Should you scramble to bet on Embrex's best-laid plan?

• Author: Cohen, Jeff
• Position: Inovoject machine injects vaccines into eggs before they hatch

North Carolina investors who aren't chicken about risky biotechnology stocks may not need to look beyond the Research Triangle, where three dozen start-ups have set up shop in recent years.

So far, the most squawking is about the first home-grown company to go public, Embrex Inc. (EMBX-NASDAQ), which has a technology it thinks can revolutionize the poultry industry. (Environmental Diagnostics of Burlington went public before moving its headquarters to North Carolina. Durham-based Sphinx Pharmaceuticals went public in January.)

Biotech stocks were the big winners during the stock market's explosion in '91, outperforming market averages by a considerable margin. The Dow Jones Biotechnology Group Index gained 142% in '91, vs. 26% for the S&P 500 Index and 57% for the NASDAQ Composite Index. Perhaps the best-known biotech companies are Thousand Oaks, Calif.-based Amgen and Malvern, Pa.-based Centocor, whose stocks surged by 267% and 140% in 1991, respectively, following government approval of their drugs.

Embrex Dollars in thousands, except for per-share numbers 1991(*) 1990 1989 1988 Revenues $96 $49 $172 $198 Net loss (3,285) (3,694) (3,276) (2,785) Loss per share (2.54) (2.22) (2.53) (2.42) * Nine months ended Sept. 30 Of course, many biotech companies often have little more than a handful of patents and a business plan. As a result, experts say, there may be eight disappointments for every Amgen.

Still, legions of daring investors are continuing to beat the bushes for the next big star among these go-for-broke stocks.

Embrex's attraction is enhanced by its involvement in a high-growth business, poultry. Embrex's Inovoject machine automatically injects vaccines into eggs before they hatch. Poultry vaccines are now administered manually to birds after they are born, at a rate of approximately 3,500 an hour per employee. In contrast, the Inovoject machine reportedly inoculates 20,000 to 30,000 eggs an hour. Embrex officials say their system, in addition to reducing labor costs, results in healthier chickens because the birds develop important immunities.

Embrex also plans to provide poultry producers with an array of proprietary products. The company has 11 such products in varying stages of development. The first, a vaccine that protects a bird's immune system from certain viruses, may be on the market by midyear, pending government approval.

"This provides us with a nice dual stream of revenues," Embrex President and CEO Randy Marcuson...