Stock Commentary - New York week to Oct 8, 2007

NEW YORK: equities started the reporting week to October 8 dipping for two days, and losing the Dow Jones 14,000 level recently attained, before gathering a bit of momentum ahead of the weekend on employment data, to close just 0.3% lower but at 14,043.73. Not helping the markets was news that house sales had fallen to a record low, as well as a little profit-taking after the previous week's strong showing. With the third-quarter financial results reporting period looming, the pharmaceutical and biotechnology sectors were mixed, as 21 of the stocks tracked saw a gain and 18 a decline.

ImClone shares rose 7.9% for the week on news of an updated label adding improved survival data for Erbitux (cetuximab; Marketletter October 8). Michael King of Rodman & Renshaw reiterated his market outperform rating for the stock and the $55 price target, noting that the drug is holding its own against Amgen's Vectibix (panitumumab) in the metastatic colon cancer setting. The revised label improves Erbitux' competitiveness, but likely means only a modest increase in sales, noted May-Kin Ho of Goldman Sachs, who reaffirmed her buy rating with a $45 price target. Investors liked the news that PDL Biopharma is putting itself up for sale, or sell off its main assets. Its chief executive is also leaving the company, whose stock was up 7.6% for the week, having already announced that it would dispose of all its marketed medicines. Katherine Xu of Credit Suisse, who has begun coverage of the firm with an outperform rating and a target price of $28, feels sale prospects are good, with Biogen Idec, Genentech and Pfizer likely candidates to buy it. Analysts at Broadpoint Capital are holding on to their buy rating, but raised the target price from $24 to $27. Swiss drug major Roche would not comment on rumors of majority-owned Genentech's interest in PDL as a way to save an estimated $340.0 million in royalties that will be due until 2010 on Avastin (bevacizumab). It was good news and bad news for Amylin, off 3.1%, which received Food and Drug Administration approval for a pen device for delivering Symlin (pramlintide acetate), but its application to add patients using basal insulin to the drug's label was rejected.