Stock Commentary - New York week to Dec 1, 2008

NEW YORK: despite a good start to the holiday-shortened reporting period to December 1 (markets were closed on November 27 for Thanksgiving), shares went into free-fall on the last day as the problems of the financial and automobile sectors, as well as the economy came back into focus, leaving the Dow Jones 3.5% lower overall. Drug and biotechnology stocks suffered along with the rest of the market, with just four of those tracked seeing a rise and 31 falling week-on-week.

At its first presentation to analysts in three years, Schering-Plough reported that it has 46 potential new drugs in clinical trials or under regulatory review and 29 in preclinical studies (see page 18). Analysts' reports were mostly positive, noting variously that the stock was undervalued and attractive for long-term investors, and that the company story can now be shifted from bad news about Vytorin (ezetimibe and simvastatin)/Zetia (ezetimibe) or currency to potentially positive expectations for its pipeline and low generic exposure. Investors reacted accordingly, pushing the stock up 3.9% for the week. Valeant was one of three tracked stocks in the black - up 2.6%, during the reported week, when the company reported that mid-stage trial results for taribavirin were encouraging, with data indicating that the antiviral is comparable to ribavirin (see page 22). The firm is trying to license the rights to the drug as it moves its base away from the infectious disease market. While Genzyme was the US drug stock with the biggest percentage loss for the reported week, off 14.5%, Oppenheimer has upped its rating to outperform, based on expected approvals of Mozobil (plerixafor) and Myozyme (alglucosidase alfa). It was not all good news for Genzyme, though, with the firm losing its European patent for plastic-based gels compatible with human tissue (also marketed as Synvisc). The patent is being contested by Fidia Farmaceutici of Italy; Genzyme has filed 12 amended claims to try to maintain its patent. In terms of US news, the company also submitted an application seeking US approval to market Clolar (clofarabine) to treat adults with acute myeloid leukemia. Amylin dropped another 7.1% for the week, with analysts classing the firm as a prime takeover candidate.