Stock Commentary - New York week to Nov 20, 2006

NEW YORK: equities started the reporting week to November 20 in bullish mood, and continued rising for a further three days, before dipping on the last as investors took a breather ahead of the Thanksgiving Holiday period. Long holiday weekends tend to produce low trading volumes and few major price moves, commented the Wall Street Journal that day. Pharmaceutical and biotechnology stocks, which were battered after the Democratic wins in the mid-term US elections (Marketletter November 20), picked up strongly, with 34 of those tracked rising and just six seeing a decline.

Among the drug majors, the best performance was seen for Abbott Laboratories, which rose 4.6% on the week, helped to some extent by an upgrade from analysts at Morgan Stanley to overweight from equalweight. Pfizer gained 4.5%, with a 1.1% rise on November 15, after the drugs giant announced plans to acquire Embrex, seeing it re-enter the poultry business. Merck & Co was lifted 2.6% over the week, after the company won the latest damages law suit over Vioxx (rofecoxib; see page 4). Among the smaller issues, Vivus leapt 16.3% on the week, which culminated with the firm raising $33.6 million in a direct offering of 9.6 million of its common shares at $3.50 each. The company intends to use the proceeds to fund clinical development of its product candidates, including the anti-obesity drug Qnexa (phentermine and topiramate). Allergan benefited from an opinion from Banc of America analyst David Maris, who has maintained his buy rating on the firm and raised his share price target from $117 to $122. His stance was a reflection of the news that the US Food and Drug Administration has lifted its ban on silicon gel breast implants, as a result of which Mr Maris sees Allergan generating $400.0 million in breast esthetics sales. The stock closed the week up 11.5%. PDL BioPharma (formerly Protein Design Labs) saw its stock fall 7.0%, after Swiss major Roche decided to discontinue development of daclizumab for organ transplant patients. Amylin was down 4.1%, ahead of the news that it had gained marketing approval in the European Union for its type 2 diabetes drug Byetta (exenatide; see page 28).