Stock Commentary - New York week to Jan 29, 2007

NEW YORK: equities gyrated through the reporting period to January 29. rising on the first two days on solid fourth quarter and full-year 2006 earnings reports, but slumped on January 25 on rising Treasury bond yield woes. Pharmaceutical and biotechnology stocks were mostly lower, with 26 of those tracked falling and just 14 seeing a rise, despite some solid financial results from the sectors.

Amgen stock was off 8.1% after the firm said an Aranesp (darbepoetin alfa) trial suggested a higher risk of death among patients with anemia caused by cancer, which accounts for 12% of the drug sales, though it is an off-label use. Analysts feel the results put $400.0-500.0 million worth of revenue at risk. There are also implications for its Epogen and Johnson & Johnson's Procrit (both epoetin alfa), which have a combined $10.0 billion market, analysts said, noting that an earlier study has already found Procrit increased the risk of death among kidney disease patients 34%. The company also said that a new study of Vectibix (panitumumab) as a front line therapy against advanced colon cancer did not show any advantage over standard therapy. Several analysts said that the pair of disappointing results cast a significant pall over Amgen's ability to grow revenue. Friedman Billings kept its market perform rating, but dropped the target price from $77 to $73. Pfizer's restructuring earned it mixed reviews (Marketletter January 29). Bear Stearns cut its rating on the stock from outperform to peer perform on concerns about future revenue projections for Lipitor (atorvastatin). Banc of America and Merrill Lynch analysts felt the move could mean a leaner, more flexible company, but ML also feels that the stock, which was off 3.3% on the week, will "tread water" in the near term. Several analysts have begun to cast an eye over Schering-Plough, down 0.4%, suggesting that now would be a good time to invest - before others also take notice. S-P has a few interesting products in its pipeline including a Phase II protease inhibitor for hepatitis C and that there is a possibility of expanding indications for Remicade (infliximab), and the Zetia (ezetimibe)/Vytorin (ezetimibe and simvastatin) franchise, which account for about 25% of its total revenue.