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Yo-yoing

The stock market is yo-yoing around the key psychological level of 6,000 as it attempts to consolidate at this watershed after the recent dash to a five-year high.

Takeover fever continues to rage globally, providing plenty of support to a number of major stock markets, including the US, which have also hit near or five-year highs. Profit taking and caution ahead of the US Federal Reserve's announcement on the expected move to higher interest rates for the time being has put a brake on the UK market moving up further.

The pharmaceutical and biotechnology sector continues to benefit from takeover activity with German drugs group, Bayer, making an offer for Schering. Merck, the rival German drugs group has since withdrawn from the bid arena. AstraZeneca, once again, has become the subject of takeover rumours.

Shire Pharmaceuticals featured with a strong rise in shares after US regulators withheld approval of Provogil, a drug used to treat sleeping disorders, as a treatment that would compete with Shire's key attention deficit hyperactivity disorder (ADHD) drugs, such as Adderall XR, for children and teenagers. The regulators were particularly worried by the risk of skin rashes developing, which could lead to hospitalisation because of patients taking Provogil. Cephalon, a US drugs group, had hoped to rebrand Provogil as an ADHD drug but now will have to conduct further clinical trials in order to stand a chance of getting approval for the drug for this indication.

Investors in Shire were also pleased after a US Food and Drug Administration (FDA) advisory panel concluded that hyperactivity drugs, such as Adderall XR, do not have to carry a strong `black box' warning about possible adverse side effects.

Elan saw its share price weaken noticeably after the Irish neuroscience-based group learnt that the FDA has decided to extend its regulatory review of Tysabri, a treatment for multiple sclerosis, by up to 90 days. The drug was withdrawn from the market last year because of safety concerns.

Shares in ProStrakan were firmer after the drug developer, which was listed nearly a year ago, produced figures that were well received by the market. Revenues were almost 50 per cent higher, mainly thanks to increased sales of a range of its pharmaceutical products, with its top selling medicine, Adcal D3 used as an adjunct to specific therapy for the treatment of osteoporosis, enjoying particularly strong sales growth. Gross profit increased substantially and the loss for the year was dramatically reduced, helped by the absence of a write-down of impairment in goodwill in the previous year relating to the merger that formed the group.

ProStrakan disclosed that it has received EU Mutual Recognition Procedure for Rectogesic, a pain treatment for chronic anal fissures. The group also announced that it is acquiring the UK rights to Tabphyn, a treatment for enlargement of the prostate, from a UK subsidiary of the German drugs group, Stada Arzneimittel.

Shares in Allergy Therapeutics, a specialist pharmaceutical company that focuses on allergy vaccination, benefited from news that it has achieved a positive outcome for its key clinical efficacy and safety study R204, which marks an important step in the development of Pollinex Quattro for ragweed allergy. According to the company, the outcome is a key element in 'End of phase II' discussions with the US regulatory authorities and other authorities prior to initiating phase III trials. The group also announced interim results showing good growth at both the sales and gross profit levels but the company made a relatively small loss before tax compared with a healthy pre-tax profit in the previous year's comparable interim figures, because of a huge jump in research and development costs.

On the new listings front, Syntopix, a drugs discovery company, made its debut at a small premium to its listing price whereas Aqua Bounty Technologies, a biotech company that focuses on the aqua culture industry, made its debut a little below its offer price. Renovo, an anti-scar biotechnology company, plans to seek a listing giving it a value of around £150 million. In May last year, Renovo postponed its proposed flotation because of market conditions.

2nd September 2008

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