Stock Commentary - New York week to Feb 4, 2008

NEW YORK: equities fluctuated between positive and negative territories in the reporting period to February 4. The Dow Jones opened the week with positive sentiment, rising almost 0.8% after unexpectedly high durable goods orders helped lift the cautious mood generated by the credit crisis. The Federal Reserve's rate cut the next day failed to impress investors and the Dow lost 0.3%, although this was followed by a turnaround, as fears of downgrades in the financial services sector receded and the benchmark index staged a 1.6% recovery. US shares retreated on February 4 as investors sought to secure recent profits in the face of losses on the weak jobs market and the Dow Jones fell 0.9% at 12635.16. Of the tracked pharmaceutical and biotechnology stocks, 30 saw a rise on the week and eight were down.

Some Wall Street watchers now feel that the market has taken too much out of Schering-Plough stock after the Vytorin (ezetimibe and simvastatin) and Zetia (ezetimibe) news. Though they agree that S-P and fellow US drug major Merck & Co could see a 50% decrease in sales for these drugs (a $1.25 billion loss for each company), some are saying that the current market value loss assumes much more profit deterioration than is likely. If this is true, then both stocks look like steals for long-term investors. The FDA also approved an additional indication for S-P's Asmanex Twisthaler (mometasone; see page 23), for once-daily maintenance treatment of asthma in children. The stock was up 8% for the week. Shares in Biogen Idec rose 8.9% for the week, ahead of its earnings announcement (see page 6), after the company said it expected 2008 net income to grow 15%-20%. Though Joel Sendek of Lazard expects the company to miss Wall Street expectations by a penny per share on revenue of $827.0 million, he told clients that Avonex (interferon beta-1a) sales could be higher than expected and that the Tysabri (natalizumab) re-launch path seems solid. With strong first-week sales of Flector (diclofenac epolamine patch), Alpharma shares rose 14.8%. Elliot Wilbur of Oppenheimer upgraded the stock to perform on the news, as well as on reduced threat of generic competition for Kadian (morphine sulfate). He began coverage of the stock with an outperform rating and a $28 price target.