Aiming high

The stock market is attempting to consolidate at close to its recent four-and-a-half-year high with the FTSE 100 churning around the 5,500 mark.

Rising oil prices and concern about future rises in US interest rates have, for the time being, dampened hopes of a good year-end rally. However, even if a further upward move to yet another high is not a reality, the stock market is set to finish 2005 with a decent gain.

Heavyweight pharma groups have been largely treading water although Shire Pharmaceuticals has tested a new high for the year after revealing that, together with New River Pharmaceuticals, it has filed a new drug application with US authorities.

The filing is for investigational compound NRP104 for the treatment of attention deficit hyperactivity disorder in children.

Deal developments

Outside the big cap pharma stocks, there were some exciting developments in the pharmaceutical and biotech sector that augur well.

Protherics, the biotech company, stole the show when its share price soared 44 per cent on news that it has agreed a deal worth up to ?195m with AstraZeneca (AZ), giving the Anglo-Swedish firm the rights to CytoFab, a treatment for septic shock.

Analysts have taken a positive view setting price targets from 90p to around 150p, which compares most favourably with the share's closing price of 76p on Monday December 12.

AZ is making an upfront ?16.3m payment and Protherics will receive royalties of 20 per cent on all sales should CytoFab make it to market. AZ will also absorb the costs of all late-stage clinical trials, which are expected to begin in early 2007, and associated regulatory and marketing costs for CytoFab.

SkyePharma shares remained in the takeover spotlight after the company said it would open its books to a number of interested parties. Press reports suggested that several US firms have expressed interest in bidding for the company following a deeply discounted rights issue to self fund the development of its asthma drug, Flutiform.

The move was poorly received by a number of leading shareholders who, just weeks earlier, were disappointed to discover that the mystery suitor of SkyePharma was Innovata, a smaller company formed through the merger of ML Laboratories and Quadrant earlier this year. Shareholders and traders were hoping that a large pharma group with deep pockets would emerge as a bidder.

Meanwhile, shares in Innovata perked up on news that it has signed an agreement with an unnamed partner to generate more than ?25m in milestones and development funding for its combination asthma therapy. It also announced that its joint venture with MicroDose Technologies, a privately owned US drug delivery systems company, had regained the rights from Bristol-Myers Squibb to its fast-acting inhaled insulin product.

Alizyme's shareholders were pleased that trial data for Cetilistat, an obesity treatment, showed patients lost weight and suffered fewer side effects than from other leading comparable drugs.

Alizyme is confident that it will find a partner to take Cetilistat to phase III trials. According to Richard Palmer, chief executive, the group is "continuing dialogue with potential licensing partners."

European venture

Shares in GW Pharmaceutical gained ground after the cannabis-based drug developer announced an agreement with Almirall Prodesfarma, Spain's largest pharmaceutical group and one of Europe's biggest privately owned pharmaceutical groups.

Under the deal, Almirall will pay GW up to ?46m to market Savitex, an oral spray for treating multiple sclerosis, in all European markets apart from the UK.

GW receives an up-front payment of ?12m boosting its cash reserves to ?22m, milestone payments and revenues on supply of Savitex, which is in phase III trials for the treatment of multiple sclerosis, neuropathic pain and cancer pain.

Almirall is also helping GW to explore the development of the product for other indications and is expected to contribute to these costs.

In April, Canada was the first country to approve Savitex as a prescription medicine.

Elsewhere, shares in Theratase sparkled after the biotechnology group announced a good annual results with pre-tax profits rising strongly and a dividend payment, the first in around a decade.