Basic stance towards European equities remains a positive one (page 1 of 3)

US Stocks

Merck & Co., Inc. (MRK, $59.75, CSFB recommendation: Hold) announced last Friday plans to withdraw its NDA (New Drug Application) for Arcoxia that was filed on October 12th and re-file the NDA with expanded efficacy data to better position the product within the COX-2 category. The company also noted that the new data is expected to better satisfy questions of efficacy as well as safety.

A hidden reason for this withdrawal could be attributed to a FDA Arthritis Advisory Panel meeting scheduled for May 14-15. While an itinerary for the meeting has not been posted, it is likely that Merck's Arcoxia as well as the cardiovascular safety of the COX-2 class may be the subject of the panel meetings.

As included in the original filing, Merck plans to seek indications for osteoarthritis, rheumatoid arthritis, chronic pain, acute pain, dysmenorrhea (menstrual pain) and acute gouty arthritis.

Merck is not providing specifics on Arcoxia re-filing timelines, but CSFB is assuming a nine month delay in original launch timelines for the product line, pushing back commercialisation from 2H02/1H03.

This delay will reduce Arcoxia sales for 2002 and probably 2003 and 2004. CSFB expects Arcoxia sales decrease of $190 million for 2002, $340 million for 2003 and $560 million for 2004.
We think Merck & Co., the second US largest drugs maker, should soon re-file its pipeline with new products developments. We recommend to accumulate the stock below $60.00.

Amgen Inc. (AMGN, $64.41, CSFB recommendation: Strong Buy) announced two separate multi-year agreements with U.S. Oncology and International Oncology to include Aranesp, Neulasta and Neupogen as preferred treatments.

U.S. Oncology is a leading cancer care service provider to community-based practices, with over 850 physician affiliations.
International Oncology is a group purchasing organisation (GPO) supporting community-based oncology practices, with over 2000 oncologists in its network.

These agreements should help the three drugs in penetrating the oncology market. Consensus also expects similar agreements with other major oncology service providers and GPOs to be established in the near future. Aranesp should receive approval for oncology in U.S. in 2H02 and in Europe in late 2002/early 2003. 12-month target price $78.00.

Some macroeconomic indicators will also come out this week. On Tuesday the FOMC will probably remain interest rate at 1.75% due to a low inflation rate and a recovering economy. On Thursday, Consumer Price Index for February is expected to increase 0.2% from January. Finally, on the same day, leading indicators for February will be announced. The consensus expects a +0.1% vs. +0.6% a month earlier. If it is the case, it will be a fifth increase in a row, confirming the rebound.

US Technology

Last week the technology stocks saw some profit-taking activities, as certain worries about valuations came into the market. And as investors sentiment still seem to be sceptical, this might have been reason enough to lock in their short-term profits. However Friday's trading day closed in the positive territory as expectations rise, that signals about the US economic recovery gaining momentum are coming out from the Federal Reserve officials meeting Tuesday. In accordance to that, the Philadelphia Semiconductor Index (SOX) outperformed the NASDAQ Composite Index in Friday's session, as stocks of semiconductor and semiconductor capital equipment companies are early cycle movers.

Oracle Corp.