Stock Commentary - New York week to Oct 16, 2006

NEW YORK: equities moved higher on all but one of the reporting days to October 16, and closing at ever new all-time highs. The Dow Jones finished the week up 1.1% at 11,980.60, with predictions that it would now breach the major 12,000 level. Pharmaceutical and biotechnology stocks were mostly higher, with 25 of those tracked rising, 15 falling and one unchanged, as the third quarter reporting season gets into swing.

Cytogen's purchase of Caphosol is being seen by analysts as a good fit (see page 18), with the stock up a whopping 35.7% during the reported week. Charles Duncan of JMP Securities has reiterated a market outperform rating on the company and raised his 12-month target price from $6 to $8. The move should boost revenue growth, with Caphosol bringing in $100 million in revenues by 2012, he said. Rodman & Renshaw also repeated its market outperform rating on the stock, boosting the target price from $5 to $7. Ahead of reporting its third-quarter earnings, Gilead shares were up 3.6%. Meanwhile, there is a difference of opinion about the strength of the franchise for Atripla (efavirenz, emtricitabine, and tenofovir disoproxil fumarate). Some analysts note that sales are being cannibalized by Gilead's Truvada (emtricitabine and tenofovir disoproxil fumarate) and that turnover may be lower than expected. Others feel that the launch was strong, the firm will meet earnings expectations and the drug will cannibalize other products in the category, rather than vice versa. Amgen stock fell 2% after the Food and Drug Administration said it wants a new clinical trial for its monthly dose of Aranesp (darbepoetin), as well as more data on a version taken once every two weeks. Amgen said it planned to ask the agency to use additional data on the new doses that was not available when it filed for approval. The company is facing possible competition from Micera (continuous erythropoietin receptor activator; CERA), which Roche has submitted for approval (Marketletters May 8 and April 24). Amgen has sued Roche for allegedly violating its patent on Epogen (epoetin alfa). ImClone stock was relatively steady, moving up 1.2%, despite a battle between the board of directors and Carl Icahn over control of the company.