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Biotechs edge back up
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March 15, 2000: 4:49 p.m. ET
Shares rebound strongly following the bruising sector sell-off a day earlier
By Staff Writer Martha Slud
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NEW YORK (CNNfn) - Biotechnology stocks staged a slight recovery Wednesday after a bruising sell-off a day earlier, but industry analysts said they expect more volatility ahead as speculative investors flood the fast-moving and complex sector.
Several large biotech stocks, including industry leaders Amgen Inc. and Biotech Inc., gained ground Wednesday, as investors stepped in to buy at reduced prices. The sector was one of the few bright areas on a down day for the Nasdaq composite index, which fell about 3 percent on continued weakness by Internet and chip-making stocks. The Nasdaq Biotech Index, in contrast, rose 3 percent.
Meanwhile, large-cap pharmaceutical stocks - which have been battered in recent months as biotech shares have gone on an unprecedented bull run - also notched up gains Wednesday, as the Dow industrial average surged ahead more than 320 points. Shares of Dow components Johnson & Johnson (JNJ: Research, Estimates) and Merck & Co. (MRK: Research, Estimates) both rallied, as did stocks in other big pharmaceutical makers such as Warner-Lambert Co. (WLA: Research, Estimates) and Eli Lilly & Co. (LLY: Research, Estimates).
Tuesday's biotech sell-off was sparked by concern over statements from the U.S. and British governments on making access to genetic research free -- with the biggest selling occurring in stocks of high-flying genomics companies that are unraveling the structure of human DNA and hope to profit from selling that data to drug makers.
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Several Wall Street analysts said investors overreacted to Tuesday's news, but added that biotech stocks have been poised for a downturn after a huge bull run over the past few months. Since last fall, the biotech sector has surged, with many stocks doubling, tripling or more in price amid excitement over scientific advances and the prospect for growth in the budding genomics industry.
"There was overreaction, but at the same hand there probably was an overreaction to the genomics companies over the past few months," said Franklin Berger, a biotech analyst at J.P. Morgan. "These are very highly volatile stocks ... they are very, very sensitive to the stock market itself, and also to news."
The head of one genomics database company, Incyte Pharmaceuticals (INCY: Research, Estimates), said the announcement Tuesday by U.S. and British leaders was in fact a favorable endorsement of existing government plans to sequence the human genome and make the information free to the public.
"This was actually a positive announcement for us, if investors could understand the new field of genomics more clearly," Incyte CEO Roy Whitfield told CNNfn's "In the Money." "The Human Genome Project will (complete) its first draft this summer, and we and others will be free to integrate that into our products." (308K WAV) (308K AIFF)
The Nasdaq Biotech Index, which is made up of more than 200 U.S. and European companies, jumped about 100 percent in 1999. Despite Tuesday's 12 percent sell-off in the index, it remains up about 37 percent from the beginning of the year.
Shares of Amgen (AMGN: Research, Estimates), which makes drugs to treat hepatitis C and anemia associated with dialysis patients, rose 6-1/4, or 12 percent, to 58-1/2 Wednesday, after an upgrade to a "strong buy" from a "buy" from Credit Suisse First Boston. CSFB biotech analyst Alex To said Tuesday's sell-off "presents a nice entry point" for buying Amgen stock; he put a $105 per share price target on the shares over the next 12 months.
S.G. Cowen & Co. biotech analyst Eric Schmidt said investors were going back into the sector Wednesday after some "panic selling" the day earlier. But he said that he is concerned that there is a lot of speculative money flowing into biotech and that many investors are not differentiating among strong and weak companies.
"We would recommend that investors stick to the quality names as always," he said. The firm's investment picks include Amgen, Biogen Inc. (BGEN: Research, Estimates), MedImmune (MEDI: Research, Estimates) and Protein Design Labs (PDLI: Research, Estimates).
Shares of Immunex Corp. (IMNX: Research, Estimates) added 16-5/16 to 17-1/4; MedImmune (MEDI: Research, Estimates) gained 10-19/32 to 160-23/32; and Chiron Corp. (CHIR: Research, Estimates) edged up 1-1/4 to 42-1/2. Biogen rose 1-1/4 to 78-1/8.
Shares of Epimmune Inc. (EPMN: Research, Estimates) rose 6-1/8 to 15-1/4, after receiving a patent for its vaccine technology, designed for the development of disease-specific vaccines for certain cancers and infectious diseases, including hepatitis C, hepatitis B and AIDS.
On the negative side Wednesday were genomics companies such as Affymetrix Inc. (AFFX: Research, Estimates), down 18-5/16 to 184-3/4, and Celera Genomics (CRA: Research, Estimates), which fell 14-1/8 to 139-7/8. 
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Amgen
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