Stock Commentary - New York week to Sept 18, 2006

NEW YORK: equities moved up (on better-than-expected financial results) and down (on disappointing retail sales data and inflation fears) during the reporting week to September 18, leaving the Dow Jones 1.4% higher overall, and reaching a four-month high ahead of the weekend. Pharmaceutical and biotechnology stocks were also mainly higher, with 28 of those tracked rising, 12 falling and two unchanged. The Dow dipped on the last day, as investors focussed on the upcoming Federal Reserve Bank meeting

ImClone stock may have risen 6.9% during the reported week, but it dropped after a court ruled that the patent for Erbitux (cetuximab) belongs to an Israeli research institute (see page 28). The company may now need to pay royalties on the product. And ahead of Carl Icahn's likely gain of a third of the firm's board seats at an annual meeting and a move to replace the management, the stock slumped. After the dismissal of Peter Dolan as chief executive of Bristol-Myers Squibb (Marketletter September 18), there was speculation that the company might be a takeover target and the stock rose 6.4%. Schering-Plough, up 3.9%, is the lead candidate, with a local newspaper noting that the firm has held internal discussions for several months about a reverse merger with B-MS. The latter would not comment on the report, but said the firm would do what is in the best interest of its shareholders. Barbara Ryan of Deutsche Bank told clients that there is what she termed "strategic merit" in joining of the two companies, but also noted that S-P "could be launching a trial balloon" to see how shareholders react. A merger would help move S-P away from its reliance on Vytorin (ezetimibe/simvastin) and Zetia (ezetimibe), with Merck & Co likely to buy out S-P's share in its joint venture to sell the products. With more than $300.0 million in hand, plus a few lucrative deals, Vertex nonetheless has priced a public offering of 9.1 million shares at $33 apiece, aimed at raising gross proceeds of about $300.3 million. Analysts noted that it is the second highest public financing conducted this year, beaten only by Amylin, which raised more than $500.0 million in March. Vertex stock was off 6.4% for the week.