biomarkers that did demonstrate a clinical benefit that could be worth further research, but it also dramatically shrank the treatment population potential of MM-121 should it proceed down the development pipeline.

Suffering an intraday plunge of greater than 42% for the third time in a matter of weeks was Ariad Pharmaceuticals (NASDAQ: ARIA) which nosedived after receiving a request from the FDA to temporarily suspend sales of its only FDA-approved drug, Iclusig. The blood cancer treatment was recently found to cause higher levels of arterial blood clots in a two-year follow-up study than anticipated which has necessitated the temporary halt. More concerning, seven of the remaining eight clinical trials Ariad is conducting involve Iclusig. If Iclusig is not successfully be relabeled and put back on the market, Ariad is only going to have its $342 million in net cash to fall back on before it essentially starts over, nearly from scratch. Shares dove 28% this week.

Triglyceride-fighting biotech Amarin (NASDAQ:AMRN) also swam with the fishes after receiving word from the FDA after the market closed on Tuesday that it doesn't consider a drop in triglyceride levels to be enough evidence as reason to approve any expanded indications for Vascepa. Based on the suggestions of the FDA's advisory panel and its unfavorable vote against recommending Vascepa's expanded indications, it's looking like Amarin will need to run a two- to three-year efficacy trial utilizing Vascepa to see if it really does reduce heart attack risk in patients if it has any hope of gaining a much-needed expanded indication for the drug. With more cash expected to be burnt on the horizon, shares fell by 25% on the week.

The disaster du jour this week was Synta Pharmaceuticals (NASDAQ: SNTA), which didn't deliver nearly as disappointing of results on the surface as you might first believe, but it didn't save the company from getting whacked by investors during the week, either. Shares fell by 33% for the week after providing an update on its lead drug candidate, ganetespib, as a second-line treatment for non-small cell lung cancer. According to the Galaxy-1 trial update, ganetespib in combination with docetaxel reduced the risk of death from the docetaxel monotherapy control arm by 25% and improved median overall survival to 10.7 months from 7.4 months. While these results appear impressive on the surface, the reduction in death risk has shrunk from previous trials and calls into question the effectiveness of ganetespib in currently ongoing phase 3 trials.