By Randall Osborne

West Coast Editor

SAN FRANCISCO - Like barometers of the pressure felt among 5,000 attendees of the J.P. Morgan H&Q Healthcare Conference here, analysts conveyed their wary optimism about the sector during the much-liked annual event's traditional wrap-up session.

"It's all about relative opportunities," said Alex Zisson, managing director for the health care sector. Even outside of health care, he added, confusion reigns.

"People have no idea what to do about the stock market in general," he said.

In specific, analysts had pointers - even if "within biotech, there's not a lot of consensus on what looks good," Zisson said.

Valuations, said analyst David Molowa, "for some of the leading companies have become much more reasonable," and a dramatic upturn is unlikely. As much as another wild surge, like the one earlier this year, might be good for investors, it would not be good in the bigger picture, anyway," he said.

"I'm not looking for a huge rebound in the group," Molowa said. "I prefer not to see that. I'd like to see some selectivity out there."

Favorites ran the gamut. Franklin Berger surprised few when he cast a vote for South San Francisco-based Genentech Inc., which disclosed a potential $187 million deal with OSI Pharmaceuticals Inc., of Uniondale, N.Y., during the conference. (See BioWorld Today, Jan. 9, 2001.)

"Our initiating report, a year and a half ago or two years ago, was called 'The Best and the Brightest,' and everything I saw the last few days means they are just as good, just as bright, just as on top of their game as before. It's a product and a pipeline-driven story."

Molowa, on the other hand, took a route that he said some might not have expected. His pick was Biogen Inc., of Cambridge, Mass.

"This name is a bit controversial," he acknowledged. "It's gone through a period during the last 10 years of a love-hate relationship with Wall Street. Right now, we're in the hate phase. With the stock down toward about $50, The Street is saying their lead product, Avonex, is dead, there's no growth left in it, no pipeline at the company, [and] they're not going to be able to do anything strategically. Why do I want to be here?"

The answer, Molowa said, is that Avonex (interferon beta-1a), the world's leading multiple sclerosis drug, has begun to regain steam in the U.S., and is selling well in Europe. And Biogen's psoriasis product, Amevive (recombinantly engineered LFA-3/OgG1 human fusion protein), shows promise, he said.

"Right now, you're paying zero for that product," he said. With Phase III data expected at the end of the year, value and momentum for Amevive will build, Molowa said.

Other choices during the conference wrap-up included Aurora Biosciences Corp., of San Diego, described by analyst Robert Olan as a bargain overlooked by some. The company's spending on what it calls its "big biology" internal development program has caused some to exit the stock, but the value will rise, he said.

Jason Kantor chose Alkermes Inc., of Cambridge, Mass., anticipating the filing this year of a new drug application for sustained-release, injectable Risperdal, an anti-psychotic drug.

Ronald Renaud picked Invitrogen Corp., of Carlsbad, Calif., for its strength in kits and reagents, and Maged Shenouda boosted Medarex Inc., of Princeton, N.J., predicting that increased success with monoclonal antibodies by others will give more juice to the firm's UltiMAb system.