Stock Commentary - New York week to Oct 27, 2008

NEW YORK: equities had yet another volatile week in the reporting period to October 27, with the Dow Jones Industrial closing 11.8% lower overall, and just above a further critical level, the 8,000 mark. Impacting markets was not just the ongoing global financial crisis, but also a spate of poor earnings reports and lowering of forecasts by companies across the board. Drug and biotechnology stocks were decimated along with other sectors.

Amgen, 2.6% higher, and Bristol-Myers Squibb, up just 0.9%, were the only two drug stocks followed with a plus sign in their column for this week after better-than-expected earnings news (see pages 4 and 10). New safety warnings did not hurt Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) as much as had been expected, and Amgen is now forecasting full-year earnings per share will reach $4.45-$4.55 per share, up from an earlier forecast of $4.25 to $4.45. B-MS saw its third-quarter net profit triple on the $4.1 billion sale of Conva-Tec, and the company also reported good increases in product turnover. It expects EPS for the year to hit the top end of its previous forecast, $1.65 to $1.70 per share. Other stocks did not fare so well. Amylin shares, off 37.6%, hit their lowest level in more than six years, as the firm reported weak third-quarter profit and lowered its guidance. Sales of Byetta (exenatide) have been slow after reports linking the drug to patient deaths (Marketletters passim), with investors and analysts alike showing their concern over news that next-generation Byetta may take longer than expected to hit the market. Affymetrix plunged 26.3% as the company reported that falling sales, increased costs, and restructuring fees turned the third-quarter figures to red. With the loss much larger than expected, the firm also laid the blame on greater competition and weak industrial spending. Analysts feel it will be a while before the company makes a turnaround, as it works on its plan to move from offering tools for basic research to offering tests for clinical trials. Ligand, 35.3% lower, is one of the drugmakers caught in regulatory limbo, with Promacta (eltrombopag), being developed jointly with GlaxoSmithKline, more than a month past its expected review date (Marketletters passim and page 15 this issue).