Stock Commentary - New York week to Aug 28, 2006

NEW YORK: equities were strong in the first few reporting days in the two week period ending August 28, on encouraging producer price and inflation figures, then dipped on oil price rise and interest rate hike concerns, but with the Dow Jones still ending 1.9% higher overall.

A UBS research report noted that Vertex was likely to have what it terms an "active" fourth quarter; the firm also raised its rating on the stock from neutral to buy and set a price target of $42. The change was based on valuation and expected momentum; Vertex stock moved up 14.1% during the reported period. A study on Lexiva (fosamprenavir) was presented at the recent Toronto, Canada, AIDS conference and published in The Lancet. News of an agreement with GenPat77 (see page 20) helped Medarex stock overcome a slight stumble that came when the company said it might have to revise its financial statements from 2000 through the first quarter of this year as a result of some stock option recording practices. The company is one of many the Securities and Exchange Commission is checking on this issue. Still, Brian Rye of Janney Montgomery Scott has restated his buy rating on the stock, although he feels it will trade at low levels until the option issue is resolved. The good news is that there are 30-plus drugs in clinical trials, he said, adding that it is "one of the more intriguing investment opportunities within the small-cap biopharmaceutical sector." Overall, the stock was up 14.2%. Investors took to the over-the-counter approval of Plan B (levonorgestrel; see page 14), and Barr stock rose 9.3%, but analysts and the company feel that any monetary boost will be slight in terms of Barr's total earnings. What will have more of an impact is a win in the bidding to buy Pliva (see page 5). That would nearly double Barr's revenue and make it the largest USA-based generic company. However, the move does increase Barr's credibility among gynecologists, and contraceptives represent about half the firm's sales. Amylin, up 12.6%, is still getting a buzz from the lifting of restrictions on the sales of Byetta (exenatide) now that more cartridges are being made to hold the medication so that it can be injected. The firm's recent strong earnings were based on Byetta.