Biotechnology stocks, joined by high-tech issues, led a broadmarket decline on Monday.
Among the hardest-hit bioscience companies were AlliancePharmaceutical Corp. (NASDAQ:ALLP), down $3.63 to $18.38;Applied Immune Sciences Inc. (NASDAQ:AISX), off $3.75 to $15;Aramed Inc. (NASDAQ:ARAMZ), down $5.50 to $29.75; CentocorInc. (NASDAQ:CNTO), losing $3.25 to $12.75; and Collagen Corp.(NASDAQ:CGEN), down $3.50 to $16.25. Another nine companieslost between $2 and $3. The AMEX Biotechnology Index lost9.40 to 134.56.
The NASDAQ composite index fell 14.61 to 577.20, while theDow Jones industrial average lost 30.19 to 3,336.31.
"What we have here is biotechnology-bashing," said GlennParker, managing director of OTC institutional trading atHambrecht & Quist. "It's nervous selling by institutions."
Some of the sell-off also could have been precipitated by arecommendation Monday by an FDA advisory committee thatBristol-Myers Squibb Co.'s AIDS drug, ddI, not receive approvalfor expanded use.
Ben Williams, health care analyst at John Hancock Global Rxfund, said some investors might be extrapolating that biotechdrugs approved for orphan indications might have troubleexpanding their approvals into larger markets.
The Street also heard another negative assessment of Centocor,as Alex. Brown & Sons analyst David Webber lowered his ratingto "sell" from "source of funds." Webber wrote that theMalvern, Pa., company "probably cannot survive the Centoxindebacle and, after limping along for a while, will be sold offcheaply. ... We conclude that Centocor is on its way to becominga 'Centocorpse,' and we advise shareholders not to wait formiracles, but to sell now."
Webber deemed it unlikely that Centoxin will receive U.S.approval to treat gram-negative sepsis, and said that theprospects for the company's other products are meager inrelation to its problems. He rated the company's managementas perhaps its most entrenched liability and said that as"currently configured," Centocor is a very unattractive takeovertarget. He also said that cash will become a problem withinseveral quarters.
The continued biotech sell-off has some analysts seeing an endin sight. "A lot of these biotech stocks are getting down to theirreal cash values, so we're nearing the bottom," Parker said.
"We will look to go back to the group when the financing driesup. To us, that would be a low point in terms of psychology andsentiment," said Williams. But he still doesn't see the grouprebounding soon, and as a mutual fund, Global Rx can't affordto wait until 1997 or '98 to see earnings on the youngercompanies.
"The only ones we'd consider buying are the ones that haveearnings, such as Amgen, Biogen and Genzyme," he said.
Webber held out hope that the market will return to biotechstocks before the next big product approval. "The market willattempt to buy ahead of the next product approval and will doit on surrogate indicators such as clinical data and scientificpublications," he said.
-- Karen Bernstein BioWorld Staff
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