Biotechnology stocks retreated across a broad front during thesecond quarter that ended Tuesday, keyed to just a couple ofcompany-specific setbacks and a few market trends that havelured investors away from growth stocks.

Reflecting that change, the AMEX Biotechnology Index fellnearly 20 percent to 145.45 during the quarter, hitting itslowest ebb since the index was started last October. Bycomparison, the wider NASDAQ composite index declined 4percent to 563.60 during the quarter.

The declines were not equally distributed. Top-tier companieswith products -- and often profits -- weathered the stormmuch better than the large number of stocks that went publicduring the boom of 1991. Many of them are trading belowtheir offering price.

Among the 10 largest biotechnology companies, based onmarket value, five stocks closed up, four declined and one,Genzyme Corp., finished where it started at $44 a share. Threeof the five gaining stocks were up by more than 10 percent,while all the declining issues dropped less than 10 percentexcept one, Elan.

The sector's biggest stock, Amgen Inc. finished the quarter at$60.88 a share, off just $1.13, or less than 3 percent.

As usual, some of the biggest moves were tied to company-specific events. Notable among these was Centocor Inc., whosestock went into a one-week free-fall of $21 a share to $12.75 ashare in April after the FDA decided that the company's leaddrug, Centoxin, needed more study. The stock closed Tuesday at$13 a share, down 55 percent for the quarter.

Xoma Corp., which was also dealt a setback before the FDA,closed out the quarter at $13.50 a share, off nearly 31 percent.

Four of the sector's stocks -- Applied BioScience InternationalInc., BioChem Pharma Inc., Curative Technologies Inc. andCygnus Therapeutic Systems Co. -- shed at least half their valueduring the quarter.

The good side of the relative decline in the sector is thatanalysts see less room for prices to fall -- and less risk.

"A large portion of the group is sitting near what I would hopeis their low point," said Denise Gilbert, an analyst with SmithBarney in San Francisco. "I'm not expecting any significantweakness."

Many observers are looking to a relatively quiet summer interms of major news and announcements.

"I expect sideway price performance, no major events (and)time to build support for the group," Gilbert said.

David Stone, a Cowen & Co. analyst in Boston, said he thinksthat the hard-hit health care sector could be headed for arecovery. Biotechnology could benefit from the increasingpublic efforts to contain medical costs, which should promptcompanies to intensive the search for new cost-effectivetreatments.

Tomorrow: Analysts adjust their picks for the next quarter andbeyond.

-- Ray Potter Senior Editor

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