The top-tier biotechnology companies gave back 25 percent oftheir value during the first-quarter correction of biosciencestocks, losing $6.8 billion in market capitalization on a fullydiluted basis.

The group -- Amgen Inc., Biogen Inc., Centocor Inc., ChironCorp., Gensia Pharmaceuticals Inc., Genentech Inc., GeneticsInstitute Inc., Genzyme Corp., Immunex Corp. and SynergenInc. -- began the quarter with a combined market cap of about$28.3 billion. Only Gensia, with a 12 percent price gain, resistedthe fallback.

The 16 companies that went public during the quarter endedTuesday lost an average of 11 percent, excluding outlierDeprenyl USA, which rose 140 percent.

As a whole, the 177 bioscience stocks covered by BioWorldduring the quarter fell 14 percent. The AMEX BiotechnologyIndex, heavily weighted by top-tier stocks, was off 20 percent.

While the correction was expected, following a year in whichbioscience stocks rose almost 180 percent, the big question iswhen will it end.

"As long as we continue to have this incredible flood of initialpublic offerings, the sector will be flattish," said RobertPeterson, an analyst at Hanifen, Imhoff Inc. IPOs by 16companies raised $597.9 million this quarter. Once the spatestops, as Peterson expects it to during the second quarter,stocks may move up again.

Nevertheless, investors should expect some continuedcorrection, especially among the younger companies, which fellless in the first quarter than did first-tier stocks. Many of thesecond- and third-tier companies have recently concludedpublic offerings, and early investors who were prohibited fromselling shares will soon be able to do so.

"There's a big supply of stock that will come out of lockups inthe next six months to a year that investors like myself willneed to sop up," said Cheryl Alexander, who manages PutnamFunds' Health Sciences Trust. "But I'm anticipating that thedemand won't match the supply."

Falling prices mean "this is the year to get in, do somehomework, do some price shopping," said Cowen & Co. analystJoyce Lonergan.

Peterson is advising investors to buy a few stocks on a six- tonine-month horizon. Advanced Tissue Sciences Inc., AgouronPharmaceuticals Inc., Synergen, T Cell Sciences Inc. and U.S.Bioscience Inc. are all good buys at current prices, he said.

Because the long-term future for the sector is so bright, "I'dwant to own a basket of 10 or 12, knowing full well that threeor four will go belly up," he concluded.

"Investors can make money by looking at who will file forproduct approvals and who will announce substantive results,"said Alexander.

As the sector has languished with little positive news, it'sbecoming more likely that several long-awaited positiveannouncements might come fairly close together.

Analysts expect the FDA to reach decisions on products forhemophilia, gram-negative sepsis, kidney cancer and graft-vs.-host disease in the next two quarters, as well as on severalimaging agents.

The good first-quarter earnings performances expected ofGenzyme and Amgen should also help the group, said Lonergan.

BIOTECH INDEX UP ON TUESDAY

The AMEX Biotechnology Index closed at 180.78, up 1.69, onTuesday.

-- Karen Bernstein BioWorld Staff

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