Despite widely held perceptions that biotech stocks havedrifted down as a group this year, much of the fallout has beenfocused on top-tier stocks, with many smaller-cap companiessustaining gains made last year.

The top-tier biotech stocks remain an average of 16 percentbelow their Dec. 31 close, despite getting an upward bounce onWednesday.

Of the nine stocks in the group -- Amgen Inc., Biogen Inc.,Centocor Inc., Chiron Corp., Genentech Inc., Genetics InstituteInc., Genzyme Corp., Immunex Corp. and Synergen Inc. -- onlyAmgen, Centocor and Immunex are above their closing priceson Nov. 14, the day prior to the last big sell-off in the sector.

However, another 81 of the 142 bioscience stocks tracked byBioWorld over the period are trading above the Nov. 14 close.

Among stocks trading over $5 on Dec. 31, the biggest winnersso far this year include Biomira Inc., HemaCare Corp.,Immunomedics Inc. and Somatix Therapy Corp., all of whichhave gained more than 60 percent.

Losers are led by U.S. Bioscience Inc. and MGI Pharma Inc.,both of which recently received bad news on their non-biotechchemoprotective drugs. Eleven other stocks have dropped morethan 20 percent this year.

Several top-tier companies have been affected byannouncements of 1991 earnings. In several cases, plans forincreased R&D spending reduced earnings projections for 1992and 1993.

"A lot of the large companies said they weren't going to be ontarget with analysts' optimistic projections," said PaineWebberanalyst Linda Miller. These included Genetics Institute,Genentech, Biogen, Chiron and Immunex, she said. "That left uswith a handful of companies with some earnings momentum,"Miller said. "So if you're looking for a growth stock, the pickingsare slimmer in biotech than other areas."

The higher market cap stocks also have been affected by themarket's rotation into cyclical stocks, which began in mid-January.

"The economy is recovering, and money is being rotated out ofbiotech into other groups where the prospect for earnings andthe risk/reward ratio is more attractive," said analyst JeffreyCasdin of Oppenheimer & Co. "Usually such a trend begins withbig funds that hold the bigger biotech stocks. And you couldsee it in technology and healthcare stocks generally."

Casdin, who said the group is in a typical bull market correctioncycle, added: "We're seeing the secondary stocks starting tobreak up in the last few days. Eventually we'll see the bigstocks start to rally on some fundamentals."

Smith Barney analyst Denise Gilbert on Wednesday advisedinvestors to look to "defensive" biotech stocks. Herrecommendations include Amgen, based on earnings growing at35 percent to 50 percent per year. She also picks Genentechbecause it doesn't trade on fundamentals, but is tied to a pre-determined price for Roche Holdings to redeem the outstandingGenentech shares it does not own. Genentech, she said, hasreached its current discount to Roche's redemption price onlyonce since the completion of the Roche merger in December1990.

-- Karen Bernstein BioWorld Staff

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