For most of the 1990s, the balance sheets of a Gaithersburg company called MedImmune Inc. were enough to give any sensible investor ulcers. Quarter after quarter, this small biotechnology company burned through millions of dollars as it chased risky, esoteric ideas for treating and preventing disease.

Investors, understandably, wondered whether the company would ever turn a profit. At the low point in late 1994, the company's shares traded at just $3.37 1/2. By last fall, the cumulative losses had reached $140 million.

Like most biotech companies, MedImmune was betting on exotic technologies. One of its main lines of research involved the sort of treatment you might see on an episode of "Star Trek": a designer antibody created in the laboratory, then injected into the human body to cope with a highly specific threat. For two decades, similar ideas had tripped far larger companies.

To be sure, MedImmune was no different from hundreds of other young biotechnology firms dotting the American landscape, all trying to turn a great scientific revolution into marketable products. And the executives of MedImmune felt they were on the right track. Stick with us, they told investors. Even during a bleak period known around MedImmune as the "nuclear winter," the company's leaders insisted: It will all pay off someday.

Well, that day has finally arrived, and not just for MedImmune.

The biotechnology industry in the United States is on a roll. A handful of companies, MedImmune among them, have finally become profitable, and analysts expect many more to become so over the next few years. The consulting firm Ernst & Young has projected that by about the turn of the century, the industry as a whole should be operating in the black for the first time in its history. Sales and employment in the industry are now rising by about 20 percent a year, according to Ernst & Young.

"I believe biotech right now is where electronics was 30 years ago," said Jim McCamant, editor of the Medical Technology Stock Letter and one of the industry's most astute analysts. "It's going to produce some big winners."

MedImmune's investors are seeing the payoff. In last year's final quarter, MedImmune's sales revenue finally outstripped its expenses, and the company posted a profit. The stock, which has been surging for months, closed Thursday at $63.12 1/2. Measured by the total value investors place on its stock, it has become one of the nation's 10 leading biotechnology companies.

The company got a huge boost last month when the U.S. Food and Drug Administration approved its high-tech antibody. The antibody was shown in tests to prevent a majority of cases of a respiratory infection that puts 90,000 American babies in the hospital every year and kills 5,000 of them. It was the first time a designer antibody had been approved in the United States to prevent an infectious disease, and it showed the broad potential for such drugs.

MedImmune illustrates the changes sweeping through the American biotechnology industry. For 20 years a financial sinkhole and a disappointment to many investors, biotech is finally turning into a real industry, with products to sell and profits to count. New treatments long in the works have advanced to the late stages of human testing, and many of them are holding up well. Some of the treatments, like MedImmune's, represent such clear breakthroughs that they are winning rapid approval at the FDA.

Biotech executives, barely able to contain their excitement, say the American public is about to witness higher crop yields, improved manufacturing methods and -- most important -- striking advances in medical care as a result of the long years these companies have invested in research.

"My feeling about the industry is really one of unbridled optimism," said Wayne T. Hockmeyer, chairman and chief executive of MedImmune. "What [the industry's growth] means for the public at large is life-saving drugs coming to the marketplace."

For investors, McCamant is convinced, the situation offers enormous opportunities. Just as people with the foresight to buy into microchip maker Intel Corp. 12 years ago have seen their investment increase more than 40-fold, investors smart enough to pick tomorrow's biotech winners today can look forward to huge gains as the companies grow to maturity.

But don't dial a stockbroker just yet. Despite all the optimism swirling around the industry right now, biotech investing remains perilous. There have been big run-ups in the prices of biotech stocks in years past, followed by bruising crashes as bad news in the laboratory sent investors fleeing.

Moreover, few biotech companies are actually making money yet. This means the stocks still trade largely on investors' expectations about their future prospects. Those perceptions can be fleeting, and the stocks can be at least as volatile as Internet or other information-technology stocks.

Even if analysts are right and the industry as a whole is finally getting its act together, more disappointments are surely in the offing for individual companies. Investing in them can still be a good way to go broke: Ernst & Young's analyses show that a biotech company that announces bad news from late human tests of a drug typically loses 35 percent of its market value in a single day.

Many analysts believe that volatility in the market for biotech stocks can sometimes work to the advantage of long-range investors, giving them periodic opportunities to buy stocks cheaply -- but only if they've done their homework, thoroughly understand a company's prospects and are willing to stick with it for the long haul, riding the stock through periodic ups and downs.

"Biotechnology is an area that Wall Street has never become comfortable with, because the companies were not making money," McCamant said. "It's an inefficient market. And if you're an investor, what you want is an inefficient market, where you know more about it than [other investors] do."

Campus to Commercial

The nation's biotechnology industry was launched a little over two decades ago. Techniques developed in university laboratories in the 1970s had opened the possibility of being able to exploit advances in biology in new commercial ways.

For instance, scientists realized they could isolate the genes that tell the body how to produce insulin, insert those into a germ or yeast, grow millions of copies, and get the organisms to crank out a big supply of human insulin. This product would be purer and cheaper than insulin extracted from livestock, improving the lives of diabetics who need to inject insulin to control their blood sugar.

In the past, drugs had been created by hit-or-miss strategy experimentation in the laboratory, followed by testing in animals. The new methods promised a far more targeted approach, in which drugs could be designed molecule by molecule to achieve their intended effect.

The first biotech company was Genentech Inc., of South San Francisco. It was founded on April 7, 1976, and sold its first stock to the public in 1980. When trading opened, Genentech soared from $35 to $88 in less than an hour -- one of the biggest stock run-ups in history.

But investors' hopes that Genentech would pay off quickly were soon dashed. The science of producing biotechnology products turned out to be a lot more complicated than anybody had imagined. Soon enough, the industry was locked into a pattern of boom-and-bust cycles on Wall Street, which has continued to the present.

The work of producing designer drugs, it turned out, was difficult, time-consuming and extraordinarily expensive. And in the early days, researchers were still a little bit in the dark, without the tools they needed to find and manipulate genes easily.

Companies did, however, get some products onto the market relatively quickly. These included obvious proteins -- such as insulin and blood-clotting factors -- that were already known to work as treatments. (One Maryland biotech executive characterizes these early successes as "picking the low-hanging fruit.") And even some of the harder problems began to yield in the laboratory. It slowly became clear that the hopes people had attached to biotechnology were not pipe dreams -- they just weren't going to pay off overnight.

Take the case of Amgen Inc., a company located in Thousand Oaks, Calif. Genentech may have been the first American biotech firm, but Amgen is now the biggest, with 5,308 employees spread around the country and annual revenue of $2.4 billion. And, though it took more than a decade, the company got that way on the basis of just two products.

One is a protein called erythropoetin, which Amgen has sold since 1989 under the brand name Epogen. It's normally made in the kidneys, and it's a signaling protein that tells the bone marrow to produce red blood cells. In people whose kidneys have failed and who are being kept alive by dialysis machines, however, the protein is largely missing. This can lead to an anemia so profound that the patient has a hard time walking upstairs or even getting out of bed in the morning.

Amgen produces the protein by genetic-engineering techniques. It brings bone marrow to life, inducing it to produce red blood cells again. The protein thus corrects the anemia, and it has revolutionized the lives of tens of thousands of dialysis patients across the globe.

It hasn't been too bad for Amgen, either. Largely on the basis of Epogen and a similar compound that corrects imbalances of white blood cells, Amgen now has a market capitalization of more than $16 billion, making it by far the most valuable biotech company in the world.

Investors who want to park some of their money in biotech are looking, basically, for the next Amgen. And for those who can time their trades right, the opportunities are extraordinary.

Surviving Setbacks

MedImmune once again offers a prime example. At one point, a string of laboratory and research setbacks had left the company reeling. Hockmeyer, the chief executive, labored to keep his troops motivated, telling them their ideas were sound and that they needed to "keep the faith and that we would ultimately succeed."

MedImmune's fortunes gradually rebounded. The company got some products onto the market and continued its research on that "Star Trek" antibody. The antibody was designed to prevent a viral disease, common every winter, that poses a life-threatening danger to premature babies. Since the FDA approved the treatment last month, MedImmune stock has been going through the roof. The company's shares closed last week at $63.12 1/2.

An investor who pumped $5,000 into MedImmune shares at the trough in 1994 would now be sitting on a stock kitty worth more than $93,000.

Granted, it would have taken a dazzling crystal ball to buy MedImmune at the absolute bottom and to hold it until now. So consider a more conservative strategy. Last summer, MedImmune announced that it had achieved dramatic results with its antibody in late-stage human testing. Anybody who knew the company's history of trouble in the clinic would have known that MedImmune was not making such an announcement lightly and the test results were probably solid.

The day the news became public, July 16, an investor could have picked up MedImmune shares for less than $25 apiece. Such an investor would now be sitting on a gain of roughly 150 percent in less than a year.

MedImmune's Hockmeyer emphasizes that he's not done yet. The company is working, for example, on a vaccine for something called the human papilloma virus. In men, this sexually transmitted virus mostly causes genital warts. In women, it is responsible for essentially all cases of cervical cancer, a disease that strikes 500,000 women around the world every year. In the United States alone, the cancer strikes about 80,000 women every year and kills nearly 5,000 of them.

A safe, effective vaccine, given to young girls as part of their childhood immunization series, would eventually stop suffering and death, at least in wealthier countries. The market for such a vaccine could thus be substantial, conceivably in the billions of dollars.

MedImmune does have competition to produce such a vaccine -- from Merck & Co., the pharmaceutical giant based in Whitehouse Station, N.J. But MedImmune had competition on its designer antibody, too. In that case, MedImmune succeeded where its competitors, including one of the world's largest pharmaceutical companies, SmithKline Beecham PLC, failed.

MedImmune's executives believe the long, difficult road they have traveled to profitability has made the company stronger. They have learned the hard way what doesn't work and what does. Many outside analysts believe that same point applies to the biotechnology industry as a whole -- that biotech companies, having failed in many of their early endeavors, have learned important lessons and are poised now to succeed.

"Nobody thought it was going to take 10 years and $100 million to get a compound from the research phase all the way to FDA approval," said Tracy Lefteroff, partner in charge of the global life-sciences practice at PricewaterhouseCoopers, the consulting firm. "But the investments that were made in the '80s and '90s are finally coming to fruition. There's money to be made here."

Companies in Profile

Amgen

Business: Develops and sells products in four medical areas: blood cell production, inflam-mation and autoimmunity, neurobiology, and soft-tissue repair and regeneration.

Products: Epogen (stimulates red blood cell production), and Neupogen (stimulates white cells)

Based: Thousand Oaks, Calif.

Established: 1980 as Applied Molecular Genetics

Employees: 5,300

1997 sales: $2.40 billion

1997 net income: $644.3 million

Ticker: AMGN

Web: www.amgen.com

Monthly closing stock prices

Thursday's close: $66.87 1/2, up $1.37 1/2

Genentech

Business: Makes pharmaceuticals based on recombinant-DNA technology; is 66 percent owned by Swiss drug giant Roche Holding

Products: Activase (blood clot and stroke treatment), Protropin (for inadequate growth hormone in children)

Based: South San Francisco

Established: 1976

Employees: 3,250

1997 sales: $947.6 million

1997 net income: $129.04 million

Ticker: GNE

Web: www.gene.com

Monthly closing stock prices

Thursday's close: $67.93 3/4, up 68 3/4 cents

MedImmune

Business: Develops products for infectious diseases and for use in organ transplants

Products: CytoGam (to reduce the incidence of an infection that often occurs in kidney transplant recipients), RespiGam (helps prevent a viral infection that is the leading cause of pneumonia in children); just won approval for Synagis, likely to replace RespiGam

Based: Gaithersburg

Established: 1988

Employees: 350

1997 sales: $81 million

1997 net loss: $36.9 million

Ticker: MEDI

Web: www.medimmune.com

Monthly closing stock prices

Thursday's close: $63.12 1/2, down 12 1/2 cents

SOURCES: The companies, Bloomberg News, Hoover's Inc.