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Sell-out performance

Big pharma stocks are edging towards 12-month highs as analysts issue 'buy' recommendations for the sector

GuitarThe stock market moved ahead strongly towards fresh four-year highs on the back of plenty of merger and acquisitions activity and a burst of frenzied takeover speculation. This has helped push the leading barometer of the market, the FTSE 100 index above the 5,350 mark with the important 5,400 level coming into view.

Investors piled in as their attention shifted from the devastation wreaked by Hurricane Katrina and the resultant surge in oil and gasoline prices. A subsequent softening in oil prices has provided a further buying stimulus.

Pharma stocks were at the forefront of the market's latest dash towards a new high. Not even the big two leading pharma stocks could escape the rumour mills swinging into action with Sir Tom McKillop, the exiting chief executive at AstraZeneca rejecting the possibility of a merger with GlaxoSmithKline (GSK).

AstraZeneca and SkyePharma both raced ahead to hit new 12 month highs, and GSK also rose strongly to within striking distance of a new high for this year. The sector, one of the best performers last week, benefited from analysts buy recommendations.

Confirmation from drug maker SkyePharma that talks with a major pharma group to license Flutiform, a respiratory medicine, had collapsed pushed its share price lower. However, the company said that it was negotiating with several other companies about licensing the worldwide rights to Flutiform.

Axis-Shield was the star performer in the sector. Its share price rose 15 per cent, after the medical testing equipment company announced a US distribution deal with Abbott for diabetes monitoring test, Afinion. Under the terms of the deal, Abbott will supply Afinion and test cartridges to hospitals and physicians' surgeries throughout the US.

News of the deal and improved interim figures, which saw the company post a profit of £300,000 compared with a loss of £660,000 in the previous six months to end-June, helped send its share price smartly higher.

Small wonders

Among the smaller companies, Antisoma shares responded favourably, rising nearly 5 per cent, after it announced that it had reached the patient recruitment target in its phase II trial of AS1404 in non-small cell lung cancer. This should enable the company to report the first efficacy data from the trial later this year.

Antisoma is undertaking a programme of three separate phase II trials in lung, prostate and ovarian cancers where AS1404 is added to standard chemotherapy treatments.

Shares in Evolutec Group also did well as the biopharmaceutical company announced that animal health group, Merial, had completed initial tests of Evolutec's anti-tick vaccine candidates in cattle with encouraging results.

Merial is going to evaluate the vaccine candidates against tick-borne diseases of economic importance.

Meanwhile, Futura Medical, a pharmaceutical and medical device group, which focuses on the sexual healthcare market, posted a big increase in first-half losses when it reported its interim results.

The losses were mainly attributed to increased R&D spend which was in line with expected acceleration of development programmes. The company maintained that excellent progress has been made with its three lead development products and as a result its share price edged higher.

2nd September 2008

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