This was an interesting week, as the market flirted with Dow 10,000. It seemed to be threatening today, before it sagged back to -21 for the Dow Industrials and -30 for the Nasdaq. The weekly numbers were positive with the Dow up 140 and the Nasdaq up 44. The market is in for continued choppiness as leadership from the High Tech's to the Oil and other sectors may be underway.

That would be viewed as a step down in leadership class, but is healthy as different market sectors participate in this Bull market. The Oils may have bottomed out and their outlook improved with the firming of oil prices in the wake of OPEC's apparently finally restricting supply. Of course, that final story has yet to play out. The High Tech's will likely mark time here, as investors wait for earnings to catch up to stock prices.

While the Nifty Fifty are catching their breath, as always it is useful to continue your individual stock research, looking for potential winning stocks. The Biotechs are dangerous but hold great promise; the tough question is picking the survivors, and those which will prosper.

On March 5, I told you about Protein Design Labs. Today I have another stock for you to keep your eye on. The name is ArQule, Inc. (ARQL), and I own some stock in it.

ArQule is a leader in accelerated drug discovery, through their lead generation and lead optimization technologies. Their Mapping Array^(TM) Program is comprised of libraries of compounds used for screening against biological targets in new product discovery. Their Directed Array^(TM) Program is a process that produces lead compounds and rapidly develops drug candidates.

A helpful way to determine if the technology is good, is to see which companies are collaborating with them. They have 27 collaborators that I know of, and these are the major ones: Abbott Labs., American Home Products, Amersham Pharmacia Biotech, Aurora Biosciences, Genome Therapeutics, Genzyme General, Immunex, Johnson & Johnson, Monsanto, Roche Bioscience, and Sankyo.

Their revenue for Q 12/98 vs 12/97, and Y 12/98 vs. 12/97 in millions was 5.9 vs. 6.2, and 22.2 vs. 17.4 respectively. Their net income (loss) from operations in millions for those periods was (3.1) vs. nil, and (8.7) vs. (2.2). After interest income, diluted per share income (loss) was (.21) vs. .05, and (.54) vs. (.02). Weighted average common shares outstanding were 12.2 vs. 13.1, and 12.0 vs. 12.4. Their all-important cash positions at 12/98 vs. 12/97 were 33.9 vs. 49.3, giving them a cash-burn rate of around 2 years. After that time you either become profitable, get new financing, get bought out, or go broke.

The stock went public in late 1996 at around 12, and had a range that year of 9 - 15 3/4. In 1997 it had a range of 12 - 29 1/4, and in the past 12 months the range has been 4 - 24. It sure is exciting owning Biotechs. The stock closed today at 4 11/16 down 7/16, with a quote of 4 11/16 bid, and 5 asked.

Anyway, the stock seems to have a lot of promise, and it sure is cheap. And whoever buys it, sure isn't paying for someone else's profit. There probably is a place in most portfolios for a few shares of such high-roller stocks. The worst you could do is lose all your money, as always. The best you could do is hit it big. Stay tuned.

The Market Pro - March 12, 1999