Stock Commentary - New York week to Sept 22, 2008

NEW YORK: equities had another tempestuous week in the reporting period to September 22, which included the collapse of Lehman Brothers and the rescue of insurance giant AIG, along with a resurgence in oil prices and on-going woes in the mortgage sector, which impacted on markets around the world. There were strong rallies on September 18 and 19, on the prospects of the government creating a "Resolution Trust Corp-style" plan to bring stability to the savings and loans crisis, leaving the Dow Jones up 0.9% on the week. In the pharmaceutical and biotechnology sectors, the week's losers outweighed gainers by 27 to nine.

King Pharma's stock was down 9.1%, as the company began its hostile takeover of Alpharma, taking its bid for the company directly to shareholders (Marketletter September 22). Alpharma stock was off 1.9%. ImClone shares dropped 6.8%, as Bristol-Myers Squibb first said that it might walk away from its bid for the company, and then boosted what was called its "inadequate" original offer after this reporting period (see page 4). In these interesting times for the stock market, investors are feeling a little jittery about whether ImClone chairman Carl Icahn's secret bidder is real. B-MS' stock was off 4.3% for the week. PDL Biopharma's shares fell 7.5% on the news of a downgrade and after the company said that royalty payments from UCB for patents on a Crohn's drug will not be coming, after the Belgian firm said that the drug did not infringe any patents. In August, MedImmune said it was reconsidering a licensing question on the same patents. JP Morgan has now downgraded PDL's stock to underweight from neutral, calling both the royalty stream and development pipeline overvalued. At the close of the week in which Vertex priced its public offering at a 6% discount to that day's closing price, the stock ended up 4.3%. The company also expanded its stock sale so that it now expects to bring in $220.0 million before commissions and expenses. Valeant, which is buying Coria Labs for $95.0 million to boost and expands its dermatology franchise (see page 2), finished the week up 4.4%. During the past few months, Valeant has been undergoing some streamlining, as it cut jobs and sold business units.