Stock Commentary - New York week to Aug 7, 2006

6 August 2006

NEW YORK: equities gyrated through the reporting week to July 31, influenced on the positive side by strong second-quarter earnings reports and on the negative by the ongoing hostilities in the Middle East or what were perceived as disappointing financials on a particular day. The Dow Jones finished the week up 1.2% Pharmaceutical and biotechnology issues, which have been reporting mostly good results over the last two weeks or so, were strong, with 32 of those tracked rising, nine falling and one unchanged.

Although Vivus has said that the increase in Muse (alprostadil) revenues is not indicative of a trend, but rather is the result of fluctuations in inventory levels at the wholesale level, investors liked the notion that the company's second-quarter revenue was $3.6 million, up from $1.7 million in the same period a year ago. The stock moved up 7.1% during the reported week, with the company stressing that the demand for Muse at the retail and government level remains consistent with prior periods. A strong earnings report (see page 3) also helped boost Mylan stock 13%. The firm also raised its fiscal year 2007 earnings forecast to $1.35-$1.55 a share, on revenue of $1.39 billion-$1.49 billion. Analysts had projected $1.18 a share, on average. The company attributed the better numbers to sales of fentanyl, though it stressed it was not overly-dependant on the product. Erbitux (cetuximab) was the cause of several stock drops this week. ImClone shares were off 7.9%, after a federal court denied its motion for a summary judgment in the current round in a patent dispute with the MIT and Repligen over the drug. ImClone, which based the motion on the basis that the patent rights had run out, now says it will vigorously defend the position that it does not infringe the subject patent. The company also faces a patent-infringement charge on Erbitux from Israel's Weizmann Institute. Amgen's experimental drug panitumumab could also take sales away from Erbitux, sold by ImClone and Bristol-Myers Squibb. B-MS stock fell 7.7% after it said it is the subject of a Justice Department criminal antitrust probe over a pending deal with Apotex over Plavix (clopidogrel) and it also reported a 33% drop in second-quarter profit (see page 3).

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