Giddy heights

The UK stock market continued its march to fresh multi-year peaks, reflecting positive global trends, with some world equities measured by the MSCI All Country World Index hitting a record high.

Good corporate earnings, positive economic US data (especially on the employment front), and the expectation that a US interest rate tightening cycle is nearing an end helped propel world stock markets higher. Concerns about high commodity prices, including oil, have for the time being been put to one side with the Dow Jones Industrial Average close to an all-time peak.

UK interest rates were left unchanged last week by the Bank of England. The FTSE 100 index, the blue-chip barometer, is attempting to consolidate at the 6,100 level, still some distance off its all-time high. Meanwhile, the FTSE 250 index has hit a record high.

Investors were pleased to see that GlaxoSmithKline's share price held firm despite animal rights activists targeting the group's private shareholders with threatening letters. The letters, thought to be around 100 so far, were sent to investors' homes giving them an ultimatum to either sell their shares within two weeks or have their personal details published on the internet. This is the first time private shareholders in a

pharmaceuticals group have been targeted by animal rights extremists.

AstraZeneca (AZ) was hurt, however, with its share price falling below the key ?30 level, after the group said it abandoned work on Galida, a new treatment for Type 2 diabetes. This setback in its pipeline follows hard on the heels of the decision in February to scrap its development plan for Exanta, a blood thinning drug. Some analysts had predicted that Galida could make sales of $1bn a year.

AZ also announced that it had signed a global services deal with Tepnel Life Sciences for the molecular diagnostics group as part of its services offering agreement to provide the Anglo-Swedish group with DNA extraction services. Tepnel's shares moved ahead strongly.

Elan, the Irish drugs group, finished last week flat despite reporting a sharp fall in its first quarter losses, down from $0.29 to $0.08 a share. The firm said it continued to make good progress across all its business and development activities. Future revenues from Tysabri, its multiple sclerosis treatment, are expected to accelerate its return to profitability.

The US Food and Drug Administration (FDA) is expected to complete its extended regulatory review of Tysabri, withdrawn last year due to safety concerns, by June 28.

Shareholders in SkyePharma celebrated the long-awaited licensing deal for potential blockbuster Flutiform. The drug developer has signed a $165m deal to develop and market the asthma treatment with Kos Pharmaceuticals, a US group. SkyePharma receives an upfront payment of $25 million and royalties on sales in the US.

Earlier this year, SkyePharm had to contend with a shareholder revolt. A group of major shareholders were unhappy with the management's inability to conclude a partnership deal for Flutiform and a deeply discounted rights offer held to fund phase III trials for the drug. One casualty of the dispute was former chairman Ian Gowrie-Smith, who resigned. Now shareholders are waiting to hear news that SkyePharma's loss-making injectables business has been sold.

Drug developer Cambridge Antibody Technology (CAT) enjoyed a healthy rise in its share price after Credit Suisse raised its rating for the stock from neutral to

outperform. The stockbroker thinks that the share could move sharply higher when CAT releases pivotal data on phase III trials for Humira, its treatment for Crohn's disease. Credit Suisse has raised its estimate for peak Humira sales to $2.9bn from $2.5bn.

Shares in Phytopharm, the drug developer of treatments from plant extracts, retreated even though management is confident of finding a licensing partner by the beginning of next year for Cogane, its treatment for Alzheimer's. Last year, clinical data relating to Cogane suggested there was little benefit to Alzheimer's sufferers but the group said further analysis showed that patients with more moderate forms of the disease had experienced a slowdown in progression of the disease. The shares, from an historically low base, have moved up in recent weeks ahead of the firm's interim results, which, due to the absence of a big milestone receipt, showed that it racked up a sizeable pre-tax loss compared with a profit in the previous year.

Elsewhere, Vernalis was in demand after it said that phase III clinical trial data for Frova, a headache drug, produced further positive data on its efficacy as a preventative treatment for menstrual migraine. Vernalis' US marketing partner Endo expects to seek supplemental approval from the US regulatory authorities for Frova as a treatment in the prevention of menstrual migraine.