Stock Commentary - New York week to July 23, 2007

NEW YORK: equities started the reporting week to July 23 in positive mode, with the Dow Jones holding the 14,000 level for the first time on July 19. Investors are clearly upbeat, says Associated Press business writer Tim Paradis, adding: "the Dow's latest accomplishment does raise questions about whether they are buying more on speculation than fundamentals." However, the next day saw an abrupt turnaround from the record territory, amid unfavorable second-quarter financial results from blue stock issues, which saw the index down a modest 0.1% on the week. Pharmaceutical and biotechnology stocks, now heavily into the reporting season (see company pages this issue), were mixed, with 16 of those tracked rising, 20 falling and one unchanged.

Takeover speculation has helped push up the share price for Barr Pharmaceuticals, with traders noting that the company's strong cash flow and good prospects for both its branded and generic drugs are attractive to private equity. Other analysts feel that the chat is just that, summer chat and rumors. Barr recently reported that sales of its Plan B morning-after pill nearly doubled, to about $80.0 million, since it went over-the-counter last August. Most analysts like the stock, with 13 of 17 who rate the company holding a buy or similar opinion; the others have a hold on the stock, which was up 6.1% for the reported week. Anticipation of a $140.0 million milestone payment from KV for Evamist (estradiol transdermal spray) has helped push Vivus stock up 9.2%. It has risen more than 40% in the year-to-date and some analysts feel it could spurt another third within a year. Vivus will use the money to fund late-stage trials for Qnexa (topiramate and phentermine), banking on the fact that an anti-obesity drug trumps a menopause agent when it comes to profits, though that income may be two or three years away. Gilead's share price fell 4.1%, after its second-quarter results (see page 6). The firm also made public that it is talking with European Union regulators about whether its Atripla (efavirenz, emtricitabine and tenofovir), sales of which were below expectations, should be taken with or without food, which could delay its approval past the expected end of this year.