By Debbie Strickland

Biotechnology took a harder hit than most industries in Monday's U.S. stock market plunge, with the Nasdaq Biotechnology Index dropping to 308.74, an 8 percent decline.

"Biotech was hammered enormously," said analyst David Crossen, of NationsBanc Montgomery Securities, in San Francisco. "Even today [Tuesday], with the market recovering nicely, biotech is barely up."

Holders of shares represented in broader market indices such as the Dow Jones industrial average enjoyed gains of more than 4 percent following Monday's losses of between 6.5 and 7.2 percent.

Nasdaq's biotech index rose 3.6 percent Tuesday to close at 319.71.

Both Crossen and analyst David Stone cited biotechnology stocks' smaller capitalization and lower liquidity as distinguishing factors.

"One could say [biotechnology shares] did worse than the broader market averages," said Stone, managing director of Cowen & Co., in Boston. "But I think if one looked at stocks of similar capitalization and liquidity, it would be about the same. Companies that have a sufficient cash balance and are not trying to sell equity right at the moment are really not affected at all."

The most recognized names in biotech — most notably Immunex Corp. — absorbed some of the largest dollar-value declines Monday, noted Edmund Debler, an analyst for Mehta & Isaly, in New York.

The five top dollar-value losers Monday were Immunex, of Seattle (-$10); BioTime Inc., of Berkeley, Calif. (-$8.50); ICN Pharmaceuticals Inc., of Costa Mesa, Calif. (-$8.125); Incyte Pharmaceuticals Inc., of Palo Alto, Calif. (-$8.062); and Qiagen Inc., of Santa Clarita, Calif.
(-$6.687).

Two other big names in biotech fell sharply Monday: Centocor Inc., of Malvern, Pa., fell $5 Monday, and Agouron Pharmaceuticals Inc., of La Jolla, Calif., lost $4.375.

The industry's sub-par bounce-back Tuesday came as no shock to industry watchers.

"Recovery could be more difficult for biotech stocks than for, say, GE [General Electric Co.], Ford [Motor Co.] and GM [General Motors Corp.]," said Debler. "When you have a stock market event of [Monday's] magnitude, people who sell stock and want to reinvest will pick up a bargain in a larger-name company, like Eli Lilly and Co. or Pfizer Inc., and get out of the more speculative stories."

"I would suspect," agreed Crossen, "the initial movements by the big institutions would be flights to quality, because these markets' recoveries will be tested probably a couple more times before people are breathing easier."

Investors were snapping up some biotechnology shares Tuesday, including Qiagen, Agouron, Immunex and Sonus Pharmaceuticals Inc., of Bothell, Wash. — all of which closed higher.

"People are looking into the better stories, and they're cherry-picking the best ones right now," said Crossen. "A broader biotech rally really will depend on greater conviction about market recovery." *

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