Only the strong survive could become the grim cliche for biotech companies struggling to keep afloat in the current capital rationing environment, as investors reward the more robust balance sheets with more money and shun many of those that have never had sufficient funds to aggressively pursue their objectives.

The continued sorry state of the market for biotech stocks will likely reinforce that trend. March went out like a (sacrificial) lamb in the wake of market-wide jitters over interest rates, with only four of The BioCentury 100 companies showing gains last week.

The BioCentury 100 Price Level ended the quarter off 16 percent at 1067.16, and is nearing the low of 1039.44 it hit a year ago on the heels of various product disasters and the opening volley of drug company bashing by President Clinton. Of the 216 companies tracked by BioCentury last quarter, only 58 managed price gains.

Funding also down

The quarter wasn't a disaster from a funding point of view: public and private companies raised $739 million. But that was 10 percent less than the $821 million raised in the first quarter last year, and there are more biotech companies than ever.

In addition, the industry continues to spend more than it's taking in. Ken Lee, national director of life sciences industry services at Ernst & Young, estimates the industry needs a net of $6 billion a year to stay cash neutral. As of mid-1993, E&Y estimated the industry as a whole had 44 months of cash - taking out the top 10 companies that figure fell to 28 months. The figure is probably lower now, Lee said.

In addition, cash is being distributed unevenly. Some of the sector's capital needs are being met through partnerships, as companies such as Protein Design Labs Inc., CellPro Inc., Viagene Inc., Cell Genesys Inc., Vertex Pharmaceuticals Inc. and privately held Tularik Inc. are meeting much of their spending needs through alliances.