Interview: Chris Jenner of the T Rowe Price Health Sciences Fund
>> the food and drug administration is beginning its annual consideration of new drugs. this year’s review comes one year after merck’s vioxx was taken off the market . so how much harder is it for drug companies to get approval and which companies have the best prospects? here to help us answer these questions is chris jenner of the t. rowe price health sciences fund. it is up almost 6% this year. chris joins us from his firm in baltimore. nice to have you on this afternoon.
>> well, the number of new drug applications i think in general over the past few years has been down modestly. so it depends on what time frame you are looking at. so in general there have been fewer new drugs coming from the pharmaceutical industry. so this isn’t really simply an issue of the f.d.a. becoming more rigid in their approval process. it actually, in my opinion, the largest issue here is a reflection of far too few new and important drugs being submitted for f.d.a. review.
>> let’s go through some of the drugs that we have heard about already and what to look for this week. so today you had bristol myers winning support from the advisory panel for a drug to treat rheumatoid arthritis. what drug would it compete with and how likely are we to see it in formal and final approval?
>> the biggest issue is when he will bristol adequately manufacturer it. i think that’s still a bit of a moving target. this advisory panel outcome was widely expected. the data for orencia was very good. it’s to treat those patients who have not responded to the frontline therapies which are embrel, humira and remicaid. orencia will be available now to patients and probably between 30% to 40% of patients that start on the other drugs do not get a sufficient benefit.
>> we’ll continue to hear from the f.d.a. through the end of this week and into next week. one focus drug is exubera. tell us about the drug and whru think it will win approval.
>> it is pfizer and sanofi aventis’ long standing effort to get this drug on the market . it seems like a potential birthing process that you certainly don’t want to miss. the issue here is that pull mondayary insulin is presumably going to be far more convenient for a patient to take and what has happened and significant studies have shown this is if insulin is taken more often and more rigorously, the complications of diabetes are significantly decreased. yet, on the other hand, delivering insulin by way of the lungs comes with potential safety concerns. that’s what the advisory panel will be asked to consider. i think that pfizer has done an outstanding job in trying to allay the ultimate safety concerns by following up patients for more than two years and presumably committing to a large type of registry where they’d follow patient safety out post-approval. so i’m hopeful that the drug will actually get thumb’s up from the advisory panel.
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Listen Market briefing --- Ellen (slow)
NYSE --- Deb (fast)
>> welcome back to “after the bell.” i’m ellen braitman. lets’s recap the day on wall street where there was a rally across the board. stocks climbing. the s&p having its biggest rally in more than four months. today’s gains coming as energy price fell from records set in the wake of katrina. we saw retailers such as wal-mart and home depot leading gains. investor concerns easing. fuel costs would restrain consumer spending. the nasdaq up 1.2%. the biggest gain there in just about seven weeks. let’s get more on this rally. we had a lot of semi records. deborah kostroun standing by at big board for more on the action.
>> that’s right, ellen. a lot of things we’re looking at for the dow. biggest percentage gain in a couple of months. the dow rose more than 122 points last on july 8. we saw a pretty good rally going on here. the chief investment officer at philadelphia trust saying you could call today almost a relief rally, that things are improving in all kinds of ways. he says the human misery starting to improve. in dollars and cents, the price of oil down today. he says there is light at end of the tunnel with the hurricane issue. so as we talk about the hurricane issue, many stocks related to that really performing quite well like texas industries hit ago 52-week high. they supply materials to the building industry. that stock higher. the company may benefit from road construction afrb the storm. also the highway bill signed into law last month. there was an article about the industry in barron’s. goldfield higher. lamson, maker of wiring boxes and fittings, also higher. caterpillar at a record high once again. at record high levels last week. continuing into this week. homebuilders also performing quite well in today’s session. a little bit of a turn around for many of the insurers like all state. they declined last week amid concern that they may face record losses from claims. but they really kind of putting in a very strong performance at least in today’s session. also, retail stocks putting in a very strong performance. you saw many in the retail arena performing well like wal-mart. also home depot and home depot, of course, gaining on optimism that the company may benefit from post katrina rebuilding efforts and so you did see retail stocks higher as well. back to you in the studio, ellen.
>> thanks so much. as deb was speaking, we have headlines out after the bell from altera, number two maker of programable chips. what the company says is it is cutting its forecast when it comes to third quarter gross margin. altera is saying the third quarter gross margin will be 66% to 67% of sales. the company also saying it sees third quarter research and development spending at $48 million. had seen $52 million in r&d expenditures for the third quarter. the company saying that the fourth quarter gross margin will be 6% to 67%, in that range. altera out after the bell saying that it is cutting its third quarter gross margin forecast. the company, keep in mind, shares up 5.3% so far this year. well, mega cap stocks such as microsoft may lead the stock market through the end of the year. some investors anticipating this will happen as slowing economic growth in the wake of katrina increases demand for less risky investments. as a group, these mega cap stocks returned less than 1/3 as much as the smallest companies during the past three years. brett gallaher of global equities at julius baer says “you will probably see risk aversion enter the picture so larger names will outperform.” he says his firm was negative on mega caps in the past but now has been buying shares of microsoft along with citigroup.
