Stock Commentary - New York week to March 10, 2008

NEW YORK: equities had a disastrous week, impacted by bad news on many fronts, including the ongoing credit crunch, weak economic data, rising commodity prices and the weak dollar. The Dow Jones closed the reporting period to March 10 down 4.2%, falling below the 12,000 mark ahead of the weekend. Drug and biotechnology issues also fared badly with only three of the 39 issues tracked seeing any kind of a rise. Catherine Arnold of Credit Suisse has downgraded the sector to market weight from overweight, pointing to upcoming patent expirations that will mean more volatile growth and regulatory changes that will lead to more Food and Drug Administration oversight for drugmakers. She also feels that investors are factoring in the possible effects on the industry of the coming presidential election.

PDL Biopharma shares had the distinction of being down the most, off 35.2%, as investors reacted to the company saying that it would no longer look to sell itself as it has not received takeover bids and it would cut more jobs (see page 4). The company also said that it plans to give shareholders at least $500.0 million from the recent sales of manufacturing and cardiovascular facilities. This also got a mixed reaction from investors. Though the company plans to cut its costs in half, Jason Kolbert of the Susquehanna Financial Group told clients that current spending on the pipeline may not be justified, and questioned the value of the company's remaining assets. He downgraded the stock to neutral from positive and priced the shares at $9. Barr Labs managed to remain in the plus column as it still felt the effects of the recent court ruling invalidating Bayer's patent for Yasmin (drospirenone and ethinyl estradiol) so leading the way to a Barr generic (Marketletter March 10). After the close of the reported week, Cytogen was sold to EUSA Pharma, with investors getting 62 cents per share, a 35% premium on the price at the close of the week when it was off 9.8% (see page 7). Merriman Curhan Ford initiated coverage of Vertex with a neutral rating, advising investors to hold the shares until there is a clearer picture of the company's timelines and more information on its hepatitis C virus drug candidates. The stock was off 17%.