Health stocks dragged to start the week, in line with broader markets.

The Nasdaq and Amex biotechnology indices were down 1.4% and 1.9%, respectively. On its first day of action, the new Nasdaq OMX Global Biotechnology Index was down 1.3%.

Pharma stocks fared slightly better, with the Amex pharmaceutical index giving up only 0.9%. However, AstraZeneca ( AZN) and King Pharmaceuticals ( KG) were its only components that stayed in positive territory.

Of those that gave up the most ground: Schering-Plough ( SGP)and Eli Lilly ( LLY) gave up 2.2% and 1.9%, respectively.

Regulators warned medical professionals of six cases of pancreatitis, two of which led to patient deaths, possibly related to Amylin ( AMLN) and Lilly's Byetta, and said they're working to strengthen the safety label for the diabetes drug.

Shares of Amylin fell 16%, to $28.86.

Dyax ( DYAX) shares shot higher Monday after the company announced positive late-stage trial results for its Hereditary Angiodema (HAE) drug DX-88. The company said that a phase III trial, dubbed Edema 4, successfully met its primary and secondary endpoints. Dyax also said the drug was well tolerated with no drug-related serious adverse events reported.

Dyax is expected to file the last module of its application for DX-88 for FDA approval early in the fourth quarter based on the phase III study results announced on Monday. Dyax shares were up more than 10% to $4.78 in recent trading.

In analyst actions, Needham initiated coverage on Cardica ( CRDC)with a hold rating. Shares were off by 26 cents, or 2.9%, at $8.87.

Elsewhere, Ladenburg Thalmann downgraded Micromet ( MITI) to neutral from buy. Shares were up 9.4% for the day, having risen 23% in the last week, arriving at $5.97 late this Monday.

Also, Citigroup downgraded Omrix BioPharma ( OMRI)to hold from buy, upping its price target to $23 from $20 on Monday. Shares were up 22 cents, or 1%, to $22.35.

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