Stephen Turner is out to prove that there is such a thing as a successful second act.

Turner is president and chief executive of five-year-old Oncor Inc. of Gaithersburg, one of the fastest-growing players on the Washington area's burgeoning roster of nearly 100 biotechnology companies.

Oncor is Turner's second stab at building a company to capitalize on the $22 billion-plus market for human diagnostic testing. He was forced to sell his first venture, Bethesda Research Labs, when he couldn't raise enough capital to keep it going.

This time, he vowed, the story will be different. Even the name he gave his new company tacitly acknowledges his ambitions. Oncor officially stands for Oncology Corp., oncology being the scientific study of tumors. But the word's homonym is a tongue-in-cheek reference to Turner's past. "Maybe I'll name the next one Finale," he quipped.

So far, securities analysts say, Turner has a winner on his hands. The company's stock sold for $3 a share when Oncor went public in 1987, fell as far as $0.78 in the fiscal 1989 third quarter and has rebounded to $6.25 on Nasdaq, hitting a 52-week high of $7 a share a few weeks ago. It closed Friday at $6.25. There are 7.5 million shares outstanding.

The reason behind the rise, according to Rosenkrantz, Lyon and Ross, a research firm in New York, is that Oncor is expected to finally show a profit in the fourth quarter of fiscal 1990. It would become the first company to make money developing, manufacturing and selling DNA probes for diagnostic testing, said Rosenkrantz analyst Gary Davis.

"There are a lot of other small biotech companies out there, but they don't have product for sale," said Ira Leiderman, head of corporate finance at Rosenkrantz.

Although revenue grew from $135,915 in Oncor's first year to $2.3 million last year, losses also have risen -- although the loss narrowed in its last fiscal year, 1989, to $1.85 million from $2.04 million the year before. In the fiscal 1990 first quarter, the latest for which figures are available, Oncor lost $476,434 on revenue of $684,434.

The 100 DNA probes and 10 kits that Oncor's researchers have developed to help doctors are the company's bread and butter as it emerges from a research-and-development-stage company into a full-fledged manufacturer.

DNA stands for deoxyribonucleic acid, the main building block of cells. The probes are used to discover abnormalities in DNA that lead to cancer, infectious diseases such as AIDS and chromosomal abnormalities such as Down's syndrome.

Oncor is one of the few biotech companies specializing in such genetic testing, said Jeffrey Casdin, a securities analyst at New York-based Oppenheimer and Co. "Almost all the activity in biotech is centered on developing therapeutic products like drugs. The diagnostic side has not been a great business in the past."

Oncor, however, "has smartly found a market niche in a new field," Casdin added. "They are doing relatively well in it."

While a half dozen or more companies also occupy that niche, Oncor is one of the few involved in cancer testing. "We've heard a lot about using probes for DNA fingerprinting and for various infectious diseases, but no one has said much about using this technique for the diagnosis of cancer," Davis said. "They are the industry leader."

Indeed, last fall, Oncor reached its first milestone on the way to profitability by becoming the first company to receive approval from the Food and Drug Administration to market a DNA-based cancer test kit.

Called the B/T Gene Rearrangement Test, it enables doctors to genetically diagnose leukemia and lymphoma by identifying the specific class of tumor in the patient. The test will allow earlier detection, since smaller numbers of affected cells are needed to identify the cancer, Turner said.

Such precise diagnosis will enhance treatment, since different tumors require different therapies, said Dr. Sheila Taube, chief of the cancer diagnosis branch at the National Cancer Institute. For example, some tumors can be halted or eradicated by chemotherapy, while others respond better to other treatments.

Earlier this month, Oncor announced the commercial sale of another kit, an alternative test for Down's syndrome, which occurs in one of every 800 live births in the United States, making it one of the most common genetic birth defects. It did not need FDA approval.

Oncor's test is faster, cheaper and more accurate than amniocentesis, Turner said. Critics, however, counter that the test does not give as complete a picture of the fetus's chromosomes as amniocentesis and has limited usefulness.

Oncor submitted its third major testing kit for FDA approval on July 9. It tests for the presence of the human papillomavirus, which is suspected of causing cervical cancer. The test will allow doctors to more accurately diagnose the virus, which is virtually undetectable by Pap smear, Turner said.

Clinicians at the Pathology Institute in Berkeley, Calif., use the human papillomavirus test for research, since it is not yet available commercially. "In comparison with other tests, Oncor's is much better," said Dr. Mark Stanley, manager of the molecular biology section. "There are a lot of doctors out there who are waiting for Oncor to bring this on line."

By contrast, said Stanley, "We haven't had much demand for the {commercially available} B/T test. ... Physicians are not familiar with it. We are spending a tremendous amount of time educating the physicians on what the test has to offer and why they should want to order it."

A native of California, Turner founded Bethesda Research Labs in 1976. It had reached $15 million in sales by 1982. That year, however, a planned public offering to raise capital was canceled because of sluggish investor interest, he said. The lab could not raise the money any other way, he said, so he sold it in 1983 to Dexter Corp.

Ironically, the company that grew out of Bethesda Research, Life Technologies Inc., announced recently it was getting out of the diagnostic testing business, leaving Oncor as the area's only public company specializing in molecular diagnosis.

Turner founded Oncor in 1984 with the help of former Bethesda Research executives Rodney Dausch and Michael Elliott.

And once again, he now finds himself needing capital to keep his company going. Turner hopes to raise $2.5 million with an off-balance-sheet financing sometime in the third quarter to fund further research and development expenses. While terms have not been worked out, investors likely will get the right to purchase stock at some future date, he said.

With the money, Turner sees Oncor moving into developing tests for what are called solid tumors that are caused, for example, by lung and breast cancer.

Farther down the road, the company may even develop tests, growing out of the work that led to its current cancer test kits, to screen for people's susceptibility to such diseases as cancer, heart disease or diabetes, perhaps allowing preventive treatment, Turner said.

But that day is a long way off, perhaps as much as 30 years, Turner acknowledged. For the time being, he said, "We are building a market position in an area a lot of people don't recognize as a major opportunity yet. That's how you build a big company."

Davis agreed. "Oncor is in on the ground floor of a real revolution in science," he said.