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Full steam ahead

Positive product news at GSK sees the pharma giant break through its 2005 peak, leaving rivals in its wake

steam trainThe stock market powered its way to a four-year high on the back of rising oil and mining share prices with speculation about merger and takeover activity helping the FTSE 100 burst through the important 5,400 mark to hit a fresh peak.

GlaxoSmithKline (GSK) led the heavyweight pharma stocks forward, finally breaking through its 2005 peak of 1378p, achieved earlier this year, in the wake of momentum buying and positive product news.

GSK has staged several attempted runs at this previous peak in recent months only to fall back to around the 1300p mark. An announcement that its postmenopausal osteoporosis drug, Bonviva, developed with Roche, had won European marketing approval gave its share price a useful boost.

Shire Pharmaceuticals, however, which has recently repeatedly hit new highs for the year, tumbled from its lofty perch after investment bank UBS downgraded the share to "neutral".

Shire's share price has risen sharply since it completed the $1.6bn acquisition of Transkaryotic Therapies, a US company.

AstraZeneca has also fallen from its recent high but staged a rally on Monday on hopes that the Canadian authorities may approve its blood-thinning treatment, Exanta. It subsequently suffered a bout of pronounced weakness.

What a result
Alizyme, the drug development company, saw its share price fall around 6 per cent after it announced that losses for the first half of the year had jumped from £1.4m to £10.7m. A leap in development costs was the main cause of the dramatic increase in its widening losses.

A cash pile of around £40m, boosted substantially by a fundraising exercise in May, is expected to provide the company with sufficient funds for product development over the next few years.

The shares slipped because some investors were disappointed that there was no news about licensing agreements and no update on Cetilistat, its anti-obesity drug.

Alizyme expects to provide phase II headline trial results for Cetilistat in the middle of December.

Maiden interim results from specialty pharmaceuticals company ProStrakan Group, which was listed in June through an IPO, were warmly received with its shares enjoying a useful gain.

Highlights of the interim period included a 59 per cent jump in sales of its lead product, Adcal D3, an osteoporosis treatment, and steady progress of Rectogesic, a treatment for chronic anal fissures, launched in June.

Plans are well under way for Tostrex, a hypogonadism product, to be launched in Sweden.

Exit strategies
Pharmagene, the biotech company, is set to exit from the market after it agreed to a reverse takeover by Asterand, a private US-based company involved in human tissue supply and services. Under the deal, Pharmagene is valued at £13m.

Penny stock ReGen Therapeutics lost around an eighth of its value after the company raised £890,000 to bolster cash resources through a placing of its stock. It also announced that it had entered into an agreement with Headstart Group under which Headstart will provide a committed share finance facility of up to £2m.

The company's interim results released at the same time showed that its interim loss widened substantially, mainly because of increased research costs.

Shares in Fulcrum Pharma, the outsourcing services firm, soared by 19 per cent after it issued a positive trading update. Its recovery since issuing its interim results in May has continued and, given a stronger order book, it expects to trade profitably in the second half of this year.

2nd September 2008

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