After an early rally, health stocks closed Wednesday's trading session down.

In business news, Sigma-Aldrich ( SIAL) and Sangamo BioSciences ( SGMO) announced a research and license agreement with Roche wherein Roche will receive non-exclusive worldwide rights for the use of its zinc finger nuclease technology for cell lines and transgenic (or genetically modified) animals. Specific financial terms were not disclosed. Sangamo shares rose 15 cents, or 1.4%, to $10.82.

Wyeth ( WYE) said on Wednesday that a U.S. District Court in Arkansas granted its motion for judgment regarding law on the punitive damages award in hormone therapy case Donna Scroggin v. Wyeth. The decision overturns punitive damages awarded by the Little Rock jury last year of $19.3 million and also clears the way for the company to appeal compensatory damages of $2.75 million, according to Wyeth. The new ruling also vacates the $7.76 million in punitive damages award against co-defendant Upjohn.

Wyeth shares traded down 93 cents, or 1.9%, at $48.55.

Elsewhere, AstraZeneca ( AZN)-owned MedImmune won a federal contract, valued at a maximum of $28.4 million, to provide military agencies with its intranasal spray flu vaccine, FluMist. The vaccines, which are being stockpiled in case of an epidemic will last through June of next year. AstraZeneca's shares traded up 58 cents, or 1.2%, to $47.80.

Meanwhile, Bernstein analyst Tim Anderson said in a note to investors that Schering-Plough ( SGP) and Merck ( MRK) may release data from the SEAS trial on controversial cholesterol drug Vytorin at the American Heart Association annual meeting in November. Although, he notes, neither company has yet said when the data will come out.

Earlier this year, the ENHANCE study showed no benefit of Vytorin over conventional Statins for certain ends. The SEAS study is looking at the drug, which is a combination of Zetia plus a statin vs. placebo as it affects progression of aortic stenosis (AS), a cardiac valve disorder, and will also consider clinical outcomes such as cardiovascular death and congestive heart failure.

Anderson said that predicting the outcome is difficult, but he believes the trial could yield neutral or, less likely, positive results -- he gives these outcomes 60% and 30% odds, respectively. It is also theoretically possible that SEAS shows Vytorin is worse than placebo -- the odds of this happening are very likely low (maybe 10%), but if it happened it would be "troublesome," Anderson wrote.

Schering's shares added 93 cents, or 4.5%, to $21.79, while Merck shares edged up 9 cents or 0.2%, to $37.06.

In analyst actions, Friedman Billings Ramsey analyst David Amsellem upgraded XenoPort ( XNPT) to outperform from market perform, citing the potential of its lead drug candidate Solzira, which is being developed with GlaxoSmithKline ( GSK) for restless leg syndrome and pain conditions. Shares ran up $1.57, or 4.2%, to $38.70.

Merck, Schering-Plough, AstraZeneca and Wyeth are all components of the Amex pharmaceutical index, which was down 0.1% to 305.04.

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