By Randall Osborne

West Coast Editor

NEW YORK - More than 1,400 registrants for the Biotechnology Industry Organization (BIO) CEO and Investors Conference surged through the stately corridors of the Waldorf-Astoria & Towers hotel in Manhattan, as the third annual event began Tuesday.

A lot of them looked lost.

Uncertainty and bewilderment were themes underlying the plenary session, too, although these had nothing to do with finding one's way around a massive hotel. Instead, the questions involved whether the industry itself, after what was described as last year's "wild" valuation ride, has become lodged in a position of slowed growth.

"This time last year, there wasn't a CEO or investor in the audience who didn't have a big smile on his face," said Gary Pinkus, partner with McKinsey & Co., of New York, which hosted the session.

"We all look a little bit more serious this year, but no less optimistic," he said.

Maybe a little less optimistic.

But industry members of a panel at the plenary session urged a philosophical approach. Biotechnology over the past decade has gone through three stages of prosperity, Pinkus told the crowd. The first stage, when Amgen Inc., of Thousand Oaks, Calif., launched its red blood cell booster erythropoietin, "began the biotech era," he said.

Then followed a slump, caused by the well-publicized failure of several sepsis drugs in a row, he recalled. Upsurge No. 2 arrived with the emergence of monoclonal antibodies, heralded by the launch in early 1995 by Eli Lilly and Co., of Indianapolis, of the clot-buster Reopro, developed by Malvern, Pa.-based Centocor Inc., Pinkus said.

"Everybody thought antibodies were going to be the next big thing, and the market took off again, on event-based news," he said. Next came "a period of time when no news was bad news. The market sort of muddled along."

Most recently came the genomics hysteria, which now seems to have leveled off seriously. "Is this the end of that part of the up cycle, and we're getting into a down cycle - or is it just noise, and the good stuff continues?" Pinkus asked panelists.

Dennis Purcell, managing director of Perseus/Soros BioPharmaceutical Fund LLC, of New York, said that, although "volatility is here to stay," the effect of momentum investors who rushed into the sector during the past year is starting to be felt less.

"We're not immune to what is happening in the stock market," Purcell said. "Look at the short-term horizons of many investors, look at day traders, look at people looking for the next best thing." However, "what we're starting to see now is a little more of the 'buy and hold' mentality," he said.

Alfred Berkeley, vice chairman of Nasdaq, said investing has been made "so efficient, so effective and so much fun" that the influence of speculators is still significant.

"There are three games being played in the market," he said. "They are games of chance, games of skill and games of strategy. Speculators are looking at what the crowd's going to do," and they resemble herds of wildebeest or schools of fish.

"There's a lot of random movement there," Berkeley said.

Ting Pau Oei, vice president of Johnson & Johnson Development Corp., the first corporate venture capital firm in the U.S., proposed that any chart of biotechnology's progress examine a broader window.

"Compared to some other industries - perhaps semiconductors would be a good example - which really never move in these five-year type cycles, [biotechnology] is more like a 20-year or 25-year cycle," he said.

"I think it's fair to say that, over the last 25 years, the level of scientific medical innovation has really not varied greatly [in its pace]," Oei said. "The amount of innovation today is probably greater than it has been, but it has increased in a very gradual, consistent manner."

Henri Termeer, president and CEO of Cambridge, Mass.-based Genzyme Corp., agreed that downturns are relative not only in terms of time, but as compared with other industries.

"We talk about volatility - dot-coms," he said. "That's volatility." And when the Silicon Valley stocks went down last year, they were "unrecoverable," Termeer added, declaring biotechnology is on a "remarkable, 25-year upward cycle."

Still, Pinkus noted stocks of only 40 percent of companies in the much-celebrated spate of initial public offerings (IPOs) last year are trading above their IPO prices now.

"The secondary [offering] story is even worse," he said, with only 18 percent of companies trading above their offering prices. "That suggests we may be on the verge of another set of mixed expectations, and the sets of things that come with that," Pinkus said.

BIO president Carl Feldbaum said the conference signed up 1,400 registrants, about 900 of them investors. Last year, the total number of attendees was 800, he said. The conference continues through today. n