Stock Commentary - New York week to Nov 26, 2007

NEW YORK: saw strong up and down movements on the Thanksgiving Holiday-shortened week to November 26. The Dow Jones moved up on November 23, but fell sharply on the last reporting day, on fears that the ongoing mortgage crisis would impact shoppers in the most import period for stores. Blue chips fell to their lowest level in seven months, with the Dow 1.7% lower on the reporting period. Although the health care sector should be seen as resilient to the economic fears, drug and biotechnology stocks were mostly lower, with 28 of those tracked falling and just 11 seeing a rise.

There has been some talk that biotechnology stocks still are not cheap compared to Big Cap drugmakers, but Jim Birchenough of Lehman Brothers has reiterated his overweight rating on Amgen and set the target price to $72. He has told clients that, while Roche has submitted a New Drug Application for Actemra (tocilizumab) for the treatment of moderate-to-severe rheumatoid arthritis, he feels there is only a limited threat to Enbrel or (etanercept) sold jointly in the US by Wyeth and Amgen, because it also has expectations from a psoriasis indication. Amgen stock was off 3.6% for the week. Cytogen stock continued to slip, as its chief executive left a week after the firm said it had hired an investment bank to help "evaluate strategic alternatives" that could include a sale of the company. Earlier in the month, Cytogen reported continued losses in the latest quarter. The stock has hit new 52-week lows, with the Nasdaq threatening to delist it if it does not reach $1 a share by May. Some analysts have pointed out that the company's management has not been able to translate approval of some good products into top-line growth and that selling the company is the only way to go. Estimates of the firm's potential selling price range from three times 2006 annual sales of $17.3 million to not much over its current market capitalization of $22.0 million. Cytogen stock was off 14.1% for the week. Vertex stock dropped 5.3% on news that, with Merck & Co (down 1.1%), its partner in developing MK-0457, it is suspending Phase II trial enrollment for the leukemia drug over possible links to a heart condition (Marketletter November 26).