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Market matters

The pharma and biotech sector remained decidedly quiet on the FTSE 100 Index, despite issues of drug safety and clinical trials disclosure sweeping through the pharmaceutical industry.

Our weekly review of the pharmaceutical stock market

The FTSE 100 Index remains above the 4,800 mark as new year optimism and a stronger US economy buoy the London markets. The widely predicted move by the Bank of England to leave interest rates unchanged at 4.75 per cent was also welcomed by the City

However, Deloitte dampened spirits by forecasting the end of 10 years of 'golden' economic performance. The City consultancy forecast economic growth of 2 per cent for the year ñ way below the government's prediction of 3-3.5 per cent.

Deloitte has earmarked the slowdown of the housing market as the main culprit and believes that 2005 will mark the start of a difficult period for the economy.

The pharma and biotech sector remained decidedly quiet on the FTSE 100 Index, despite issues of drug safety and clinical trials disclosure sweeping through the pharmaceutical industry.

GSK tackles criticism

Pharma giant GlaxoSmithKline (GSK), however, is tackling criticism of clinical trials disclosure head on. The company announced that it will make the results of all of its clinical trials from 2000 freely available on the internet. It also plans to establish an independent body to review the data and ensure it is published to a professional standard.

Shares in GSK were also boosted by chief executive Jean-Pierre Garnier's revelation that the company plans to announce phase II results for 15 products in clinical trials later this year. Garnier said that GSK currently has 45 products in phase II trials and data scheduled for publication in the second half of the year would reveal whether 15 of the products were ready to progress to phase III trials.

Investors were left distinctly unimpressed after GSK revealed its drugs portfolio at its R&D day last year and are viewing 2005 as a make-or-break year for the company.

AZ reveals pay plan

Chief executive revelations from AstraZeneca also had the City talking after the company released plans to pay its chief executive, Sir Tom McKillop, more than £2.2m through a long-term incentive plan. The plan promises McKillop a payout equal to 250 per cent of his basic salary if performance criteria are met.

Some investors viewed the plans as controversial after AstraZeneca struggled through a turbulent 2004. The group's share price plummeted 30 per cent last year after its much anticipated lung cancer drug, Iressa, disappointed in clinical trials and its blockbuster drug, Crestor, suffered safety concerns.

However, Jean-Pierre Garnier, head of AstraZeneca's rival GSK, earned £2.79m last year, with many believing that this was the main reason for McKillop's pay review. This was dismissed by AstraZeneca.

Shire fights generic competition

Shire Pharmaceuticals was again making waves this week after revealing that it has sealed an agreement with Australian company Avexa to license the experimental HIV treatment SPD754.

The licence is part of Shire's divestment programme so that it can focus on later-stage drugs in its pipeline. Shire is also keen to concentrate on its main portfolio of drugs for the central nervous system, gastrointestinal and kidney disease.

Shire is experiencing continuing problems surrounding the patent of its top-selling Attention Deficit and Hyperactivity Disorder (ADHD) treatment Adderall XR. This week, the company countersued US generics manufacturer, Impax Laboratories, over Impax's application to create generic versions of Adderall XR.

Shire is also fighting off attempts from Barr Laboratories, another US firm, to create generic versions of Adderall XR. It may, however, have a final trick up its sleeve, having clinched an agreement last week with New River Pharmaceuticals to create the compound NRP 104, also for the treatment of ADHD.

Xenova shares leap

Among smaller stocks, biotech company Xenova was celebrating. Its shares jumped 28 per cent after it announced that it had signed a technology licensing agreement with Oxxon Therapeutics.

The deal gives Oxxon the right to use Xenova's DISC-HSV technology, which delivers genes to the immune system for the treatment of cancer and infectious diseases. Xenova is set to receive an upfront payment spread over two years, milestone payments on the first four commercial products developed and royalty fees from the collaboration.

2nd September 2008

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