Wallace C. Steinberg, the chairman of the Healthcare Investment Corporation, the largest venture capital fund devoted to health care, died on Wednesday at his home in Rumson, N.J. He was 61.

He died in his sleep, said Dr. James H. Cavanaugh, the company's president.

Mr. Steinberg was willing to risk millions on untested futuristic notions that nonetheless held the promise of revolutionizing medicine. He was among the first to promote gene therapy and to invest in the study of animal organs for human transplantation. Mr. Steinberg was also a master at generating enthusiasm for his ideas, thereby luring investors.

He explained in an interview in 1992 that "the basis of Healthcare Investment is to conceive of where medicine is going before anyone else thinks of it."

And to pursue those goals, he was ready and willing to pull strings and offer lures to get the nation's most outstanding scientists to work for him. With $378 million available for investment, his company had the resources and the power to make Mr. Steinberg's visions a reality.

One way he sought to transform his vision was his formation of a company to develop a new source of organs for transplants. Several years ago, he talked of a day when animal organs could be transplanted into humans, without using powerful drugs to suppress the immune system. He began asking around to find who would be the best person to direct such research and which medical school would be the best to conduct the studies.

He decided that person would be Dr. David Sachs, who was then working at the National Institutes of Health, and that the medical center would be the Massachusetts General Hospital.

So, in March 1990, Mr. Steinberg formed a company called Biotransplant. He lured Dr. Sachs from the institutes to head the company's scientific advisory board by arranging a faculty position for him at both Harvard Medical School and the Massachusetts General Hospital.

Within six months, Mr. Steinberg had invested $6 million in Biotransplant and had persuaded the Sandoz Corporation to contribute $5 million. Other companies are optimistic about the same strategy, and one, Nextran, is planning transplants of gene-altered pig organs to humans within the next 30 days.

Another company, Human Genome Sciences, arose from Mr. Steinberg's belief that the future of drug development may hinge on finding genes that can be used as the basis of new treatments. Mr. Steinberg entered this field when a scientist at the National Institutes of Health, [Dr. John Craig Venter (born 1946)], developed an automated shortcut to finding genes.

Many scientists harshly criticized Dr. Venter's methods as risky and uncertain, and controversy surrounded the N.I.H. application for patents on snippets of genes he had found.

Soon, Dr. Venter's grant applications were being refused. But Mr. Steinberg said he thought Dr. Venter was leading an international race to lock up the human genome. And, he said, the health institutes simply could not invest enough money in Dr. Venter's work to make it truly competitive.

"I said to myself, 'My God, if this thing doesn't get done in a substantive way in the United States, that is the end of biotechnology in the U.S.,' " Mr. Steinberg said.

But Dr. Venter said he did not want to head a company and become a capitalist but wanted to remain a scientist pursuing research.

So, Mr. Steinberg put together a customized deal that appealed to Dr. Venter. He formed a nonprofit institution, the Institute for Genomic Research, with a budget of more than $85 million a year and made Dr. Venter its director. The researcher could pursue any scientific goals he wished and could publish all of his results in scientific journals. But, before publication, he must allow Human Genome Sciences, Mr. Steinberg's new company, to study the genes for 6 months or, in the case of genes it wanted to commercialize, for 12 months.

The gamble appears to have paid off. Dr. Venter has now deciphered the first full set of genes from a living organism, the entire genetic database of the bacterium Hemophilus influenzae. When Dr. Venter applied to the health institutes for money when he started the project, he was turned down and told that what he was proposing could not be done.

About a year ago, SmithKline Beecham invested $125 million for 10 percent of Human Genome Sciences.

Another of Dr. Steinberg's successes is [Genetic Therapy Inc.], formed in 1986.

Dr. Cavanaugh of Healthcare Investment said Mr. Steinberg had decided that the future of medicine after the millennium would be in gene therapy, and so he formed a company intended to be a leader in the field.

In an interview in 1990, Mr. Steinberg said [Genetic Therapy Inc.] had been set up specifically to be bought out by a large drug company. "The ultimate payoff will be when a large pharmaceutical company realizes it needs a position in gene therapy," he said at that time. Earlier this month, Sandoz announced it was buying the company for $295 million.

Mr. Steinberg was born in Brooklyn and earned both a bachelor's degree in pharmacology and a master's degree in pharmaceutical chemistry from Rutgers University. He was a technical director for Sterling Drug International and then spent 21 years at Johnson & Johnson, where he was eventually made responsible for venture capital, strategic planning and mergers.

At Johnson & Johnson, Mr. Steinberg developed the idea for the Reach toothbrush, following his hunch that he could succeed in marketing a brandname toothbrush made to help remove plaque, even though the company's president, vice president and chairman thought the idea would not work. Not only did he succeed, but Reach became the best-selling toothbrush in the world, Mr. Steinberg said.

He attributed his success in part to what he said was his way of thinking with "simple clarity." He worked Monday through Thursday at his company's offices in Metro Park, N.J., spending long weekends playing tennis and going out dancing at night with his wife, Maria.

He dreamed of living forever, optimistically saying that all the ills and degenerative conditions of aging were, at least in theory, correctable. "I have this theory that death is a genetic disease," he said in an interview several years ago.

"There is no religious, preordained reason to die."

Mr. Steinberg fantasized about getting a new heart and kidneys from animals developed by Biotransplant. He told Dr. Sachs that when the two of them were 70 years old: "I am going to take your hand in mine, and I will walk into Massachusetts General Hospital. We will get a room with two beds, and we'll both have a prophylactic heart and kidney transplant."

His first marriage, to Rose Schram of Delray Beach, Fla., ended in divorce.

In addition to his wife, Mr. Steinberg is survived by four children from his first marriage, David, of Rumson; Robert, of Highlands, N.J.; Jeffrey, of Sayreville, N.J., and Laurie Kinkead of Little Silver, N.J.

[Dr. John Craig Venter (born 1946)] is riding high. A group of venture capitalists has staked him with $70 million for a laboratory that will identify thousands of human genes a month and enable at least some of them to patented.

But other researchers are aghast at the possibility that the human genome could be locked up and owned by private investors, whether they are Dr. Venter's backers or others. They say they fear a "land grab" for the human genome that will greatly impede scientific progress and the free exchange of information.

Adding to the acrimony is the nature of Dr. Venter's gene search. He plucks fragments of new genes from the human gene set by a shortcut that allows him to recognize the gene's existence but that usually does not identify its function. Critics say that the hard work is working out the full structure of a gene and determining what it does in the body.

Dr. Venter says that it would be irresponsible not to apply for patents on the genes. If he simply published his data, that could make the genes part of the public domain and thus not eligible for patents. Such a move could diminish the incentive for any company to develop the genes because they would have no guarantee of exclusive use.

Wallace Steinberg, chairman of the board of HealthCare Investment Corp., which is financing Dr. Venter, said he had suddenly realized that there was an international race to lock up the human genome. If Americans do not participate, he said, they will forfeit the race and lose the rights to valuable genes to Britain, Japan and other countries that are in the race to win. He said the National Institutes of Health could not afford to invest enough money in Dr. Venter's enterprise to make it truly competitive.

"I suddenly said to myself, 'My God -- if this thing doesn't get done in a substantive way in the United States, that is the end of biotechnology in the U.S.,' " Mr. Steinberg said.

The stakes are high, but the issue remains unsettled. Ownership of a gene that specifies a medically useful protein, like erythropoietin, used to treat anemia, or tissue plasminogen activator, used to stop heart attacks, are worth millions of dollars. But patent lawyers disagree about whether gene fragments can be patented, and the United States Patent and Trademark Office has not yet issued its opinion.

In the meantime, Dr. Venter's former employer, the National Institutes of Health, has applied for patents on nearly 3,000 genes he has found. The British Government, saying it was retaliating, recently applied for patents on 1,100 genes detected by its scientists.

Dr. James Watson, the leading biologist who headed the $3 billion Federal effort to sequence the human genome, recently resigned that post over the issue, saying he strongly disagreed with the Government's decision to attempt to patent genes. Amid cries by academic scientists for an international agreement to prohibit these patents, Dr. Venter's enterprise has raised the possibility of a gene-finding factory whose interests will be in making money for its backers.

Dr. Venter left the N.I.H. as of midnight of July 13, taking 30 investigators -- virtually his entire staff -- with him and essentially taking the N.I.H. out of the business of spewing out sequences of gene pieces. He will direct a new venture, the Institute for Genomic Research, in a Germantown, Md., office park just up Rockville Pike from his old laboratory at the N.I.H. The new institute will provide all rights to any products it develops to a company, Human Genome Sciences Inc. That company was formed by the HealthCare Investment Corporation, a venture-capital firm. Inspired on a Plane Ride

Biotechnology companies and scientists are wary of the new venture. Stephen Raines, who is vice president for intellectual property at Genentech, a biotechnology concern in South San Francisco, said that the privatization of Dr. Venter's gene search "will make the controversy more bitter." Mr. Raines envisioned a sort of toll system for the human genome, with Dr. Venter the principal toll taker. If patents are granted, he added, Genentech and others will have to compete, frantically scrambling to patent their own portions of the genome.

George Annas, a lawyer and medical ethicist at Boston University, agreed. "We will have everyone trying to patent the entire human genome," he said. "This is not science. This is like the Gold Rush. That's why there are no scientists saying this is a wonderful thing."

Dr. David Housman, a molecular biologist at the Massachusetts Institute of Technology, said: "It's pretty much a can of worms. I think it impacts every one of us."

At the center of the rain of criticism is Dr. Venter, a mild-mannered 45-year-old scientist who said he had innocently set the scene for large-scale gene patenting. It began about two years ago when he developed a fast, cheap and highly automated way to find pieces of human genes. He said it cost $40,000 to $50,000 to use older methods to find the sequence of the string of chemicals that make up a complete gene. But it costs just $20 with his method to find the sequence of a gene fragment that is large enough to identify the gene, and he has used the method to find pieces of nearly 10,000 genes. The full human gene set is thought to consist of about 100,000 genes.

The innovation came at a time when Dr. Venter, like hundreds of other scientists, had been working on the Human Genome Project and had become frustrated by the snail's pace at which he was able to decipher the human genetic material. Only a fraction of the genome's DNA consists of genes. Interspersed between and within the DNA sequences that specify genes are many other DNA segments; some of them help control the activation of genes, but the function of some of them has yet to be determined. These sequences seriously interfered with attempts to isolate the genes themselves, Dr. Venter noted.

An average gene consists of about 1,500 nucleotide base pairs, the chemical units that make up DNA. Molecular biologists had to undertake a laborious and circuitous search for genes amid the dauntingly long DNA sequences. From the project's start in 1988 until now, about 3,000 complete human genes have been found.

Dr. Venter said his own two-year search for genes along a 100,000 base-pair stretch of chromosome 19 had frustrated him with its tedium. "We found that even when we had big sequences of human chromosomes, on the order of 100,000 base pairs of DNA, the sequence was, for all practical purposes, uninterpretable," he said.

He would scrutinize the DNA sequence, trying to guess where the genes were. Then he would look inside the cell for signs that he was right. That meant looking for the genes' mirror images -- called messenger RNA, or mRNA -- that cells make when the genes are being used.

One day, on an airplane coming home from a meeting in Tokyo, Dr. Venter had an inspiration. He suddenly realized that an obvious shortcut could take him right to the genes themselves.

The idea was to exploit the mRNA, an intermediary molecule that is made when genes are being expressed. When a cell is about to use a gene, enzymes inside a cell map the DNA sequence of the gene into mRNA, which is unstable. Each mRNA picks up the blueprint of the gene from which it was derived. So by fishing mRNA's out of cells and examining them, scientists could deduce the sequences of genes.

The only difficulty is that mRNA's are short-lived. But there is another enzyme that can copy the mRNA's back into DNA, forming a stable molecule that has the blueprint of the original gene. Using these DNA copies, known as cDNA's, it should be possible to home in on the genes themselves and determine their sequences, Dr. Venter reasoned.

He said that others had also had this idea but had dismissed it as impractical because, they said, some genes would have so few mRNA copies that they would escape detection. Undeterred, Dr. Venter began going after mRNA's in earnest, using them to make cDNA's, and determining their sequences. He automated the work as much as possible, using robots and computers to do jobs that are often done laboriously by hand in molecular-biology laboratories.

As part of this effort, he relied on a DNA sequencing machine that can automatically and almost instantaneously tick off the sequence of the first 300 to 500 nucleotides of a gene. That, depending on the gene, is a tenth to a third of the total sequence, and it is enough to identify the entire gene. Dr. Venter would then have his computers search all of the known genes, from yeast to humans, looking for ones that resembled the fragments he had sequenced. He said that about 20 to 30 percent of the genes were either identical to known human genes or were similar enough to genes from other organisms that he could guess at their functions in people.

His method, which is heavily automated, was enabling him to find genes at the rate of 2,000 a month at the time he left the N.I.H. He expects to find about 10,000 a month after he has scaled up his project at the Institute for Genomic Research.

After Dr. Venter had detected 350 human genes, he was set to publish his work. But an N.I.H. lawyer, Reid Adler, intervened. He reasoned that if Dr. Venter simply published the sequences, he might create a disincentive for companies to use those genes to develop new drugs. A company might discover the entire sequence and function of one of Dr. Venter's genes but have its patent application denied on the grounds that the gene had already been identified by Dr. Venter and was in the public domain.

At Mr. Adler's urging, Dr. Venter agreed to apply for patents on the genes he had identified. "I thought it was just irresponsible to just dump all this stuff and make it so that the biotech industry and the pharmaceutical industry could not get patent protection," Dr. Venter said. The patents, if granted, would belong to the Federal Government.

N.I.H. Defends Patents

The N.I.H. director, Dr. Bernadine Healy, said the patent application "protects our options." If patents are granted, the N.I.H. could allow people to license them at no cost or at nominal cost. Or the N.I.H. could withdraw its patents or dedicate them to the public. "By filing, we lose absolutely nothing," Dr. Healy said. But if the institutes had not filed, a door would be closed. If the sequences of gene segments were published, the Government would be unable to go back and file to patent them.

Richard D. Godown, a lawyer who is president of the Industrial Biotechnology Association, a Washington organization representing 137 companies, said his group supported Dr. Healy's action, at least as a temporary measure. For the longer term, he said, he would like an international agreement saying that these sequences cannot be patented.

But the N.I.H.'s move to get patents has appalled some scientists, lawyers and members of the biotechnology industry.

Dr. David Botstein, chairman of the genetics department at Stanford University, said that if the patents were granted, companies that own a library of gene fragments would be able to play a perverse game of "gotcha," laying claim to the hard work of scientists after they find out what the genes actually do.

But Dr. Healy said that Dr. Venter's discovery had unexpectedly changed the nature of the rush to identify human genes and that her hand had been forced by uncertainties in the patent laws. She said she would, of course, like to see Dr. Venter remain in the Federal Government but that the National Institutes of Health could not afford to match Mr. Steinberg's offer of $70 million.

"I think it is a wonderful opportunity" for Dr. Venter, Dr. Healy said. She added, "I think it is good that we will have companies doing sequencing, just like Europe and Japan do."

She said she was not unduly concerned about the prospects of patents. "People in the private sector have always exercised intellectual-property rights," she said.

Mr. Steinberg said that the United States had to compete because it seems to be in an international race. Without the increased resources that his company could provide, Mr. Steinberg said, "it is my opinion that the majority of gene fragments would be discovered outside the United States."

Before founding HealthCare Ventures, Mr. Steinberg spent 21 years at Johnson & Johnson, directing strategic planning, venture-capital activities and mergers. Now, as chairman of the board of what he says is the nation's largest venture-capital firm in the health-care field, Mr. Steinberg has been wooing the nation's leading scientists and investing in some of the most promising recent discoveries in molecular biology. 

Other Investments

He has more than $350 million in capital and has invested, for example, in a company started by [Dr. William French Anderson (born 1936)] of the National Institutes of Health to bring gene therapies to market. He has also invested in rights to a gene, known as P53, that is at the heart of a wide variety of human cancers. The gene, one of the most important findings in cancer research, was discovered by Dr. Bert Vogelstein of Johns Hopkins University.

Mr. Steinberg said he intended to be socially responsible with his investment in Dr. Venter's work. He said he would have all of the genetic information uncovered by Dr. Venter published promptly and would collaborate freely with other companies and with the N.I.H. He pointed out that other countries were garnering gene fragments but had made no commitment to publish them.

Like others in the biotechnology industry, Mr. Steinberg said that he would be happiest if the Patent Office denied patents for gene fragments. But, Mr. Steinberg argued, if his company took the high ground by not applying for patents, other countries might successfully do so, irrevocably injuring the American biotechnology industry.

That, he said, is "my biggest fear as someone who owns biotechnology companies." Mr. Steinberg said that "there is a tremendous effort in France, England and Japan" to find gene fragments. "If this becomes a race and if gene fragments become proprietary, then it is in the best interests of the U.S. and entities of the U.S. to file for patents."

What do you do for an encore after you have decoded the human genome? [Dr. John Craig Venter (born 1946)] has had to ponder that problem sooner than he expected after being forced out as president of [Celera Genomics Corporation] in January.

He has now made his decision, to start two institutes and to write a book. One institute, he said in an interview last week before giving a lecture at the Yale School of Medicine, will study issues of science policy like the genetic basis of race and stem cell research. The other will try to engineer microbes genetically to convert carbon dioxide into hydrogen, producing clean energy and averting greenhouse warming in the same step.

As for the book, that will be based on his own genome, which he has now declared to be the principal human genome decoded by [Celera Genomics Corporation]. ''I will do a detailed examination of my genetic code and use that as a basis of writing my book on genomics,'' he said.

The new turn in Dr. Venter's career does not seem likely to be significantly more placid than the previous phases. In conversation, he still alternates between assertions of his achievements and aspersions on his academic critics, some of whom attacked him again in an article in March in The Proceedings of the National Academy of Sciences. He is proud of what he achieved at Celera, but perhaps still a little bruised by the buffeting that he received there from the demands to generate revenue, as well as scientific results.

''There was severe pressure on me from the people who put up the money, as well as from the Collinses and Landers,'' he said, referring generically to his academic rivals in the race to decode the human genome, Dr. Francis S. Collins of the National Institutes of Health and Dr. Eric S. Lander of the Massachusetts Institute of Technology. ''So I was walking a tightrope, though at times it felt like sliding along a razor blade.''

Although best known for his role in decoding the human genome, Dr. Venter had made three prior landmark scientific discoveries. All were achieved because of his skill in spotting the gains that could be reaped from the new DNA sequencing machines made by [Applied Biosystems] of Foster City, Calif.

As a little-known researcher at the National Institutes of Health, Dr. Venter used the first generation of the machines to discover hundreds of human genes by decoding just short parts of them. A biomedical entrepreneur, [Wallace Herbert Steinberg (born 1934)], who died in 1995, set up Dr. Venter in a nonprofit institute, the Institute for Genomic Research, or TIGR, to pursue the advance in harness with a commercial partner, Human Genome Sciences, headed by Dr. William A. Haseltine.

At TIGR, Dr. Venter assembled a loyal and talented group of scientists that included Dr. Hamilton O. Smith, a Nobel biologist. The team's second coup was to decode the full genome of a bacterium, handily beating the government-supported effort in 1995.

At the Yale lecture last week, Dr. Venter retold the story of how he applied for a National Institutes of Health grant to decode the bacterium by a novel method but was rejected by a panel of academic genome scientists who declared his decoding method unworkable. Dr. Venter had to finish the project with his own funds, he told the audience, but not before Dr. Collins had turned down an appeal, repeating the grant committee's finding that Dr. Venter's method could not work. Dr. Collins, through a spokesman, declined to comment.

''While the N.I.H. is not very good at funding new ideas, once an idea is established they are extremely good,'' Dr. Venter added, noting the profusion of the institutes' money now devoted to decoding other bacterial genomes.

Dr. Venter was then invited to sequence the human genome by Dr. Michael W. Hunkapiller, head of Applied Biosystems.

Given the chance to trounce his rivals on their principal project, Dr. Venter accepted and set up his company, Celera Genomics, that started sequencing the human genome from scratch. He tested his novel decoding first on the fruit fly genome, his third major scientific achievement, and then turned to the human genome, which both he and the government consortium completed in draft form in June 2000.

Celera's plan was to sell its genome data to subscribers. Dr. Venter said that this became a profitable business of more than $100 million a year, a figure that ''not many biotech companies have achieved.'' The problem was that the government was giving away much the same data for free. Dr. Venter declined to address directly the question of whether he thought it a proper role of the government, which usually supports just precommercial research, to compete with his database.

Given Celera's high stock price, investors wanted more than just the income from the database. ''The experiment worked, but not on the level wanted by people who wanted to become billionaires out of it,'' Dr. Venter said.

His original plan, Dr. Venter said, was to stay at Celera for four years. He made it through a ''very strenuous'' three and a half. ''I had the demands of the pressure of the human genome race,'' he said. ''I was trying as an absolute novice to run a New York Stock Exchange company and dealing with some of the issues and personalities associated with that.''

But on leaving Celera, it was not so easy for him to return to his home at TIGR. In his absence, his wife, [Dr. Claire Marie Fraser (born 1955)], had taken over the institute and built its staff to 300 people, with $40 million a year in research grants, including financing to sequence the anthrax DNA. ''So I said it was much better, rather than disrupt that structure, to form these sister organizations where I could play a role,'' Dr. Venter said.

He is starting his institutes, the TIGR Center for the Advancement of Genomics and the Institute for Biological Energy, with the money that he made from his stock in Human Genome Sciences and Celera. The policy institute may weigh in on political issues like stem cell research and what Dr. Venter calls ''the confusion over genetic determinism.''

His energy institute is centered on a group of ancient microbes, archea, which inhabit the deepest parts of the earth and ocean. The archea do not infect humans, making them safer to manipulate. Dr. Venter said he hoped that they could be genetically engineered to suck out carbon dioxide from the atmosphere, relieving the threat of greenhouse warming, and to convert the gas into hydrogen, a source of nonpolluting energy.

At 56, Dr. Venter is still full of vigor and ambition. He seems to thrive on opposition, missing no chance to skewer his academic critics. Yet he enjoys the academic approval of the prizes and honors that are showering down on him.

''I've always felt part of the academic community,'' he said. ''I had to form Celera to get the money for sequencing the human genome.''

He professes complete lack of concern that he has not been elected to the National Academy of Sciences, an elite group that has honored his chief academic rivals.

He responds heatedly to the criticism that he is brilliant at spurring public interest in his projects but seldom finishes them. ''Do I come up with new ideas and move on to other things?'' he asked. ''Yes. I could easily spend my entire life working on any one of these things, but science is a lot further ahead because I didn't.''

Later he referred to his role in life as ''like a superenzyme.'' ''I'm catalyzing things,'' Dr. Venter added.

The policy and biological energy institutes represent new areas where, he concedes, he is a neophyte. At TIGR, where he is still chairman of the board, he intends to decode more genomes, particularly those that throw light on one of his deepest interests, evolutionary biology.

He said he thought that he could get ''most of the chimp genome'' with a shortcut based on comparing it with the human genome. ''But the real things are the blue whale, the dolphin and the elephant,'' he says. ''There are no bad genomes to do.''

No bad genomes -- an appropriate motto for the man who was first to decode the 1.8 million DNA units of the bacterium Haemophilus influenzae, the 120 million units of the fruit fly Drosophila melanogaster and the 3 billion units of that distinctive variety of person, Homo sapiens var. Venter.