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Executive Summary

Amgen managed to pull out a gain in a very jittery August on the "Street" as increases in oil prices and fears of recession sent the Dow Jones Industrials into a 10% decline and the S&P 400 down 9.2%. Amgen was one of only four of 38 pharmaceutical stocks on the F-D-C "OTC" Index to end the month on the plus-side, up 2-1/8 to 45-1/4 in August following a gain of 8-1/2 in July. The stock, which began trading on a two-for-one split basis Aug. 13, continued to be buoyed by growing Epogen sales. Also, disappointing news for Immunex's GM-CSF at the July 31 advisory committee meeting in the form of diminished hopes for a quick review was greeted by the "Street" as good news for Amgen's G-CSF product Neupogen. In the midst of uncertain market conditions in general, Shearson Lehman's Teena Lerner predicted only good things for Amgen in the remaining days of 1990. She forecast a one-year target price post-split of 68, or a near 200% increase from 1989. Immunex rebounded from July with a one point gain to 28 in August as the market reacted to positive news about the company's work with interleukins. Immunex jumped 2 to 27 on Aug. 29 following the announcement of the creation of PIXY-321, a fusion molecule of GM-CSF and IL-3 that is said to be 10 times more active in promoting bone marrow growth than the sum of its parts. Immunex also reported encouraging preclinical results for its soluble IL-4 receptor for the prevention of organ transplant rejection. Analysts also saw Immunex' decline in the wake of the advisory committee as presenting a bargain for investors. In an Aug. 24 report, Robertson Stephens analysts Mark Simon and Sandra Yuen said they "strongly believe that Immunex can satisfactorily resolve the panel's concerns in a very expeditious timeframe [and] therefore view the recent price weakness in the stock as an excellent buying opportunity." Genzyme turned in the biggest percentage gain among pharmaceutical stocks and second highest point increase (up 8.7% via a 1-5/8 gain to 20-3/8) on optimism about Ceredase's quick approval and the company's ability to raise funds for its proposed spin-off Neozyme even in a gloomy market. Genzyme jumped 1-1/4 to 19-1/4 on Aug. 30 when word leaked that the Ceredase NDA would be reviewed by an FDA advisory committee on October 22, fueling speculation that the enzyme replacement therapy would be approved before year-end. Genzyme climbed another 1-1/8 Aug. 31 to close at 20-3/8. The pharmaceutical component of the Index fared marginally better than the DJIA and S&P 400, losing 7% for the month. The index as a whole slid 5.5%, with wholesalers taking the biggest blow, off 12%. The final tallies would have been worse except for a slight rally on the "Street" in the last week, the market's first up week in the last seven. Xoma had the biggest decline, falling 6 to 18-1/2, as investors reacted to the company's announcement that FDA had requested more data in reviewing PLAs for Xomen-E5 and XomaZyme-CD5 Plus.

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