Stock Commentary - New York week to March 30, 2009

NEW YORK: equities had a volatile week, with a sell-off at both ends of the reporting period to March 30 as economic woes continued to take  their toll on markets. Pharmaceutical and biotechnology stocks failed  to present a defensive option, with just 11 of those tracked seeing a  rise, while 25 declined. Yet another piece of proposed legislation for  follow-on biologics was revealed, again with a short period of  exclusivity, which would be expected to have a negative impact on the  research-based sector (see page 13).

The rumor mill helped push Allergan up 12% on talk that UK drug major  GlaxoSmithKline might be interested in the company. GSK already  co-markets Botox (botulinum toxin type A) with the firm in Japan and  China, while Allergan helps promote the UK group's Imitrex  (sumatriptan) and Amerge (naratriptan) in the USA. Given the existing  relationship and with GSK likely looking to diversify as are other  large-cap pharma companies, a number of analysts feel that such a  combination would make sense. After PDL BioPharma provided guidance  indicating that revenues for the first quarter would be about $60.0  million, $10.0 million more than in the same quarter last year, the  stock moved up 11%. The rise comes from royalty revenues primarily from  higher sales of Avastin (bevacizumab), Herceptin (trastuzumab) and  Lucentis (ranibizumab inj), marketed by Genentech, and sales of Tysabri  (natalizumab), sold by Elan and Biogen Idec. After the latter's R&D day  for analysts and journalists (see page 18), most were impressed with  the programs and some pegged it as a firm that should be attractive to  buyers, with the most likely purchasers AstraZeneca, Bristol-Myers  Squibb and Sanofi-Aventis. The company said it has 20 new medicines in  Phase II or beyond, and at least six of these have reached the final  stages of testing before Food and Drug Administration approval. Still,  the shares were up only 2% for the week. The US Department of Justice  is looking into Par Pharma's promotional practices of its Strativa  unit, relating to sales of Megace (megestrol). The firm said it plans to  cooperate with the inquiry, but its shares slid 15.2%. Vivus saw  profit-taking, falling 20.9% after its obesity drug-related news 32%  hike the week before.