Biotechnology analysts issued a flurry of ratings changes onCentocor Inc.'s stock in response to Monday's news that thecompany has stopped its Phase III clinical trial of its septicshock drug, HA-1A, and suspended sales in Europe due tounexpected patient deaths.

The Malvern, Pa., company's stock (NASDAQ:CNTO) dropped 63percent after the announcement on Monday, from $17.75 to$6.63 a share. It dropped another 88 cents a share on Tuesday,closing at $5.75, with almost 5.5 million shares changing hands.Almost one-half of all the company's outstanding shares weretraded in the past two days.

The biotechnology indexes also continued to tumble, with theAMEX Biotechnology Stock Index off 3.59 to 151.55 and theChicago Board Option Exchange Biotechnology Index down 5.01to 144.39. The indexes lost 12 points and 7.61 points,respectively, on Monday.

Jay Silverman, an analyst at Wertheimer Schroder in New York,repeated his "neutral" rating on the stock, but said thatCentocor's woes could hurt the biotechnology sector's ability toraise money in the short term.

"This happened just as investment in biotechnology was gettingheated again, despite a lack of excellent fundamentalblockbuster drug announcements," he said. "We could havesome indigestion on our hands here."

But Silverman also speculated that Centocor's bad news maynot cast as long a shadow over other biotechnology companiesas it did last spring. "We have a more directed, focusedinvestment base than we did last year," he said. "Theyunderstand that good things happen and bad things happen inthis industry."

Wole Fayemi of Hambrecht & Quist in New York downgradedhis rating on Centocor from "buy" to "neutral" in a report titled"Centoxin Stumbles, Centocor Falls." In his downgrade ofCentocor, Fayemi argued that the market's reaction to the newswas "somewhat excessive" and that "the worst appears to beover." He said the current price of the stock undercuts fairvalue for the company, even in the worst case scenario, whereHA-1A is dropped completely.

PaineWebber analyst Linda Miller downgraded Centocor to"unattractive" from "attractive."

Teena Lerner of Lehman Brothers wrote on Monday, "Weconsider Centoxin's (HA-1A) chances for approval and/ormarket acceptance to be nil." She said that Synergen Inc.(NASDAQ:SYGN), whose sepsis drug, Antril, is in clinical trials,would benefit from Centocor's setback. "SYGN's position ashaving the only viable anti-sepsis drug has been strengtheneddramatically," she wrote.

Peter F. Drake of Vector Securities International of Deerfield,Ill., upgraded Centocor stock from "sell" to "neutral" in a reporttitled, "Most of the Bad News is Behind Us." Vector has had a"sell" rating on the stock since last July.

Drake argued that while "significant risks remain in theCentocor investment story," a large part of the down-side riskfor investors is past with the stock trading under $7.

Alex. Brown & Sons analyst David Webber upgraded Centocorfrom "sell" to "source of funds," and upgraded Xoma Corp.(NASDAQ:XOMA), which is also developing a drug to treatsepsis, from "source of funds" to "neutral." He said that neitherupgrade constitutes a recommendation to buy.

-- Lisa Piercey Business Editor

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