Healthcare Stocks Sluggish as Some Say Recent Rally Is Over

by: M. E. Garza

Is the three month rally on Wall Street over?

Stocks declined for a second straight day after some factory data yesterday pointed to a very weak economic recovery. Even one Wall Street banker suggested the three-month rally in stocks may be over. Morgan Stanley's Jason Todd told the Wall Street Journal that after the S&P 500 breached the 950 level last week, "the [stock] rally may now be over."

In Healthcare, equities were very sluggish but a couple of late session run-ups did present some nice profits for traders.

Poniard Pharmaceuticals, Inc. (NASDAQ:PARD) closed the day at $4.92 +0.84 (20.59%), but after hours it was trading at $5.23 for an additional +0.31 (6.30%). The company is in great financial shape, is reported to be actively seeking international partners, and has just presented some

clinical development data for it's lead product candidate, Picoplatin. Still, there could be something else brewing here. Speculation on various investor boards attributes the late afternoon spike on chatter about a good news leak. This is one to watch tomorrow morning.

Merge Healthcare Inc.(NASDAQ:MRGE) closed up $4.03 +0.55 (15.80%). The health IT solutions provider, and etrials Worldwide, Inc. (NASDAQ: ETWC) (“etrials”), a provider of clinical trials software and services, announced today that Merge has commenced an exchange offer for all of the outstanding shares of etrials’ common stock pursuant to their previously announced definitive merger agreement dated May 30, 2009, under which Merge will acquire etrials. Subject to the terms and conditions of the exchange offer, etrials’ stockholders who validly tender their shares will receive for each share of etrials common stock they tender in the exchange offer (i) $0.80 in cash, without interest, and (ii) 0.3448 shares of Merge common stock.

K-V Pharmaceutical Co. (NYSE:KV.A) continues to climb. Today it jumped another $+0.24 (8.39%) after last week's news that it has entered into a settlement regarding a patent infringement lawsuit with privately held Purdue Pharma L.P. of Stamford, Conn. Purdue will grant KV Pharmaceutical certain limited non-exclusive, royalty-bearing, non-transferable rights to sell in the United States generic versions of the drug OxyContin (oxycodone HCl controlled-release) for a limited period of time. KV Pharmaceutical Company is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. This was a $20+ stock a year ago. It may easily continue to climb.

ISTA Pharmaceuticals, Inc.(NASDAQ:ISTA) closed up for the day to $3.79 +0.29 (8.29%). There has been some insider purchases after last week's run up and announcements of positive results from a Phase 2 clinical study in subjects with dry eye disease using a new, low-dose formulation of bromfenac, the active ingredient in Xibrom 0.09%. The studies achieved statistical significance in the primary endpoint of the objective sign of conjunctival staining (Lissamine Green test) as compared to baseline. They also achieved statistical significance on the objective sign of corneal staining (Fluorescein test) as compared to baseline. Patients also achieved statistically significant improvements in subjective symptoms measured by the Ocular Surface Disease Index (OSDI) and improvement in patients' most bothersome ocular symptoms.

Rounding out the winners was Continucare Corporation (AMEX:CNU) is up $2.39 +0.18 (8.14%). Continucare provides primary care physician services on an outpatient basis through a network of medical facilities and independent physician affiliates (IPAs) in the State of Florida. They have 18 medical offices equipped with state-of-the-practice technology and staffed with experienced physicians and a comprehensive support staff throughout Miami-Dade, Broward and Hillsborough Counties.

Most of today's top "losers" were companies that were giving back some of yesterday's gains.

Gainers (% price change) Last Trade Change Mkt Cap
Poniard Pharmaceuticals PARD 4.92 +0.84 (20.59%) 170.75M
Merge Healthcare Inc. MRGE 4.03 +0.55 (15.80%) 228.79M
K-V Pharmaceutical Co. KV.A 3.10 +0.24 (8.39%) 154.84M
ISTA Pharmaceuticals, Inc ISTA 3.79 +0.29 (8.29%) 125.87M
Continucare Corporation CNU 2.39 +0.18 (8.14%) 141.93M
Losers (% price change)
Jazz Pharmaceuticals, Inc JAZZ 3.79 -0.77 (-16.89%) 109.63M
Enzo Biochem, Inc. ENZ 4.78 -0.63 (-11.65%) 179.16M
Nephros, Inc. NEPH 5.28 -0.54 (-9.28%) 201.51M
Sequenom, Inc. SQNM 4.40 -0.41 (-8.52%) 268.99M
America Service Group Inc ASGR 13.85 -1.18 (-7.85%) 128.71M
Most Actives (dollar volume)
Genzyme Corporation GENZ 52.75 -2.87 (-5.16%) 14.23B
Johnson & Johnson JNJ 54.62 -0.13 (-0.24%) 150.51B
Merck & Co., Inc. MRK 24.43 -0.53 (-2.12%) 51.51B
Pfizer Inc. PFE 14.16 +0.03 (0.21%) 95.55B
Amgen, Inc. AMGN 51.21 +1.77 (3.58%) 51.84B