Stock Commentary - New York week to Nov 3, 2008

NEW YORK: equities powered ahead on the first reporting day of the period to November 3, as bargain-hunting set in following the previous week's dismal showing and momentum gained toward the US presidential elections on November 4. There were some good news stories for drug companies, coming both from medical conferences and quarterly result reporting, leaving all the pharmaceutical and biotechnology stocks tracked with rises, some of which were very significant. However, it should not be forgotten that the sector has taken a heavy-pounding in recent times, on the back of worries for the industry longer term. Also helping was the Federal Reserve Bank's interest rate cut.

There was a massive 52% gain for Mylan, which reported that third-quarter profits were up 15% (see page 11), helped by the sale of rights to Bystolic (nebivolol) and news that it was raising its earnings guidance for the full year, in part, based on fentanyl sales. The company's forecast for 2009 and 2010 was unchanged. For most of the year, the stock has been under pressure because of investor concern over its high debt levels and the integration of Merck's generic unit a little over a year ago. Still, not all news for investors was good. Mylan also said that fentanyl sales could see some added pressure, with the US approval of Teva's competing product. There was also a strong gain for Vertex, whose shares rose 26.7% on previewed positive data for telaprevir (see page 19). Noting that the data seems to support the drug's use in a broad spectrum of hepatitis C patients, Meg Malloy of Goldman Sachs told investors that the company is ahead of the competition. Yaron Werber of Citibank feels Vertex' drug is effective more quickly than Schering-Plough's boceprevir, which has higher rates of anemia in Hep C patients. Two pieces of good news for Medarex helped its shares accelerate 43%. Positive data from a mid-stage trial for MDX-066 and MDX-1388 to treat Clostridium difficile-associated diarrhea and a narrower third-quarter loss were the triggers. News that one of its larger investors may hold discussions on ways to improve shareholder value, including the possible sale of the biotechnology divison, helped to boost the shares of Amylin by 28.8%.