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High hopes

The FTSE 100 Index sits just below the 5,000 level. Despite this, investors remain confident in the stock market, especially in the pharmaceutical and biotech sector.

The FTSE 100 Index sits just below the 5,000 level, prevented from breaking through the important barrier by surging oil prices.

Oil prices have increased to over $55 a barrel in London and $54 a barrel in New York over the past week, with some oil producing countries finding it difficult to meet demand and keep prices under control. Opec (The Organisation of Petroleum Exporting Countries) meets next week to discuss the situation but some countries are unwilling to increase production.

Algeria and Libya have already said that they will not increase oil supplies by 1.9 per cent a day - a figure proposed by Saudi Arabia - arguing that increasing supplies will not stabilise prices.

Despite this, investors remain confident in the stock market, especially in the pharmaceutical and biotech sector.

Research carried out by stockbroker TD Waterhouse found that investors believe that the pharma sector will outperform the rest of the market during 2005 after enduring a tough 2004.

Further data revealed that six out of ten investors were more confident in the prospects of the FTSE 100 than a year ago, and over half were expecting a 10 per cent rise in the market this year. Improving returns from portfolios, stabilising market conditions and the performance of the FTSE 100 and 250 were cited as the main reasons for the increased optimism.

AZ promotion prompts rumours
Meanwhile, the sector has had a quiet week on the markets despite activity in Europe and the US. Among the larger companies, Anglo-Swedish group, AstraZeneca, made the headlines.

Tongues were wagging after the company announced that it was promoting David Brennan - who is currently head of US operations at AstraZeneca - to a senior executive director. Brennan is respected for his marketing skills, particularly in the promotion of the firm's ulcer treatment Nexium, but is relatively unknown to investors.

The move immediately fuelled speculation that Brennan could succeed Sir Tom McKillop, AstraZeneca's chief executive, when he retires. McKillop had originally said he would retire on his 62nd birthday this month, but last year agreed to extend his contract.

Safety concerns surrounding AstraZeneca's cholesterol-lowering statin, Crestor, continued to bite the company. Despite US regulators, the Food and Drug Administration (FDA), concluding last week that Crestor was just as safe as other statins on the market, US consumer group, Public Citizen, petitioned the FDA to ban the treatment.

The group claimed that it had found that the rate of serious muscle damage reported in patients taking Crestor was six times higher than similar statins so the drug should be banned immediately. The FDA, however, rejected the claims.

NeuTec losses widen
Among smaller stocks biopharmaceutical company, NeuTec Pharma, reported increased first-half losses. The group, which specialises in developing treatments for drug-resistant infections, said that the losses were because it has begun manufacturing Mycograb, a treatment for invasive yeast infections. The company hopes that the drug will be approved for use in Europe next year.

NeuTec is also pinning its hopes on Aurograb, for the treatment of the hospital super bug MRSA, which is currently in phase III clinical trials. Results are expected in the second half of the year, with a possible launch date of 2009.

Pre-tax losses in the six months to December 31 rose from £1.19m to £1.64m, while losses per share were 5.3p.

Cyprotex doubles turnover
Investors showed interest in drug discovery and technology group, Cyprotex, after the company revealed that it has successfully doubled its turnover to £2.12m. The firm also cut pre-tax losses to £1.46m in 2004.

Ark losses widen
Biotech company, Ark Therapeutics, also reported this week that its turnover has increased. The group, which specialises in developing treatments for vascular diseases and cancer, said that turnover had increased from £1,847 to £154,353, while pre-tax losses had widened to £14m in 2004.

Ark Therapeutics, a spin-out from University College London, floated on the markets early last year, raising £55m. The group has already marketed its first product ­- a device for dressing leg and foot ulcers.

Proximagen eyes AIM
Another university spin-out, Proximagen, is also planning to list on the stock market. The group, founded by a professor at King's College London, is hoping to raise up to £12m by listing on the Alternative Investment Market in order to fund drug discovery and development programmes for Alzheimer's and Parkinson's disease. The University could receive £1m from the flotation.

2nd September 2008

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