Premarket Movers: HIV Drug OK Boosts MRK

Oct. 15, 2007

NEW YORK — Merck & Co. shares gained in premarket trading Monday after the Dow Jones industrial average component got approval from the Food and Drug Administration for its new drug to treat HIV.

The FDA late Friday OK'd Merck's Isentress tablets for people who have strains of the virus that causes AIDS and are not getting successful treatment from drugs already on the market. It is the first in a new class of drugs, which work to prevent HIV from inserting its DNA into human DNA, thereby stunting its ability to replicate and infect new cells.

Bear Stearns analyst John Boris said Merck showed "flawless regulatory execution in wake of (a) tough FDA environment," in getting approval for the drug. He estimated the drug will account for up to 8 percent of Merck's global sales in the next three to five years.

Merck reported sales of $6 billion in 2006.

Isentress, plus other drugs Merck has in its pipeline, appear to be addressing concerns about patent expirations for other products, said Boris, who reiterated an "Outperform," or "Buy," rating on the Whitehouse Station, N.J., company.

Merck shares added 72 cents, to $54.23 in premarket trading, from their Friday close at $53.51.

Futures trading and the Nasdaq 100 Premarket Indicator were mixed premarket.

Also gaining in the early session were shares of test and measurement equipment maker Tektronix Inc., which is being bought by conglomerate Danaher Corp. for $2.85 billion.

Danaher will launch a cash tender offer of $38 per share for Textronix shares, a 34 percent premium to Beaverton, Ore.-based Tektronix's $28.34 close Friday.

Tektronix jumped $9.28, or 32.7 percent, to $37.62 premarket, just below the offer price.

Danaher, which makes bar code readers, dental products and medical instruments, along with tools and other items shares were flat with Friday's $82.47 close.

On the downside, shares of Dow component Citigroup Inc. slipped after the bank reported a 57 percent drop in its third-quarter profit, citing big hits in mortgage-backed securities, leveraged debt write-downs and fixed-income trading losses.

Citi shares were off 17 cents at $47.70, from their Friday close at $47.87.

And shares of Force Protection Inc., which makes troop transport vehicles for the military, fell after it said in a regulatory filing it has identified "material weaknesses: in its accounting. "As a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our stock," the filing said.

The news comes on top of a previous refiling of several years of financial reports by the Ladson, S.C., company, whose shares are up nearly 40 percent year to date on the strength of new contracts with the U.S. government to supply vehicles for Iraq.

"There can be no assurance as to when all of the material weaknesses will be remedied," the filing said.

Shares fell $1.85, or 7.7 percent, to $22.10 premarket, from their Friday close at $23.95.

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