So far this year public financing of biotechnology companieshas followed a pattern established in 1992.

Last year a heated first quarter was followed by three leanquarters. While it's too early to tell how closely 1993 willfollow last year's script, public offerings have been brisk inJanuary.

"The bullishness of Wall Street is high right now," said KennethLee, national director of life sciences industry services for Ernst& Young in Palo Alto, Calif. "But no one expects it to be as big asthe '91-92 window."

Lee pointed out that Centocor Inc.'s announcement on Mondaythat it has suspended its Phase III clinical trials of HA-1A dueto unexpected patient deaths could dampen the current marketatmosphere. "Centocor could have the dubious distinction ofclosing down two biotech financing windows in one 12-monthperiod," he said.

"I think we need to stop talking about investment inbiotechnology in terms of windows," argued D. Larry Smith,senior pharmaceutical analyst for Hambrecht & Quist Inc. inNew York.

"This is part of a fundamental shift. For years now, most of themoney has been tied up in big, lumbering dinosaur companies,like IBM. The investment community is realizing that thecutting edge of research and new product development isshifting permanently to small companies," he said.

Biotechnology companies are small, innovative andentrepreneurial, willing to accept risks for potentiallyenormous rewards, and as such they will continue to attractinvestors throughout the '90s, said Smith. "All the deals thatdeserve to get done will get done," he added.

But some observers wonder if biotechnology companies'insatiable need for cash will outstrip the investmentcommunity's ability to evaluate their technology.

"There are just a ton of secondaries out there," said SarahGordon, an analyst at Amerindo Investment Advisors Inc. "Thecompetition for capital amongst the CEOs is absolutely intenseright now."

Gordon said the sheer number of proposed offerings that needsorting through is overwhelming. "In this complex industry, it'sclearly not enough to go to a road show lunch and invest onthat basis," she said. "The CEOs, with help from savvy bankers,have learned how to package themselves and their company'stechnology for Wall Street consumption. That makes it all themore treacherous to sort through and find the really soundtechnologies and companies to invest in."

Last Year's Offerings

According to BioWorldLs records, 32 companies raised $918million in 1992 in second, third and, in at least one case, fourthrounds of financing. Forty-two companies raised $1.2 billion ininitial public offerings last year.

January saw seven companies complete offerings worth $204million. February continued the momentum, with fourcompanies raising $183 million, and March brought $171million to six companies. April and May were also active, withcompanies grossing $81 million and $86 million, respectively.But by June, after Centocor (NASDAQ:CNTO) and U.S. BioscienceInc. (ASE:UBS) suffered setbacks for high visibility products,the financing front became a wasteland.

In December, there were signs of life, with three companiesraising $113 million. And the momentum seems to have carriedover to this month.

-- Lisa Piercey Business Editor

(c) 1997 American Health Consultants. All rights reserved.

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