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The waiting game

Traders and investors are waiting with bated breath for big pharma groups to post interim results

WaitingThe overall impact of the attempted London bombings, which made for some volatile trading on the stock market last Thursday, was largely muted with the FTSE 100 index moving up towards what could be an assault on the 5,300 level, to establish yet another new three-year high.

Investors and traders are looking forward to the interim results of the big pharma groups that will be posted on Thursday amid a plethora of figures from other FTSE 100 companies. GlaxoSmithKline (GSK), in particular, has been weak ahead of its results despite a recent good run, which saw it reach a 12-month high.

Last week, the pharmaceuticals and biotech sector was the second worst sector performer due mainly to softness in the share prices of GSK and AstraZeneca.

Shire Pharmaceuticals, on the other hand, has done rather well with its share price hitting a fresh 12-month high before easing back a little.

The latest upward surge came despite news that an investment group headed by the well-known US corporate raider, Carl Icahn, had built up a 5 per cent stake in biopharmaceutical company Transkaryotic Therapies (TKT).

In April, Shire made a $1.6bn cash offer for TKT. While some analysts took the view that Shire was paying over the odds for this acquisition, more recently they have decided that the deal would be good for Shire and have issued buy recommendations for the company.

A significant band of dissident shareholders at TKT maintain that the offer from Shire is far too low, as does Icahn. In the meantime, the board of TKT has appealed to shareholders to approve the acquisition by Shire.

Shire's share price could be vulnerable if it has to up its bid to seal the acquisition, or if it loses the deal altogether. However, a successful vote from both Shire and TKT shareholders on July 27 could see Shire take control the following day as all regulatory issues have already been settled.

Up and away
Shares in gene therapy company Oxford BioMedica, which is a rumoured takeover target, touched yet another 12-month high on news that it has been awarded a research grant, worth an initial £350,000, by the UK Motor Neurone Disease Association to support preclinical evaluation of MoNuDin. The gene therapy product treats Amyotrophic Lateral Sclerosis (ALS), the most common form of motor neurone disease.

Oxford BioMedica plans to start clinical development in 2006-07. Other organisations, including US and UK charities, are considering funding further sponsorship of initial trials in MoNuDin in ALS patients. A previous preclinical study of the treatment, published in May last year, produced encouraging results.

Investor interest
Investors have shown an interest in specialist structure-based drug discovery and services company, Sareum Holdings. The company has seen its share price jump by almost one tenth after announcing a major collaboration to develop novel cancer therapeutics. The collaboration is with the Institute of Cancer Research, a leading cancer research centre, and Cancer Research Technology Limited (CRT), an oncology focused and development company.

In terms of the collaboration agreement, drug candidates developed will be licensed by CRT to pharmaceutical partners for clinical trials. Any payments, milestones and royalties from the partnership agreements will be shared between Sareum and its collaborators.

Encouraging maiden interim results from Proximagen Neuroscience, a drug company specialising in neurodegenerative diseases, gave its depressed share price a useful lift. Shares in the company, which was listed on the Alternative Investment Market (AIM) in March, are still trading at 5 per cent below the 148p listing price.

2nd September 2008

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