Stock Commentary - New York week to Nov 17, 2008

NEW YORK: equities saw an exceptionally strong rally on November 13 (the Dow Jones jumped 6.7%), as investors took to bargain-hunting thinking the market must have bottomed out. However, there were two more days of falls, adding to the first two, leaving the Index 6.7% lower in the reporting week to November 17, the day that the largest number of job cuts for 15 years were announced around the country, among them 52,000 at Citigroup alone. With very few exceptions, the pharmaceutical and biotechnology sectors put in a dismal performance, following the general downturn, with just seven of the stocks tracked seeing a rise and 28 declining.

News that ArQule has signed an R&D deal with Daiichi Sankyo (Marketletter November 17) saw the US firm's stock soar 33% for the week, after first heading south on the deal. The upfront payment of $75.0 million gives ArQule enough cash for three years. Though Amylin ended off 16.2%, not all the news was bad. By the end of the reported week, Carl Icahn was raising his stake in the company and IMS reported that Byetta (exenatide) prescriptions increased during the first week of November, but they are still 9% down year-on-year. Though Thomas Wei of Piper Jaffray has a buy rating on the stock, he still feels it is up-in-the-air as to whether what he terms "misleading" headlines about the pancreatitis risk will have a long-term negative impact on efforts to expand sales of the drug. Last week, the company announced it would reduce spending and cut staff (Marketletter November 17), but analysts did not expect the move to drive investors to the stock the way speeding Byetta LAR to market would. Confident that a Food and Drug Administration panel would recommend Embeda (morphine sulfate and Duramorph), investors drove Alpharma's shares up 12.3% for the week. Expected to make its recommendation by year-end, the panel said the drug was a small advance over current pain pills. The same group backed King Pharma's Remoxy (oxycodone), though a difference of opinion over label language meant the stock fell 0.6%. Cowan upgraded both firms to outperform, saying that Embeda is likely to be cleared and that King now has an incentive to complete the Alpharma acquisition (Marketletters passim).