MondayMorning

TOP STORIES

Medicare Drug Plan Gains Support. A bipartisan proposal to provide prescription drug benefits for all Medicare beneficiaries gained support Thursday. Senators William Frist (R-TN) and John Breaux (D-LA) said they are optimistic they can get the votes needed to pass their bill, because President Bush and the chairmen of key congressional committees have said Medicare overhaul legislation is needed this year. The pair of bills, originally introduced in each of the past two years, aim to cut Medicare costs by letting private health plans bid to provide coverage, including new benefits, to beneficiaries. The senators' prescription drug coverage plan for all seniors would cost of at least $163 billion over 10 years, according to Congressional Budget Office estimates. Breaux and Frist said they will focus initially on winning support of the 19 members of the Senate Finance Committee who hail from rural states. Rural senators have said the Breaux-Frist plan needs to provide more incentives for health plans to do business in their states, many of which have only one Medicare plan or none at all. Frist, a physician, said he would discuss his bill with Bush.

Celera Releases New Gene Research Data. Celera Genomics Group (Rockville MD), a unit of Applera Corp., said its scientists estimate there are between 26,500 and 30,000 human genes - substantially below the 100,000-gene tally widely discussed for months on Wall Street and also in the scientific community. Celera also estimates that sequences represent over 95% of the human genetic information with an accuracy of greater than 99.96%. The data will be available for the first time to researchers seeking treatments for diseases such as cancer. Celera and the government-funded Human Genome Project unveiled their data to researchers, showing that humans have only a third more genes than a common type of roundworm. That suggests scientists are unlikely to find many diseases that can be traced to a single gene. Celera shares closed the week up $0.96 to $42.56.

FDA Panel Backs Lilly, Pfizer Drugs for Agitation. A panel of scientific advisors recommended that the Food and Drug Administration approve Eli Lilly & Co.'s (Indianapolis) injectable form of its top-selling schizophrenia drug, Zyprexa, for treatment of severe agitation in certain patients. The panel voted unanimously to allow Lilly to label the drug for use in treating agitation in patients with schizophrenia, which is characterized by hallucinations, as well as bipolar disorder and dementia. Lilly is seeking to expand Zyprexa's uses as it faces competition from Pfizer Inc.'s (New York ) oral drug, Geodon, approved last week for treating schizophrenia, and also backed - in injectable form -- by the same FDA panel to calm severe agitation in schizophrenics. Lilly had sought backing for a broader use of the injectable Zyprexa, in all cases of extreme agitation. But panelists said the drug is likely to be prescribed for uses not listed on the label. "In a real world setting, at times you may have to give something before you make a diagnosis," said Abby Fyer, an FDA panel member and doctor at the Columbia University College of Physicians and Surgeons.

Medical Stock Spotlight: Laser Vision Centers (Nasdaq) soared 1.16, or 42% for the week, to 3.91. Five insiders, including CEO John Klobnak, recently purchased a combined 29,200 shares. As the shakeout continues in the crowded laser eye-correction market, investors took heart that these insiders are keeping the faith. Elsewhere, Moore Medical Corp. (Amex) jumped 1.11, or 17%, to 7.61. The distributor of medical and surgical supplies posted a 6% increase in fourth-quarter revenue to $30.7 million. It was the company's second consecutive quarter of revenue growth over 6% measured against the prior year. But Corixa Corp. (Nasdaq) fell 4.20, or 19%, to 18.13. A study of its experimental psoriasis drug failed to show any significant benefit. The study failed to achieve its goal of showing a statistically significant reduction of at least 50% in the severity of psoriasis treated with PVAC, Corixa said.

FDA Issues Another Warning About Celebrex. The Food and Drug Administration has said in a warning letter that Pharmacia Corp. (Peapack NJ) used misleading information to promote its painkiller Celebrex. In written materials and in audio conferences for doctors, Pharmacia representatives omitted information about Celebrex's risks, minimized warnings about potential allergic reactions to the drug, and made unsupported claims about its benefits, the FDA said in a letter dated Feb. 1. "Your promotional activities ... are particularly troublesome." The promotions "raise significant health and safety concerns, in that they minimize crucial risk information." The FDA sent the company two previous letters explaining concerns about the marketing of the drug. "Despite our prior written notification, Pharmacia has continued to engage in false or misleading promotion" of the drug, the latest warning said.

Tracking Government: Robert Reischauer, a former Congressional Budget Office chief, told senators last week that forecasts of a Medicare prescription drug benefit probably are too low because Congress will be pressured by seniors to expand the benefit once it's established. Reischauer, currently president of the Urban Institute in Washington, said the Medicare proposals introduced in Congress last session had less generous benefits than many insurance plans offer. "Few working Americans would be satisfied with such coverage," Reischauer said in written testimony to the Senate Budget Committee. "Congress should expect unrelenting pressure to improve the benefit that is initially enacted, if it is not significantly more generous than the plans previously introduced," he said.

CORPORATE

Boston Scientific to Acquire Interventional for $345 Million. Boston Scientific Corp. (Natick MA) said Thursday it has agreed to buy closely held Interventional Technologies Inc. (San Diego) for about $345 million in cash to add products. Boston Scientific will gain Interventional's balloon catheter system used in clearing arteries during angioplasty. The acquisition will "modestly" reduce earnings in 2001 and may add to earnings in 2002, Boston Scientific said in a statement. The company said it will make additional payments of an undisclosed amount if certain milestones are achieved. Interventional had 2000 sales of $42 million, a 91% increase from 1999, Boston Scientific said. Company shares closed the week off $0.15 to $15.75.

WellPoint Posts 14% Jump in Q4 Profit. WellPoint Health Networks Inc. (Thousand Oaks CA) said fourth-quarter net income rose 14% to $89.5 million, or $1.37 a share, from $78.8 million, or $1.20, a year earlier. The results topped analysts' EPS estimates of $1.35. Revenue for the big California health insurer surged 24% to $2.4 billion. WellPoint, the parent of Blue Cross of California, said it had 7.9 million customers as of Dec. 31 - up about 8% from the previous year. The company added 434,000 customers in California. Analysts said WellPoint has found the right mix of what customers will pay for, and the broad range of its product offerings have continued to drive enrollment growth beyond expectations. WellPoint closed the week up $3.91 to $101.65.

PEDIATRIX MEDICAL GROUP INC. (Fort Lauderdale) agreed to buy Magella Healthcare Corp. (Dallas) in a merger worth about $195 million in stock and assumed debt. The acquisition will create a $323-million company that employs 550 physicians in 27 states and Puerto Rico, Pediatrix said. Its doctors would practice in 185 hospitals. Pediatrix shares closed the week down $3.62 to $21.50.

PFIZER INC. (New York) halted human clinical trials of a painkilling medication. The move occurred after the Food and Drug Administration voiced concern over a study suggesting the medication, known as pregabalin, increased the incidence of tumors in mice. Pfizer said there is no evidence that the drug causes tumors in humans, and will press on for FDA approval.

SCHERING-PLOUGH CORP. (Kenilworth NJ) saw its shares sink 19% to $41.25 after warning its first-quarter earnings will fall 15% below last year's profit of $0.42 a share. Analysts were looking for EPS of $0.48. The drugmaker cited regulatory concerns about its manufacturing process. It also said the FDA won't approve its revamped version of Claritin until the manufacturing issues are resolved.

MERIDIAN BIOSCIENCE CORP. (Cincinnati) saw its shares plunge $2.00, or 40%, to $3.00 after the company said it will "refocus" operations following a previously announced inspection by the Food and Drug Administration. Meridian said it has suspended manufacturing and distribution of approximately 30 products and is determining which products to revalidate for future sale.

FDA ROUNDUP:. Medtronic Inc. (Minneapolis) won marketing clearance for its new Gem III AT dual chamber defibrillator. Medtronic said the approval makes it the first company to sell a dual-chamber defibrillator that also treats atrial arrhythmia, a condition that affects the upper chambers when the heart beats too rapidly. Watson Pharmaceuticals Inc. (Corona CA) received approval for oxaprozin, a generic version of Pharmacia Corp.'s (Peapack NJ) arthritis drug Daypro. Laserscope Inc. (San Jose CA) won approval for its Lyra long-pulse Nd:YAG laser system for treatment of Pseudo Folliculitis. The condition is characterized by inflammation or superficial infection of the hair follicle. U.K. drugmaker AstraZeneca Group received clearance for a fast-dissolving formulation of its Zomig remedy for acute migraine in adults. The new formulation allows treatment with a pill that rapidly dissolves on the tongue without the need to swallow with liquids. And OraPharma won approval for its Arestin anibiotic treatment for adult periodontis.

WALL ST./FINANCE

Markets: Stocks wobbled into the weekend as investors ponder how much the economy is hurting. Nortel plunged 34% after the fiber optics maker cut its profit outlook and raised the number of planned job cuts to 10,000. A bleak outlook also hurt Dell Computer, whose first planned layoffs in 16 years marks a change in the trend of the economy. Investors who thought the market was nearing the end of the bad news on profits are realizing that isn't necessarily the case. Military action in the Middle East added to the market's woes. The Dow Jones industrial average closed the week with a gain of 18.37 to 10,799.82. Bonds sank on a report that the Producer Price Index for January surged 1.1% -- its biggest increase in more than a decade. The yield on the 30-year Treasury bond rose five basis points on the week to 5.45%.

IPO Sector: United Surgical Partners International Inc. (Dallas) filed for an initial public offering of up to $120 million worth of common stock. The company, which is majority-owned by the Welch, Carson Anderson & Stowe buyout firm, is assembling a chain of outpatient surgery centers in the U.S. and Europe through acquisitions. Founded in February 1998, United Surgical is headed by Donald Steen, a former executive at HCA-The Healthcare Co. (Nashville). United Surgical presently operates or holds stakes in 34 U.S. facilities, nine in Spain and two in the U.K., with additional acquisitions to follow, according to the SEC filing. United Surgical's top practices are orthopedics, obstetrics and gynecology.

Weekly Money Rates in percent	2/16/01	Prev. Week	Year Ago
PRIME RATE:	8.50	8.50	8.75
DISCOUNT RATE:	5.00	5.00	5.25
10-YR. TREAS. NOTE	5.09	5.02	6.48
30-YR. TREAS. BOND	5.45	5.38	6.15
TELEPHONE BONDS	7.78	7.71	8.35
MUNICIPAL BONDS	5.41	5.32	6.20

Sources: Salomon Smith Barney; Telerate

Certificates of Deposit

COM. PAPER: 30 days	5.47
Primary Offerings by NYC banks:
One month	4.13
Three months	4.49
Six months	4.74
Secondary Market Offerings:
One month	5.45
Three months	5.25
Six months	5.15

Source: Dow Jones Markets

RESEARCH & TECHNOLOGY

Researchers said an osteoporosis drug being tested against breast cancer reduces the risk in older women by more than 70%. In a study to be published in Breast Cancer Research and Treatment, a team from Eli Lilly and Co. (Indianapolis) and the Univ. of Pittsburgh said a four-year trial of the drug raloxifene, sold by Lilly under the name Evista, showed it could prevent breast cancer as well as osteoporosis. Evista or a placebo were given to more than 7,700 women at average age sixty-six. "Specifically, raloxifene reduced the risk of estrogen-receptor positive invasive breast cancer by 84%," said Jane Cauley, a professor of epidemiology, who led the study. "This finding indicates that raloxifene is very effective at curbing the development of estrogen-fed breast tumors among older women." Lilly hopes to market Evista for use in preventing breast cancer.

Researchers for the first time have proven that lowering stroke victims' temperatures a few degrees may protect them from permanent brain damage. Although many animal experiments have shown that lowering temperature even a degree or two can reduce stroke damage, accomplishing this in humans is extremely difficult. Doctors cannot just cool the brain. Instead, they must cool the entire body. Dr. Derk Krieger and colleagues from the Cleveland Clinic found that people who were quickly cooled down with alcohol rubs following severe strokes did substantially better than expected. Half suffered little or no permanent damage and were well enough to return to work. Only 10% of people who received standard care did that well.

EARNINGS ROUNDUP:

Pharmacia Corp (Peapack NJ) said Q4 profit jumped 32%. Operating earnings totaled $417 million, or $0.32 a share, up from $316 million, or $0.24, a year earlier. The results matched analysts' estimates. Revenue grew 8% to $4.55 billion with sales of the Celebrex arthritis painkiller rising 55% to $772 million. Sales of pharmaceutical products totaled $3.3 billion led by strong sales of Celebrex and Camptosar, for colorectal cancer that has spread. Sales of agricultural products totaled $1.2 billion. "Our strong results in the quarter and for the full year validate our original rationale for the (Monsanto) merger," said Fred Hassan, Pharmacia's CEO.

Protein Design Labs Inc (Fremont CA) reported a fourth-quarter loss of $51,000, or breakeven on a per share basis, topping Wall Street estimates of a 7-cent loss per share. Revenue more than doubled to $17.6 million as royalty payments and other fees exceeded expectations. Last year, the company reported a loss of $5.9 million, or $0.16 a share. PDLI currently derives most of its revenue by licensing its humanized antibodies to other companies to develop drugs, but it also is attempting to develop anti-based therapies of its own.

Human Genome Sciences Inc (Rockville MD) narrowed its fourt h-quarter net loss as the biotechnology company's revenue jumped from less than a million dollars to more than $5 million. Human Genome said the loss before nonrecurring items was $6 million, or $0.05 a share, compared with a loss of $18 million, or $0.19, a year earlier. The company was expected to lose $0.15 a share.

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