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Executive Summary

Viratek's persistence in seeking a treatment IND for Virazole (ribavirin) is keeping speculative fires burning. The company's stock emerged from mid-year doldrums to appear as August's top point-gaining issue on the "F-D-C" Monthly Index of O-T-C stocks. The price of Viratek stock exactly doubled during the month to close at 28-1/2, its highest level since the heady days of March. Three forces appeared to be at work in Viratek's August rebound. First, parent company ICN announced plans to purchase an additional 1 mil. shares of its 60%-owned subsidiary. The announcement followed an earlier buyback of 1.5 mil. shares. Second, Viratek, along with other Pharmaceutical stocks, seemed to benefit from heightened "Street" interest in O-T-C issues in general. Finally, the firm has recently discussed with FDA the possibility of resubmitting its request for a ribavirin treatment IND, based on additional data from previous LAS and ARC studies. At a July 31 meeting with top agency officials, ICN President Milan Panic said that follow-up data was forthcoming. FDA's April placement of the company's treatment IND application on clinical hold sent Viratek stock into an immediate tail spin. The August market was also affected by FDA's clearance of the first IND for an AIDS vaccine. The honor went to a privately held concern, MicroGeneSys. The sense of progress, however, may also have had a salutory effect on Chiron stock, which advanced 3-3/4 during the month to close at 28-1/2. Chiron is also working on an AIDS vaccine that reportedly will be ready for human testing by the end of the year. Strong second quarter results along with a Wall Street Journal article extolling the potential of monoclonal antibodies helped give Centocor a 25% boost (up 8-1/4 to 40-3/4), moving the issue above the $40 a share mark for the first time since May. However, the company's second quarter results reflected a one-time gain from the sale of AIDS vaccine technology to Repligen, a company in which Centocor now has an equity position. Pharmaceutical issues led all other Index components, with an 8.6% advance during the month. Excluding Beecham, the Index Composite rose 7%, doubling the monthly gains of both the Dow Jones and S&P 400, which rose 3.5% to 2,662.95 and 3.3% to 385.83, respectively. EDITORS' NOTE: Both the Diversified and Composite averages for August are skewed by Beecham Group, one of the most heavily weighted companies listed in the "F-D-C" O-T-C Index. A sharp advance in the price of Beecham shares in August reflects a change in the firm's listing of American Depository Receipts (ADRs) in the U.S. Seeking to have its stock quoted on NASDAQ's National Market System, Beecham, on Aug. 3, announced the establishment of a sponsored ADR program. Previously, unsponsored Beecham ADRs had been trading on the NASDAQ National List on a one ADR for one share basis. On Aug. 7, Beecham began an exchange of the new sponsored ADRs for the unsponsored ADRs on the basis of two unsponsored for each sponsored ADR, effectively doubling the stock price. Subject to approval from the Securities and Exchange Commission, Beecham expects its shares to be quoted on the National Market System beginning in October. Chart omitted.

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