Stock Commentary - New York week to April 21, 2008

NEW YORK: equities moved higher over the first four days of the reporting week to April 21, with the start of the first-quarter reporting season creating some confidence. However, the last trading session saw an end to the four-day rally, although the Dow Jones still finished the week with a 4.3% gain. Pharmaceutical and biotechnology stocks, despite some negative days, ended mostly higher with 21 of those tracked rising and 18 declining week-on-week.

The last day saw drug majors move lower, after Eli Lilly posted disappointing first quarter results (see page 10), and Lilly itself was down 4.3% on the week. Affymetrix slumped 32.5%, as a result of the firm lowering its full-year 2008 revenue forecast, saying it believed its customers were reducing R&D spending, news which dragged the biotechnology sector down on April 14, although this, as well as drug stocks, generally picked up subsequently. Forest Labs declined 14%, despite the company reporting first-quarter results showing that it had swung back into profit (Marketletter April 21). Disappointing investors was the drugmaker's forecast of weaker 2009 results than analysts had expected. ImClone shares advanced 8.1% to close at their highest level in three years, on negative news for a rival's lung cancer drug - Roche/Genentech's Avastin (bevacizumab; see page 21) - which is seen as a positive for its own product, Erbitux (cetuximab). Genentech saw its share price fall 3.7%. Drug giant Pfizer experienced only a 1.8% downward blip in its stock over the week - having fallen as much as 3.3% on April 17, despite reporting an 18% drop in first-quarter income, with the results hit by generic competition and acquisition costs (see page 4). Johnson & Johnson gained a modest 0.9%, having reported the week earlier, with first-quarter figures and full-year forecasts that beat analysts' consensus forecasts. Medarex put on 6.0% after the company revealed positive Phase I/II trial results that suggest a potential association between higher doses of its MDX-060, an investigational anti-CD30 antibody, and improvement in disease control and prolonged progression-free survival in patients with relapsed or refractory CD30- positive lymphomas.