By Val Brickates Kennedy
Drug stocks followed the broader market north early Tuesday,
pushed higher by news that troubled Citigroup Inc. (C) had turned a
profit during the first two months of the year, beating
expectations.
The Amex Pharmaceutical Index (DRG) climbed 1.5% to 221.83 and
the Amex Biotechnology Index (BTK) advanced 2.3% to 554.55. The Dow
Jones Industrial Average rose 3% to 6765.
Schering-Plough Corp. (SGP) and Merck & Co. (MRK) were early
gainers, both up 4% at $20.84 and $21.80, respectively.
On Monday, the two U.S. drugmakers announced they plan to merge
in a deal worth $41.1 billion.
Under the terms of the deal, Schering-Plough shareholders will
receive $10.50 in cash and 0.57 in Merck stock for each share of
Schering-Plough. Merck's total bid amounts to $23.61 a share. The
combined company will be called Merck and headed by Merck Chairman
and Chief Executive Richard Clark.
Shares of Genentech Inc. (DNA), meanwhile, moved about 1% lower
to $92.13. Early Monday, Dow Jones Newswires reported comments made
by Roche's chairman that Genentech's suggested bid price of $112 a
share was not "realistic."
Roche, which holds a 56% stake in Genentech, has formally bid
$93 a share for Genentech as part of a protracted battle to gain
control of the biotech giant. The Wall Street Journal reported
Monday that Roche (RHHBY) could raise its bid this week to $95 a
share.
In early March, Genentech's board said they valued the company
at around $112 a share.
Also losing ground were shares of stem cell researchers, which
had rallied Monday on news President Barack Obama was lifting
certain research funding restrictions that had been put into place
by the Bush administration.
Shares of StemCells Inc. (STEM) tumbled 15% to $1.69, while
Cytori Therapeutics (CYTX) shares sank almost 30% to $1.88. Tiny
Advanced Cell Technology (ACTC) saw its shares skid 10% to 13 cents
a share. Also falling almost 10% were shares of Geron Corp. (GERN)
and Aastrom Biosciences (ASTM).
-By Val Brickates Kennedy; 415-439-6400;
AskNewswires@dowjones.com