We may never know if a genetic mutation is responsible for Icelandic singer

Bjork's

eerie wailing, but Iceland may soon offer U.S. investors a useful play on genetics research nonetheless.

DeCode Genetics

, a biotech company that's formulating genetic databases of the entire population of Iceland with an eye toward a cure for Alzheimer's disease, should join a spate of European companies heading to

Nasdaq

this year, looking to sate investors' appetite for bets on the booming biotechnology field.

The European biotechs' arrival should prove compelling for U.S. investors, who have become smitten with biotech shares here but may be looking for less richly valued plays on the theme. A good number of overseas biotechs are expected to list in the U.S. in coming months, as the cash-hungry companies seek to cash in on U.S. investors' latest biotech-buying frenzy before it evaporates.

With domestic biotechs flooding the market as well, analysts say it's likely that only the best European biotechs will find their way into U.S. stock markets.

The Biotech Enigma

DeCode, a Reykjavik-based genetic research company, isn't talking about its pending IPO and hasn't yet filed with the

Securities and Exchange Commission

. But

Morgan Stanley Dean Witter

and

Lehman Brothers

are drafting plans to raise up to $200 million this year in listings on Nasdaq and probably

Easdaq

, its European counterpart, say people familiar with the company's plans.

DeCode isn't alone among European biotechs looking to tap a rich cash vein in the U.S. DeCode will likely join companies such as

Gemini Holdings

, a British company that studies genetic variations in human twins, and

Lion Bioscience

, a Heidelberg, Germany-based genetic analysis company, in launching U.S. IPOs this year.

The reason for the Europeans' attraction to the U.S. market is clear: After years of slumbering, U.S. biotech stocks have caught fire in recent months. Investors are suddenly sanguine about the promise of fields such as genomics, which aims to provide the maps and toolkit for finding new drugs to heal some of mankind's most difficult-to-treat ailments, such as arthritis, heart disease and senility.

Accordingly, stock values of biotechs such as

Sequenom

(SQNM)

and

Celera Genomics

(CRA)

have exploded in recent months, as shares rocket higher day after day and momentum investors infatuated with any kind of tech jump aboard. Monday's action in

NeoRx

(NERX)

, a developer of cancer-fighting drugs whose shares jumped 161% to 57 on news of a favorable mention in the

Proceedings of the National Academy of Sciences

, serves as a case in point.

With the window of opportunity suddenly open, companies are rushing to market to raise money for product development, which is usually funded by investors and large pharmaceutical companies. Biotech companies typically make losses during the years-long product-development period, and fundraising is always a challenge. But, with Celera raising a jaw-dropping $820 million in a share offering last month, many industry executives decided it was fundraising time whether or not the money was immediately necessary.

Awash With Money

"It's the Celera effect," says Stefan Loran, analyst with

Legg Mason Wood Walker

in Baltimore who has no formal rating on the stock. "Everyone and

his brother is trying to go public."

"There's a real frenzy to raise money," adds Glyn O. Edwards, chief executive of

Antisoma

, a British biotechnology company that listed on the

London Stock Exchange

last year. "They are trying to raise as much as they can to ride them out through the rest of the cycle."

The biotechs are trying to raise money before what some see as an inevitable turn in the market, as happened in the early 1990s, when product development hit roadblocks at some major companies, souring a bull biotech market.

"There is always a risk of indigestion, and one blowup could shut down the market," says David Buxbaum, executive director in health care investment banking at

CIBC World Markets

.

Still, there's been no need for

Pepto

just yet. Sequenom, which is developing tools to analyze the human genetic makeup, raised $157 million in its IPO a month ago. Its stock has since shot up from 26 to 145, putting its market value at $3.29 billion, even though the company lost $21.8 million in 1999 and generated a paltry $179,000 in revenue.

Celera Genomics, meanwhile, is an "industrial genomics" company backed by biotech entrepreneur Craig Venter. Its stock has shot up from 30 on Dec. 1 to 230 Friday. Celera, currently valued just south of $13 billion, lost $24.3 million in its latest second quarter on revenue of $8.3 million.

Ultracompetitive

With nearly two dozen U.S. biotechs filing for IPOs in recent months, the European companies will face ample competition as they seek to stand out from the pack. With more than 300 biotechs listed in the U.S., that is a major challenge, particularly since the science can be baffling even for the most experienced fund managers.

"Things are changing so fast," says Sam Isaly, managing partner at New York-based

OrbiMed Advisors

and long-time investor in biotechnology stocks with holdings in European biotechs including Switzerland's

Ares-Serono

and Britain's

Cambridge Antibody Technology Group

. "This incredible and endless search for the new is driving me crazy."

Some corporate financiers are advising European companies with anything but the most compelling story to tell to stay in their home markets, where the number of biotech companies is smaller and investor relations are more manageable. That way, when biotech product development hits speedbumps and the fickle investors drop biotech as the flavor of the month, European companies -- already at a disadvantage in the U.S. market -- won't be left vulnerable to being dumped by U.S. investors and analysts.

"I am sure when the market turns, some European companies will become orphans," says David Porter, head of health care corporate finance for

Nomura International

in London, who advises most biotechnology companies to avoid the U.S. market.

As for DeCode, it may be able to ride on the success of Bjork, Iceland's most famous musical export. DeCode is compiling genological data for almost all of Reykjavik's 450,000 or so residents except for the 5% of the population that elected not to participate. Arni Sigurjonsson, a DeCode spokesman, could only say that the singer is likely participating.

"I'm pretty sure Bjork is included," says Sigurjonsson.