By Val Brickates Kennedy
Drug stocks gained ground Friday, with Bayer AG, Johnson &
Johnson and Merck & Co. among the session's biggest
winners.
The Amex Pharmaceutical Index (DRG) jumped 1% to 239.01. The
Amex Biotechnology Index (BTK), meanwhile, echoed the broader
market, slipping 0.3% to 626.43. The Dow Jones Industrial Average
was down 25 points to 7,370.
Advances were made by several of the major U.S. pharmaceutical
players, including Johnson & Johnson, Merck & Co. (MRK),
Eli Lilly & Co. (LLY) and Schering-Plough Corp. (SGP). Both
J&J and Merck are Dow components.
Shares of J&J rose 3% to $51.57 while Bayer (BAYRY) shares
motored up 9% to $50.76.
Late Thursday, an advisory panel of the Food and Drug
Administration recommended the agency approve J&J's and Bayer's
new blood thinner Xarelto, despite some safety concerns. Xarelto is
already on the market in Europe.
While the FDA is not bound to the recommendations of its panels,
it generally follows them.
Bayer shares were pounded earlier in the week over concerns that
the panel might turn down the product.
Shares of J&J were also helped by an upgrade from analysts
at UBS, who raised their rating to buy from neutral. UBS cited the
probable approval of Xarelto, which they believe could become a
major product in the surgical market. While UBS sees 2009 as being
a rather "tough year" for J&J, they foresee newer products
boosting the conglomerate's top line starting in 2010.
Merck & Co. (MRK) shares climbed 2% to $26.60. Early Friday,
analysts at Cowen & Co. raised their rating of the stock to
outperform, citing its comparatively strong financial position and
upcoming merger with Schering-Plough Corp. (SGP).
"Merck's merger with Schering-Plough makes good strategic sense
across current products and those in the pipeline. The deal
structure maintains Merck's tax rate, credit rating and should
retain ownership of Schering-Plough's share of Remicade/Simponi,"
wrote the Cowen analysts, in their note.
The Cowen analysts also gave Merck the advantage in any possible
legal arbitration with Remicade's and Simponi's co-marketer,
Johnson & Johnson. Simponi is the prospective brand name for
Remicade's successor golimumab, which is not yet on the market.
Shares of Shire Ltd. (SHPGY) fell 2% and Noven Pharmaceuticals
(NOVN) dropped 4% on news that they were doing a limited recall on
their product Daytrana, a patch used to treat attention deficit
hyperactivity disorder.
The companies said the recall was due to problems with the
product's adhesive backing rather than over any safety issue.
Shire also said it has filed a lawsuit against generic drugmaker
Mylan Laboratories (MYL) over that company's attempts to market a
generic version of Shire's drug Fosrenol in the U.S. Fosrenol is
used to treat kidney disease.
Mylan shares were off 2% at $12.90.
-Val Brickates Kennedy; 415-439-6400;
AskNewswires@dowjones.com