Stock Commentary - New York week to Dec 11, 2006

NEW YORK: equities meandered around in the reporting week to December 11, with the Dow Jones up a modest 0.4% ahead of a pending Federal Reserve Bank policy meeting which, in the event, decided to keep interest rates steady. Pharmaceutical and biotechnology stocks were fairly evenly balanced on ups and downs, with 20 of those tracked rising, 18 falling and two unchanged.

Investors reacted positively to news that Medarex received a fast-track designation for its MDX-10 or ipilimumab to treat melanoma (see page 21). Analysts noted that the company has managed to keep its eye on the prize, with drug development programs moving ahead, while it dealt with an options-backdating scandal, the resignation of its chief executive and the search for a successor. A Biologic License Application is expected to be submitted next year, after trials are completed. The stock was up 11% during the reported week. ArQule stock moved up 16.9%, on little news. The company said it has enrolled the first patient in a Phase I clinical trial with ARQ 171; Roche has an option to license the product, and also issued a press release updating the progress in its other clinical programs to treat cancer. The company recently announced interim results of an early-stage antitumor drug trial that showed positive results. Lehman Brothers kept its equal weight rating on Amylin, but reduced the target price from $51 to $39. Wall Street watchers have noted that, while the company, whose stock was off 3.6% during the reported week, has exceeded expectations for diabetes drug sales for the past two quarters, it faces increased competition, and its early- and mid-stage products in development will not be on the market for years. Amylin stock was off 3.6%. Cephalon shares fell 4.2% during the week after it said there could be a delay in the final approval of Nuvigil (armodafil), for excessive sleepiness, as the Food and Drug Administration investigates a case of a serious rash with a related medicine. The agency has asked Cephalon for additional information about a potentially dangerous rash in a clinical trial of its Sparlon (modafinil). The company halted development of that drug after at least one report of a serious skin rash in a child.