The average percentage of shares on loan is now at 7.3 per cent, its highest level this year and well above the index average of about 4 per cent, said Mr Schutte. The figure is second only to energy stocks.
Biotech stocks on the small-cap index are now down 12.8 per cent since their July peak, while the Nasdaq Biotechnology Index, which was up an impressive 31 per cent this year at its peak in the same month, has since fallen 12.9 per cent as investors pulled their cash from biotech exchange traded funds.
BlackRock's iShares Nasdaq Biotechnology fund was among those that recorded the largest redemptions in August. More than $800m, or almost 13 per cent of assets under management, left the fund in August, but the ETF has still returned 9.9 per cent this year.
The Nasdaq Biotech index is still up 14.6 per cent year-to-date and has gained 470 per cent since March 2009, having been up as much as 580 per cent in July over the same period, making it one of the best performing sectors in US equities since the financial crisis.
Like all equities, biotechnology companies have been lifted partly by the Federal Reserve's loose monetary policy since the financial crisis, but also by investors chasing the returns that follow the discovery of new drugs.