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Marriage mania

Intense merger and takeover activity continues to propel the market ever upwards with the FTSE 100 index

Intense merger and takeover activity continues to propel the market ever upwards with the FTSE 100 index, representing the leading blue-chip stocks, smashing through the 5,900 mark to hit a near fresh five-year peak. The bulls reckon the psychologically important 6,000 level will be breached soon.

Markets worldwide are being swept higher by a rising swell of takeover mania.

AstraZeneca (AZ) held centre stage as its share price soared, enjoying the best rise among the Footsie stocks last week, up nearly 10 per cent, on renewed market talk that Swiss drugs group Novartis would launch a bid for it. Expectations that positive data would emerge from Crestor, its cholesterol drug, also helped drive the share price smartly higher.

Analysts mostly still dismiss the takeover talk about AZ. A little credence to the speculation, however, has come in the wake of a move by German drugs group Merck to take over rival German group Schering. In recent weeks there were rumours in the German market that Schering was in the bid frame.

Monday's positive news on test results from clinical trials for Crestor sent the shares racing up even higher with the ?30 mark very much in sight now. The data showed that this treatment reverses the build-up of plaque in patients suffering from clogged heart arteries.

Shire Pharmaceuticals hit another new high for the year after a US judge pushed back six months to end-October the date of the trial on the alleged infringement by Barr Laboratories, the US drugs group, of Shire's blockbuster attention deficit hyperactivity disorder (ADHD) treatment, Adderall XR. Deutsche Bank analysts noted that the delay would be beneficial to Shire, which now has more time to get ready to launch its next-generation ADHD drug.

In the run up to the latest news on the legal wrangle Shire's shares were moving higher on news that the US regulatory authorities had confirmed its resubmission for DAYTRANA, a trans-dermal patch treatment for ADHD. The new drug application is being treated as a Class 1 resubmission. Shire is planning to launch DAYTRANA, assuming it is approved, in the first half of this year.

GlaxoSmithKline's shares have also being doing well, the third best Footsie performer last week, mainly on the back of improving investor sentiment towards the sector and this group in particular. The shares also seemingly benefited from the strengthening belief in the market that it is not going to bid for Serono, the Swiss biotechnology group.

Elan, the Irish group, was another pharmaceutical stock in the limelight racing up by more than a fifth in value following news that Tysabri, its multiple sclerosis drug, was recommended to return to the market by a US Food and Drug Administration (FDA) regulatory panel of experts. Safety concerns resulted in the drug being withdrawn last year. The US regulatory authorities usually follow the recommendations from advisory panels.

Rebel shareholders in SkyePharma failed in their attempt to remove Jerry Karabelas, chairman of the drug discovery and delivery group. Agreement with two of its major institutional investors over the selection and appointment of two new independent non-executives was subsequently reached. These shareholders maintain that they are now happy that their objectives of strengthening the board will be achieved and welcome the steps taken and are fully supportive of the group. Earlier this year the rebels were instrumental in removing Ian Gowrie-Smith as chairman and non-executive director.

Figures from Ark Therapeutics, a developer of medical products, were not well received by the market, which marked its share price down significantly. It made a much bigger pre-tax loss, thanks to a big jump in research and development costs. Importantly, turnover is starting to grow rapidly, albeit from a tiny base, with sales of Kerraboot, a treatment for lower leg ulcers expanding strongly in the UK. Licensing agreements for Kerraboot covering six countries were concluded last year and since the year-end.

Shares in Sinclair Pharmaceuticals were up strongly after the oral hygiene and dermatological group confirmed it was going ahead with the £37 million purchase of Group CS Dermatologie, a French skin care group and the release of interim figures. Losses were lower after a big leap in sales, which were boosted by new product launches in many countries.

The market did not greet kindly results from biotech Alizyme and, in particular, news that its directors had exercised their options and sold the shares. Alizyme has lost more than 15 per cent since the announcement. However, to put the slide into perspective, it comes after the shares had more than doubled since their low touched around nine months ago.

2nd September 2008


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