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Marching on

Despite setbacks, the pharma sector continues to help the FTSE march on towards important milestone

Bid speculation has reached fever pitch in the Square Mile of the City of London driving the FTSE 100 Index to a near five year high of 5863. The break through the psychologically important level of 5,900 in coming days looks almost certain - despite high street shops being hit by their poorest takings since records started back in 1945. Stay away customers ignored huge price slashing in the New Year sales ensuring that retail sales plunged by 1.3 per cent in January. This was the biggest drop since December 2004.

The reason? Debt laden customers are tightening their belts until it hurts as they struggle to put their finances on an even keel.

The pharma sector has moved forward along with the market as a whole, with a new entrant to the market, an imaginative acquisition in Croatia by GKN, abandonment of a major new drug by AstraZeneca, boardroom shenanigans from SkyePharma and more sales of non-core divisions.

ImmuPharma is coming to the Alternative Investment market by reversing itself into General Industries, a cash shell company. ImmuPharma, which has 18 months' worth of cash in the bank, is working on a potentially top-selling drug for lupus along with pain treatments. Lupus is a condition via which the immune system attacks the body and it affects one million people worldwide. The drug is near the end of Phase I trials and could start Phase II trials later in 2006.

GSK shells out £30 million on Pliva R&D institute
GlaxoSmithKline, which has been moving more of its research to low-cost emerging countries, saw its share price slip back slightly as it announced it is spending approaching £30 million to buy the research and development arm of Pliva, a Croatian-based drug manufacturer.

AZ abandons Exanta
AstraZeneca also saw a slight fall in its share price by terminating its work on Exanta, which had been vetoed by the US regulators back in 2004. Exanta is a blood thinning drug, which had been anticipated as a future major revenue earner with expected sales of £1.7 billion, and offering an alternative to Warfarin, a generic drug.

AZ had discovered, among the 400 patients being given Exanta, that one had developed a serious liver injury and is therefore withdrawing Exanta from the market.

While blocked in the USA, Exanta had been approved for sale in Europe. AZ is to stop any further work on Exanta and will abandon two clinical trials. The market had hoped that AZ might gain approval from the US regulator for limited use of Exanta - a hope now extinguished.

AZ is set to appeal against a US court ruling invalidating the patent on its heart drug Toprol, which has cleared the way for generic copycat versions of Toprol being on pharmacists' shelves by late April 2006.

SkyePharma - board battles shareholders
The new non-executive chairman of SkyePharma, Jerry Karabelas, has started as he means to go on by blasting the dissident shareholders accounting for some 40 per cent of the equity, led by North Atlantic Value, a fund run by J O Hambro's Chris Mills.

The dissident shareholders want to see their own candidate, Bob Thian on the SkyePharma board and have called an extraordinary general meeting on the matter on March 9 to unseat Karabelas (and possibly clear out the other directors) and install Thian. Skyepharma has written to its shareholders advising them to vote against the NAV proposals. Bob Thian has turned down an offer from SkyePharma to become a part-time director.

NAV reckons SkyePharma's board needs drastic reform, having been unsuccessful in finding a partner to finance development of Flutiform, its treatment for asthma, and also having been forced to make a rights issue last September. Karabelas claims NAV wants to push the company's share price ahead and then sell its share stake.

FDA blocks Rimonabant
The best of the bunch measured by future revenue creation in sanofi-aventis' drug pipeline is Rimonabant (currently planned to be marketed as Acomplia), which was due to be launched in the latter months of 2006. Rimonabant has not yet been approved by the US Food and Drug Administration (FDA). Rimonabant aims to treat obesity and smoking, both of which are prime triggers for premature death. The drug could win blockbuster revenue status. Forecast yearly sales are $1.4bn to $6bn by 2010. sanofi-aventis certainly needs a new blockbuster drug as a substantial percentage of its operating profit is at threat from generic competition.

A gleam in the clouds is that the FDA has given sanofi-aventis certain conditions to be met by Rimonabant before it can be sold in the US as a weight loss drug. However the FDA blocked the marketing of Rimonabant as an anti-smoking treatment.

Roche applies to EMEA for Herceptin go-ahead
Roche has applied to the European Medicines Agency to give the green light for Herceptin, the anti-cancer drug, to be used to treat women with early-stage breast cancer. If approved, the drug could become available in the autumn of 2006. A mother of three with breast cancer recently lost her case over her local NHS trust's refusal to finance treatment with Herceptin, which is not licensed for use in the early stages of breast cancer.

2nd September 2008

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