Stock Commentary - New York week to Sept 15, 2008

NEW YORK: equities saw another roller-coaster week in the reporting period to September 15. Having breathed a sigh of relief after the government rescued mortgage giants Fannie Mae and Freddie Mac, it was the fate of Lehman Brothers that weighed on investor sentiment and, when the news of its bankruptcy came out on the last day, the Dow Jones slumped 4.4%, closing 5.2% lower on the week and below the psychologically-important 11,000 level. Drug and biotechnology stocks failed to provide a defensive haven, with 26 of those tracked falling and just 10 rising.

Amgen was one of the few stocks to end the week in positive territory, up 4% as a result of advance news for data on denosumab's ability to reduce fractures among post-menopausal women with osteoporosis (see page 17). The drug could bring in $2.0 billion-$3.0 billion annually, according to analysts, but only after it proves itself against already-approved therapies. Mylan shares were off 11.1% after Forest Labs (down 4.6%) said that the US Patent Office had rejected all pending claims for Bystolic (nebivolol), which could cut its exclusivity by about five years. Forest sublicensed the US marketing rights to the drug from Mylan, which, in turn, had acquired these for North American from Janssen. The latter submitted the patent for re-examination. Meanwhile, Moody's affirmed a speculative rating for Mylan after the firm decided not to sell Dey, its specialty pharmaceutical division (Marketletter September 15). Mylan is, however, issuing $400.0 million in senior, unsecured debt, which Moody's feels will improve the company's financial position. An arbitration agreement that has Ligand paying $13.0 million to The Salk Institute, which is now dropping a claim over Targretin (bexarotene) for about double that amount, helped to push the firm's stock down 12.1%. It was easy to tell which stock was on which side of a hostile takeover bid. King Pharma, down 7.9% for the reported week, has now bid $37 per share for Alpharma, a 5% premium to the latter's price the day before the offer was announced (see page 2). Alpharma shares were up 4.7%. The price boosts King's earlier offer by 12%. Analysts now feel that the two companies will negotiate a final deal.