It was a big week for the health care and biotech industries.

With a change in power in Congress, the Democrats have launched their “100-hour plan,” which includes a focus on Medicare drug pricing and reversing the ban on stem-cell research. Also, California Gov. Arnold Schwarzenegger unveiled a plan for universal health care insurance for the country’s most populous state.

On Thursday, a bill to reverse the ban on federal funding on research on new lines of embryonic stem cells passed the House by a margin of 253 to 174. While this may not immediately include enough Republican votes to override the president’s veto threat, that may change after the U.S. Senate passes a more moderate bill and negotiates, in conference committee, enough compromises to capture a veto-proof majority of both chambers.

The stock market prices companies on the basis of where business conditions might be six months or more into the future. Drug discovery at biotechnology companies can take years, and the market sees a favorable legislative environment for these companies developing.

On the other hand, established drugmakers such as Merck ( MRK) and Pfizer ( PFE) are paying high premiums to buy smaller biotechnology companies in an attempt to replace drugs that are coming off patent protection.

While this may be good for holders of biotechnology stocks and funds, it has the potential to dilute the value of pharmaceutical companies. This, combined with an attempt by some members of Congress to reduce the revenue these companies receive from Medicare for their existing drugs, puts big drug stocks in a negative light.

The impact of Schwarzenegger’s universal health care insurance plan for California on health and biotech stocks is less clear. Hospitals, for instance, would have to pay a 4% fee into the system, however it would eliminate most of the unpaid emergency room care given to the uninsured.

For drug companies, this may be a long-term positive, as children or adults who had previously stayed out of the preventive health care industry would be able to purchase prescription drugs. Or, if the critics of the plan are right, drug companies will produce fewer innovative new drugs if they are restricted on pricing.

Top-Performing Health Care and Biotech Funds
Fund Ticker Rating Fund Type 1 Week Total Return
ProFunds Biotech Ultrasec-IV BIPIX E Open-End Fund 2.84%
Biotech HOLDRs Trust BBH D+ ETF 2.63%
Saratoga Health and Biotech-B SHPBX E+ Open-End Fund 2.49%
Rydex Series Biotech-ADV RYOAX E- Open-End Fund 2.42%
Live Oak Health Sciences FD LOGSX D- Open-End Fund 2.36%
GenomicsFund.com GENEX E+ Open-End Fund 2.13%
Franklin Biotechnology DIS-A FBDIX E Open-End Fund 2.09%
Fidelity ADV Biotechnology-A FBTAX E Open-End Fund 2.01%
Fidelity Select Biotechnology FBIOX E Open-End Fund 1.95%
SunAmerica Bio/Hlth FD-A SBHAX E- Open-End Fund 1.90%
Source: Bloomberg

ProFunds Biotechnology UltraSector ProFund was the big winner this week, climbing 2.84% in the five trading days from the close on Thursday, Jan. 4 to the close on Jan. 11.

The fund is designed to return 150% of the movement of the Dow Jones U.S. Biotechnology Index. With weightings of 80.0% biotechnology, 17.8% pharmaceutical, and 1.8% health care products stocks, the top holdings are Amgen (AMGN) , Genentech (DNA) , Gilead Sciences (GILD) and Genzyme (GENZ) .

Next on the list is the exchange-traded fund Biotech HOLDRs Trust (BBH) , which gained 2.63%. It holds the same companies listed above for BIPIX as its largest holdings, along with Biogen Idec (BIIB) , Applera (ABI) , and Medimmune ( MEDI) . Almost 81% of the fund is concentrated in biotechnology companies and more than 15% in pharmaceutical stocks.

Worst-Performing Health Care and Biotech Funds

Fund Ticker Rating Fund Type 1 Week Total Return
IShares S&P Glbl Healthcare IXJ C- ETF -1.15%
Fidelity Select Pharma Port FPHAX D Open-End Fund -0.27%
ProFunds Pharm Ultrasectr-IV PHPIX E- Open-End Fund -0.19%
Pharmaceutical HOLDRs Trust PPH E+ ETF -0.10%
BlackRock Healthcare Fund-I MAHCX E Open-End Fund 0.00%
H&Q Life Sciences Investrs HQL E- Closed-End Fund 0.00%
Fidelity ADV Health Care-T FACTX D Open-End Fund 0.09%
John Hancock Hlth Sciences-A JHGRX E Open-End Fund 0.10%
Vanguard Health Care Fnd-INV VGHCX C Open-End Fund 0.11%
Quaker Bio Pharm-Health FD-A QBPAX D+ Open-End Fund 0.23%
Source: Bloomberg

The health care fund that took the biggest hit this week is the iShares S&P Global Healthcare Sector Index Fund ( IXJ) , an ETF that gave back 1.15% for the five trading days ending Jan. 11. The fund holds 18.0% in health care products, 8.4% in health care services and 6.7% biotechnology. But its largest concentration is in pharmaceuticals at 63.9%, including Johnson & Johnson (JNJ) , Pfizer, Novartis (NVS) , and GlaxoSmithKline (GSK) .

With even more exposure to pharmaceutical stocks, at 94.8%, the Fidelity Select Pharmaceuticals Portfolio is also seen to be at risk from the Democratic-controlled Congress’ attempt to mandate that Medicare negotiate for lower prescription drug prices. The fund’s top holding is Merck, followed by Pfizer, Novartis, Bristol-Myers Squibb (BMY) and Eli Lilly (LLY) .

This has been a good week for funds holding biotechnology stocks. Plus, the long-term seems brighter with the health care industry spending considerable time and money looking inward to see how to become more efficient in the delivery of care and the purchasing of drugs and other health care products.

Unlike last week’s utility funds, health care and biotechnology funds have significantly higher levels of volatility. This accounts for the comparatively low ratings generated by our risk-adjusted return mutual fund model for the best and worst performers. If the president’s threatened vetoes are sustained, the worst performers above could easily switch places with the best performers in the short run.

BY DONALD JAY KORN

FOR INVESTOR’S BUSINESS DAILY

Posted 1/5/2007

The calendar may say 2007. But you’re not yet finished with last year. You still have to file your 2006 tax return.

If you don’t feel up to tangling with the Internal Revenue Code on your own, you’ll probably hire a tax preparer. Maybe you’ve already used a professional to prepare your tax return for many years.

By doing some advance work on your own, you’ll make life easier for your tax pro. And you’ll increase the chance that you’ll legitimately lower your tax bill.

You might wind up paying a lower fee too. Your likely first step is to schedule a face-to-face meeting. Don’t wait too long. As the April 16 filing deadline approaches, it can get harder to set up quality time with your tax adviser.

One tactic is to schedule a meeting for late this month or early February. You likely will have most if not all of your 2006 paperwork by then.

And your tax pro may have more time than in the early spring.

After you’ve scheduled the meeting, begin to organize. Don’t just dump a box full of documents on your tax preparer’s desk.

That will force you and your tax preparer to waste time sorting out your records. And your adviser might have to spend more time afterward, figuring out where everything belongs.

The more time he has to devote to such sorting chores, the higher your fee is likely to be.

But if you organize beforehand, your adviser may have more time to give you advice on taxes and financial planning. That can save you money on your 2006 return or further down the road.

The clearer the picture of your finances you present, the more focused that advice can be. You might learn whether you should invest in taxable or tax-exempt bonds, for example. Or whether a traditional IRA or a Roth IRA is the better choice.

It can help your adviser see whether you’re going to be subject to the alternative minimum tax.

If so, he might suggest that you avoid private activity bonds. Those fund housing projects, hospitals, and the like. Under the AMT, interest paid by such bonds is taxable, not tax-exempt. Also, you should beware of tax-exempt bond funds that hold private-activity munis.

Come Prepared

You may use the time to ask questions too. You can get a consultation along with a start on your 2006 tax return.

To get such benefits, go into the meeting with a calculation of last year’s income. Specify what came from your job, from your investments and from other sources.

Do the same with your expenses. Organize your records to show business-related outlays, charitable contributions, estimated tax payments and so on.

Have your documents ready to back up your math.

“Many accounting firms provide clients with an organizer to fill out in advance,” said David Kahn, managing director in the New York City office of the accounting firm RSM McGladrey. Completing those forms can help you assemble the information you’ll need.

You can use last year’s tax return as a guide so you won’t make vital omissions.

If you track your finances on a computer software program, that will help you pull your records together.

When you meet with your tax pro, bring in a disk from your program in case data are needed. Call first to make sure the preparer’s office supports your file format.

Gathering data and filling out your tax preparer’s organizer are not the only steps to take before your meeting. You also can track the cost basis of any assets you sold in a taxable account in 2006.

Say you sold some stocks last year. Go over your records to figure out when you purchased those shares and how much you paid.

“Don’t forget to add any reinvested dividends to your cost basis,” Kahn said. They will reduce your taxable gain or increase your capital loss.

Suppose you bought stock in ABC Corp. 20 years ago for $50,000. Over the years, you’ve received $31,000 in dividends and reinvested them all in more ABC shares.

If you sold all of your ABC shares last year and received $120,000, you’ll have a $39,000 long-term capital gain. That would count $81,000 as your cost basis: $50,000 paid upfront plus $31,000 in reinvested dividends.

If you didn’t count the reinvested dividends, you’d have a lower cost basis and a higher tax bill.

Higher Cost Basis

“Go through the same exercise for mutual fund shares you’ve sold,” Kahn said. Even if you moved from one fund to another in the same family, that’s a taxable event.

With mutual funds, add to your basis reinvested capital gains distributions as well as reinvested dividends.

Many brokerage firms and mutual fund companies will provide reports to you on the cost basis of securities you’ve sold. But you might have to do some homework on your own, especially for old holdings and for securities you’ve transferred among different firms.

KATE Middleton’s split from Prince William has placed her in a “powerful position” to launch a successful fashion career outside royal circles, according to the editor of a leading Royal magazine.

Majesty magazine editor Ingrid Seward said Ms Middleton, a clothes buyer for a fashion firm, would go into fashion and do “fantastically well”.

“I am sure she will dedicate herself to her career. She is a smart person and anyone would be pleased to snap her up,”Ms Seward said.

“I am sure she will get herself together; she doesn’t really have much choice.”

Publicity craze over future lovers

Meanwhile, top British publicist Max Clifford said the two’s next lovers will get “massive media coverage”.

William, 24,would be in “an impossible position” as women- some genuine, some not- line up to be his next girlfriend, whereas Ms Middleton’s, 25, next boyfriend would get “a massive amount of attention”.

Leave them alone, urges Blair

British Prime Minister Tony Blairhas urged people to leavetothetwo alone.

Mr Blair said most of the stories written about the demise of their four-year relationship would be “complete nonsense,” as British newspapers picked over the bones of their break-up, with conflicting accounts as to why they parted.

“I think, in respect of Prince William, they are a young couple. We have had the announcement, fine,” Mr Blair said.

“They should be left alone now without reams of stuff being written that I can assure you, from my experience of royal stories, most of which will be complete nonsense.

“I think, now it has been announced, they should be allowed to get on with their lives.”

Turnover slowed to a trickle as investors began to balance their books and allowed themselves time to take a look at future strategy. As a result, the FTSE 100 index was left nursing a loss of 17.9 at 6306.3 although dealers reported little in the way of selling pressure.

Shares of steelmaker were suspended at 607p now the takeover by Indian rival Tata Steel has been completed. Corus drops out of the Footsie 100 today, to be replaced by , down 12p at 1268p.

Stock market bears have caught a cold in following the breakdown in bid talks. The shares slumped 27p to 620p on the news. The life assurer conceded in November it was looking for a buyer. It is reckoned to have had talks with rival , 3p better at 717p, and , up p at 327p, but failed to agree a price.

Broker has repeated its buy rating on Resolution and says the breakdown in talks will free the company to communicate its strategy to the market more clearly.

was another big faller, losing 6.1p to 135.5p as boss Arun Sarin warned of a slump in margins at its UK mobile phone business. Talking to brokers in the City and Frankfurt today, Sarin warned of increased competition.

fell 12p to 486p as private-equity outfit Texas Pacific Group swooped on Spanish carrier Iberia. BA owns a stake in Iberia, and has first refusal on the sale of another sizeable minority stake. But BA must now rethink any plans it had for a tieup with Iberia.

was p lower at 1026p on news of the improved terms from Kohlberg Kravis Roberts and its own deputy chairman Stefano Pessina, who owns 15% of the shares.

Dresdner Kleinwort has downgraded , 5p adrift at 483p, from buy to add on valuation grounds in the wake of yesterday’s strong trading update. But the target price has been raised from 500p to 524p.

The broker says BSS performed well last year in terms of organic growth and with the benefit of recent acquisitions and this trend looks set to continue. It has raised its pre-tax profit forecasts by 1m, with a 600,000 increase for the following year.

Venture capitalist and investment manager was among more than half a dozen companies to make their public debut on Aim today following a placing of 3.99m shares by Panmure Gordon at 160p, valuing the company at 21.45m. The shares started trading at 162p and touched 174p.

Also making its debut was the commercial property investor and latest vehicle of Desmond Bloom. A total of 111m shares were placed at 1.4p and the price more than doubled to 2p. The group has also made its first acquisition with the purchase of 10 pubs for 4.5m.

Aim-listed , up 4p at 28p, has signed the production sharing agreement for the development of the offshore Block 7 oil prospect in Tanzania. It forged the deal with the government of Tanzania and state-run Tanzanian Petroleum Development. Block 7 covers 8500 sq km. Dominion will spend at least $8.75m (4.5m) to hunt for oil on the site over a four-year period. In clinching the deal, Dominion fought off some fierce competition from the likes of oil giant Chevron and Brazil’s state-owned Petrobras.

advanced 9p to 319p on the back of a bullish trading update. Altium Securities says trading was in line with expectations, but emphasised that the pipeline for new restaurant sites remained strong. The company is raising 4.3m by way of a placing at 300p. Altium has repeated its buy rating.

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TAKING STOCK

BANKING AND FINANCE
is locked in a legal battle with Deutsche Bank, alleging it poached 16 employees from its fixedincome team. says the defections are serious for the fund manager. Fixed-income handles about $100bn (51bn) of the $500bn under management. Amvescap has been winning new money in this area.

BUILDING AND PROPERTY
is to move into the housebuilding sector. The office developer’s huge departure will see it build the housing element of the Ebbsfleet regeneration in north Kent. The company has opted to go it alone on the contract rather than tie up in a joint venture with a housebuilder, Building magazine reports today.

CONSUMER
Panmure Gordon has raised from sell to hold on the back of yesterday’s trading update. The sugar giant said trading had been in line with market expectations and had continued to comfortably exceed the same period last year. This follows January’s profits warning, which was blamed on slower growth of Sucralose sales.

ENGINEERING
Panmure Gordon has repeated its buy rating and 535p target on after the shipbuilder and support services group said trading for the year to 31 March had been ‘in line with board expectations’. It has seen continued growth throughout its support services businesses. The broker says there is 13% upside to its 535p target.

HEALTH
Drugs discovery firm says its chief executive Steven Lee has paid 12,900 for 10,000 extra shares at 129p each. That lifts his total holding to 158,148 shares, or less than 1% of the company. VASTox revealed this week that Roche, and Merz will present scientific data gathered using its Zebrafish technology platform.

INDUSTRIALS
A bidding war may be about to break out over Spanish fag maker , which is the target of a 7bn offer from Imperial. Altadis shares were marked higher on the Spanish bourse yesterday amid claims rival British American Tobaccomay team up with venture capitalists CVC Capital, Cinven and PAI over a possible bid for Altadis.

LEISURE
The House of Lords decision to block 17 new casinos under the Gambling Act could be good news for . says the Government may now separate the 16 small and large casinos from the supercasino, which will reduce the competitive impact on Rank and restrict supply into the market. The broker has repeated its buy rating.

MEDIA
Californiabnaires Ron Burkle and Eli Broad today increased to $8.2bn (4.2bn) their takeover offer for US newspapers and television giant Tribune, owner of the Los Angeles Times, Chicago Tribune and a host of TV companies. The deal tops a rival bid from Chicago property titan Sam Zell.

NATURAL RESOURCES
is raising C$152.4m (55.2m) through the issue of 30m shares at C$5.08 each. The oil and gas company said the net proceeds will be used to fund its 2007 capital budget and as working capital. It needs to raise more than 500m to extract gas reserves from its venture in the Algerian desert.

RETAIL
WestLB has repeated its reduce holding on following news of last year’s drop in profits. The broker says the current premium rating for the shares, and the uncertainties in France - where fourth-quarter margins were down 200 basis points - prevent it from taking a positive view of the stock at this stage.

SUPPORT SERVICES
A better-than-expected trading update from received well-rounded praise from the City and indicated the independent caterer may have turned the corner. Credit Suisse has upgraded from neutral to and raised its target from 285p to 370p. is pleased that so much progress has been made on margins.

TECHNOLOGY
has begun coverage of with a buy rating and 190p target. It says growth in the broadband and internet protocol in cable and telecom networks should drive growth in demand for the group’s Deep Packet Inspection-based solutions. Sandvine helps residential broadband providers manage network security.

TELECOMS
Vodafone boss Arun Sarin has begun a series of broker presentations at which he will make known the impact on profits of growing competition on the UK and German arms and the need to reduce costs. He must convince that Vodafone is not neglecting two of its biggest markets following the purchase of India’s Hutchison Essar.

TRANSPORT
The rail regulator’s quarterly report shows all the UK rail sectors achieved growth in passenger kilometres, total passenger journeys and revenue in the third quarter of 2006 compared with the year before. Long-distance passenger kilometres and journeys increased by 7% and 7.2% respectively, between the third quarters of 2005-6 and 2006-7.

UTILITIES
National Grid’s latest trading update has revealed rising costs and debts now totalling 11.8bn. It overshadowed reassurances that operating profits will be up when the group unveils full-year figures in May. appears unimpressed and has repeated its neutral rating, warning the higher costs and debts will hurt the shares.

Other stories:
Market report: Thursday close
Mid-week share tips
Taking stock: Market news in brief
Yesterday’s trading: Carphone sell-off

KVISTGARD, Denmark, May 16 (UPI) — A U.S. court dismissed Bavarian Nordic’s claim that its smallpox vaccine was inappropriately used by Acambis to derive its own vaccine.

Bavarian Nordic said it plans to appeal the ruling by the U.S. District Court in Delaware. The court held that there were no facts in dispute and that no existing case law supports a finding in Bavarian Nordic’s favor.

Bavarian Nordic alleges that a scientist supplied a sample of the modified vaccinia ankara virus used in its smallpox vaccine Imvamune to Acambis for research purposes only. But Bavarian Nordic alleged Acambis used the virus to produce its smallpox vaccine MVA3000.

“We are confident that this decision will be reversed on appeal,” said Peter Wulff, Bavarian Nordic’s president and CEO.

“The order basically holds that anyone can use a live biological material as the starting material, however obtained, and avoid liability for conversion by simply reproduce the material,” Wulff added. “In effect, a competitor could obtain a live virus sold in the market for use in patients, reproduce the virus and sell the millions of doses obtainable from it as his own.”