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Stock Market Strangeness

By j7uy5 on April 20, 2007.

If,
after reading my earlier posts this week, you are thinking that strange
things happen in the pharmaceutical market, you are right.
 But strange things happen in the stock market too.



A pharmaceutical company, rel="tag">Amgen, just saw the price of its stock
shares jump by 3.9%.  The reason: they released a study that
shows that their drug, rel="tag">Aranesp, is no more dangerous than
placebo!  Hurray!  Our drug does not kill patients!



The oddity of this has been href="http://www.latimes.com/business/la-fi-amgen20apr20,1,2635142.story?coll=la-headlines-business">noticed:



face="Helvetica, Arial, sans-serif">Yet there is one
question that Thursday's announcement didn't answer: What took so long
for the research to happen in the first place?



Although the study's results are reassuring, some wonder whether such
questions should have been explored sooner.



"We prescribe this drug to a million people a year and only now are we
seriously examining if how we are treating them is harmful?" said Dr.
Ajay K. Singh, professor of medicine at Harvard Medical School. "That's
very disconcerting."



A few days ago,I heard on the radio that some people were surprised
that the FDA does not routinely test dog food for safety. Little do
they know.


Tags
medicine

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Hurray! Our drug does not kill patients!

THIS is professional successful framing.

If the drug is more effective than the alternative, then proving it is safe would remove a cloud over it. Relaxing of a negative for a company is a positive signal (i.e. an external observer's judgement of the companies value would be increased). So a bump in the stock price wouldn't be unexpected. Add in the fact that the market overall has been jumping (some of the increase would have happened with NO news).
None of this says anything about the moral/safety issues, presumably the co. knew the gist of the results, but was waiting for confirmation. If the study had been highlighting significant dangers, then we would certainly hope those results would come out quicker.