Stock Commentary - New York week to April 28, 2008

NEW YORK: equities moved up and down during the reporting week to April 28, with sentiment negatively impacted first by mixed first-quarter earnings and then improved by better figures, which included some of the drug majors. Pharmaceutical and biotechnology stocks were mainly higher, with 24 of those tracked rising, 14 falling and one unchanged. The rejection by the Food and Drug Administration of one drug, the agency's request for further information on others, and first-quarter results adversely affected by generics helped to slow the drug sector during the reported week.

Though Merck & Co and Schering-Plough took a hit when the FDA decided not to clear their combination allergy treatment (loratadine and montelukast; see page 22), the move came too late to affect this week's numbers. Merck was up 4.6% for the week. Schering-Plough rose 8.6%, based on better-than-expected first-quarter earnings and good data for boceprevir presented at the European Association for the Study of the Liver meeting (see pages 4 and 19). Still, George Farmer of Wachovia and Steve Scala of Cowen & Co feel that Vertex' telaprevir will wind up taking the largest share of the hepatitis C market. Brian Abrahams of Oppenheimer feels boceprevir could still be what he termed a threat, but Mr Scala is of the view that the drug has an inferior profile and some uncertainties about when its Phase III trials will begin. The need to add more overall survival data to the information already at the FDA also pushed down Medarex, which was off 5.9% to its lowest point in a year. The company, and partner Bristol-Myers Squibb, are now delaying submission of the Biological License Application for ipilimumab until at least 2009 (page 22). Medarex shares have lost more than half their value since last summer. Though Katherine Kim of Banc of America expected a 2009 filing date, she has cut her 2009 forecast by $0.12 to $1.10 to account for lost revenue from potential ipilimumab sales and has a neutral rating on the stock. B-MS' shares remained stable, up 1.5%, because of its good first-quarter earnings, though analysts expect patent concerns longer-term with Avapro (irbesartan) and Plavix (clopidogrel; see page 4).