Stock Commentary - New York week to Mar 16, 2009

NEW YORK: equities started the reporting period to March 16 with a burst of upward activity and the Dow Jones rising 5.5%, boosted by positive  comments from beleaguered Citigroup, but it took another two days of  edging up before the index regained the psychologically-important  7,000 level, ending 10.2% higher week-on-week. Recent M&A activity has  sharpened the focus on the pharmaceutical and biotechnology sectors,  which have suffered as a result of new US President Barack Obama's  health reform plans (Marketletters passim), with none of the stocks  tracked seeing a decline in this period and some very serious  double-digit rises. The drug/biotech sector in particular benefited  from the positive comments over the weekend from Federal Reserve Bank  chairman Ben Bernanke that the recession could end later this year.  Additionally, a few days before that, UBS initiated coverage of the  specialty pharmaceuticals sector, noting that the group will have solid  earnings growth and will look attractive compared with others. It told  clients that now is the time for these firms to acquire earlier-stage  products for their pipelines from small companies and to become more  focused on R&D. Firms such as Allergan (up 9.6%), Forest (up 11%) and  Cephalon (up 2.3%) have the money and the interest to license new  products, UBS noted.

Investors paid attention to a report that downplayed the pancreatic  risks of Byetta (exenatide), with Amylin stock soaring up 30.1%. Though  the firm had referenced the data before, the new findings use an  insurance company database to show that neither Byetta nor Merck &  Co's Januvia (sitagliptin) increased risks for pancreatitis. The  linkage, pending Food and Drug Administration label changes for the  drug, and concerns that the agency would want additional studies for  Byetta LAR had been pushing down the stock. Investors showed their  confidence in Merck's planned buy of Schering-Plough by pushing the  shares up 24.9%. Merck had the biggest two-day percentage gain in its  history during the reported week, though the stock is still well off its  year-ago highs. Also, The Lancet published positive data for S-P's TRA  (see page 22) and Sanford Bernstein raised its rating on Merck to  outperform.