By Randall Osborne

West Coast Editor

SAN DIEGO ¿ Many initial public offerings, filed too early, are likely not to make it. Follow-ons will fare much better. Convertible note offerings will increase in popularity, and should. Ditto shelf registrations, only more so, with their lowered risk and a bargaining power unseen in earlier years.

Such was the word from James Streator, director of health care investment banking for Thomas Weisel Partners LLC, of San Francisco, speaking to an audience at the eighth annual BIO 2001 International Biotechnology Convention & Exhibition.

¿If you looked back three years from today, you would have been a lot more pessimistic, and a lot more negative, and a lot more depressed,¿ Streator said, speaking as part of a panel called ¿An Overview: The Future of Life Sciences Financing.¿

Streator said the industry is no longer perceived as made up of ¿those biotechy¿ guys over in left field, who don¿t know what they¿re doing.¿

Protestors outside the convention center had their doubts, and the meeting opened over the weekend amid tight security, with local police joined by FBI agents on foot, on bicycles, in patrol cars and even in helicopters, circling high above the building.

Dan Eramian, BIO¿s vice president of communications, said there had been no major incidents, and protestors numbered between 750 and 1,000, fewer than at last year¿s convention in Boston. Attendees ¿ a record 13,000 to 15,000 of them expected, compared to last year¿s 12,000 ¿ had their eyes not on the protestors, but on the money.

About $10 billion was invested in biotechnology in 1999, and $32 billion in 2000, Streator noted, which is ¿just a staggering amount of capital.¿

It will keep coming, he said.

¿This is a long-term business,¿ Streator said, adding that he was ¿very encouraged by the overall tone¿ of optimism and patience.

In mutual funds, ¿despite the fact that there are negative numbers, there are also positive numbers, [and] if you flattened out the whole curve, it generally hasn¿t changed all that much in terms of capital going in and staying there,¿ he said. ¿Over the long haul, people are not taking their money out of mutual funds, people are not running for the hills. They are sticking it out despite a somewhat difficult market.¿

The volatility, worrisome as it might be, is helping in some ways, Streator added ¿ particularly in the ability of companies with a market cap of at least $1 billion to file shelf registrations.

¿You can now turn to your investment bankers and say, Look, we filed the shelf, it¿s effective, what are you going to bid me for that stock overnight?¿¿ he said. ¿At 4:30 in the afternoon, you¿re given a price, and you¿re going to get a check. You know exactly what it¿s going to cost to sell that capital. The risk in that whole equation has been shifted from you, the issuer, to me, in the investment bank.¿

The jittery market means a need for surety, Streator said.

¿You can start to take advantage of that, and make the banks underwrite something, which we haven¿t done for a long time. You need to be aggressive about this, and take advantage of it.¿

Another panel member was Dennis Purcell, a former colleague of Streator at Hambrecht & Quist, in San Francisco (now JP Morgan H&Q). Purcell is senior managing partner with the Perseus-Soros BioPharmaceutical Fund LLC, in New York.

Up-and-coming companies have largely consisted of non-therapeutic firms, Purcell said.

¿From a public equity standpoint, if we look at these companies [that went public], it¿s just a wide range of companies. It¿s been a real challenge on the investment side to sort out the winners and losers there.¿

Many companies that managed to complete their IPOs are now trading much lower than they started, he observed ¿ adding that, overall, the ¿buy and hold¿ approach will work better for market players than going with momentum, which has created problems.

The conference continues through Wednesday.