Stock Commentary - New York week to January 7, 2008

NEW YORK: equities moved up and down in the holiday-spattered three-week period to December 31, 2007, with a decline in the earlier sessions after a quarter point cut in the base rate - not the hoped for 50 points, along with the announcement of various plans to ease banks' problems, did not assuage traders' anxieties. The subprime mortgage crisis continued, with several banks issuing warnings. The reporting period saw a 3.4% decline in the Dow Jones but, despite a volatile year, the index ended 2007 with a 6.4% rise. Pharmaceutical and biotechnology stocks, which should be less impacted by the credit markets and an economic slowdown, were decimated over the three weeks, with 36 of those tracked falling and just three moving up.

Affymetrix was one of only three stocks that was up for the period and also the only firm that received a grant from the National Human Genome Research Institute. Its share was $10.2 million. All other grant recipients were academic institutions. The company, which rose 6.5%, is also buying USB Corp, which makes molecular biology and biochemical reagent products for $75.0 million in cash (see page 4). Affymetrix said the purchase will help it speed development and commercialization of new genetic analysis products and raise the value of its current product portfolio. Although Biogen Idec was off a whopping 23%, analysts at Rodman & Renshaw have maintained their market perform rating on the stock and told clients that, while Avonex (interferon beta-1a) sales declined 3.3% month-to-month in November, they are tracking marginally above fourth-quarter 2007 estimates of $263.0 million. Medarex, off 21.9%, and partner Bristol-Myers Squibb, down 9.5%, both took hits after one of three studies on ipilimumab did not meet its primary goal of shrinking tumors in at least 10.0% of the study's 155 patients (Marketletter December 17, 2007). The two companies still plan to pursue a Biologic License Application for the drug in the first half of this year. Jason Zhang of BMO Capital Markets feels that though high doses of the drug proved more effective in the three trials, the data are not strong enough for approval. Akhtar Samad of Bear Stearns agrees, and adds that the poor trial result raises the risk for late-stage clinical studies.