A floor may have been established under the top-tier biotechstocks, if the behavior of the AMEX biotech stock index is anyindication.
The Biotechnology Index, which began from a base of 200calculated on Oct. 18, 1991, has bounced back every time it hasapproached its Nov. 26 low of 182.16. The low, 9 percent belowthe index base, came several days after the Nov. 15 sell-off ofbiotech stocks.
After peaking at 256.60 on Jan. 14, the index declined to183.87 on Feb. 19, bounced and then settled back to 184.50 onTuesday before bouncing up again Wednesday.
The index of 15 NASDAQ stocks, which is awaiting SECapproval, includes seven first-tier stocks. The top-tier groupconsists of Amgen Inc. (AMGN), Biogen Inc. (BGEN), CentocorInc. (CNTO), Chiron Corp. (CHIR), Genzyme Corp. (GENZ),Immunex Corp. (IMNX) and Synergen Inc. (SYGN). The eightother stocks are California Biotechnology Inc. (CBIO), CytogenCorp. (CYTO), Gensia Pharmaceuticals Inc. (GNSA), ImmuneResponse Corp. (IMNR), ImmunoGen Inc. (IMGN), MedImmuneInc. (MEDI), Mycogen Corp. (MYCO) and Xoma Corp. (XOMA).
"If there is a floor, it's the November lows," said Sutro & Co.broker Richard Bock. "The shakeout in the first tier is prettymuch over with unless one of three factors comes into play:Centocor's Centoxin doesn't get approved, there is political heaton drug prices, or the rotation into cyclicals continues."
The sell-off has been within the normal parameters of a bulladvance, Bock said, in which a stock that moves from $10 to$20 is likely to fall back 50 percent to $15.
However, the second- and third-tier stocks won't see their lowsuntil this summer, he said. "I've started to step in and buy thefirst tier, but I'm only nibbling at the second tier."
Alex. Brown & Sons. Inc. broker Michael King said it's hard totell yet if the group is rebounding. "Technically, the group wasway oversold," he said.
-- Karen Bernstein BioWorld Staff
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