Stock Commentary - New York week to Jan 5, 2009

NEW YORK: equities started with a strong rally on December 16, 2008, but then moved up and down through the Christmas and New Year holiday  period, reacting to various good and bad economic and global political  news. The Dow Jones Industrial Average advanced 4.5% in the three weeks  to January 5, briefly regaining the 9,000 level on January 2. Drug and  biotechnology shares strongly outperformed, as 30 of those tracked  increased - many in hefty double-digits - and just three declined.  Overall, the biotechnology sector was a relatively safe investment in  2008, with many of the larger cap stocks such as Genentech and Amgen  doing well, while other issues in the sector, like PDL Biopharma,  Biogen Idec and Amylin, took heavy hits. In 2009, analysts expect  consolidation, with Big Biotech gobbling up smaller firms and  pharmaceutical companies buying in as they fill out their pipelines.

Affymetrix saw its stock swing up 29%, as investors continued to approve  of the acquisitions it made last year. After buying USB and True  Material earlier in 2008, it bought Panomics for $73.0 million in cash  in December, and also hinted it will make more buys in 2009. Affymetrix  will also benefit from the current mindset, ie, looking favorably on  personalized health care, according to analysts. Piper Jaffray has  reiterated its buy rating on Vertex, maintaining its $43 price target  and labeling the company a "top pick for 2009." It also told clients  that Vertex is one of the few biotechnology companies that can deliver a  true blockbuster drug in the next few years. The stock, up 27.7% for the  reported weeks, has benefited from the favorable clinical trial data  for telaprevir, an inhibitor of the hepatitis C virus, with more good  news expected from the upcoming JP Morgan Healthcare Conference. PDL  shares plummeted 31.1% as the firm spun out its biotechnology  operations and was taken off the S&P MidCap 400 index. The latter  business is now part of Facet Biotech, though PDL still holds rights to  royalty revenue on all future and current licensed products. Also, PDL  and Alexion settled a patent dispute over the blood disorder drug  Soliris (eculizumab), with Alexion paying $25.0 million in exchange for  a license to sell Soliris under the "Queen" patent.