Stock Commentary - New York week to June 18, 2007

NEW YORK: stocks saw strong gains in the week to June 18. The Dow Jones Industrial Average opened the reporting period with a 1.0% decline but recovered well through the following four days, and the DJIA closed the week on a seven-year record high, as the market recovered from worries about rising government bond yields.

Gilead's just-approved Letairis (ambrisentan) received a black-box warning for risks of liver injury and birth defects and will be available only through a restricted-distribution program (see page 21). Joel Sendek of Lazard said less-frequent dosing and increased efficacy make the drug the best choice in its category. With a buy rating on the stock and a price target of $91, he has forecast 2007-2010 sales for Letairis of $20.1 million, $115.4 million, $257.2 million and $405.5 million, respectively, while William Ho of Banc of America also reiterated his buy rating on the shares, which were up 1.6% for the week. Bristol-Myers Squibb shares rose 3.9% in a slow-moving period for the sector. The stock got a boost after George Grofik of Citigroup upped his rating to buy from hold and kept his $33 price target. Based on the expected growth of Plavix (clopidogrel) and other new drugs coming in a few years, and some needed cost-cutting, the company has a chance for significant margin expansion, he said. There was a positive report on the sleep benefits of Avinza (morphine sulfate), an opioid given to reduce pain from osteoarthritis. The trial was run for Ligand, which sold the drug to Neurogen, which plans to file for approval of a lower dose for a sleep-related indication, paying royalties to Ligand, which was up 5.6% for the week. Alpharma stock rose 4.1% after it bought some Chinese assets relating to its animal health business. Financial terms were not disclosed and the company said the deal is not expected to affect its 2007 operating results. Approval of generic Wellbutrin XL (bupropion HCl extended-release tablets) pushed Watson up 2.8%. Genzyme shares were weak, up only 0.7% for the week, after the company reported mixed data for a powdered version of Renvela, a tablet form of which is awaiting US approval. The company plans to file for the approval of the powdered version during first-half 2008.