Keeping afloat

The Footsie 100 Index, which rose 6 per cent in the first quarter, has made a buoyant start to the second quarter by jumping back over the milestone 6,000 level. The stockmarket has been boosted by worldwide demand for metals, particularly from fast growing China, driving gold to a 25-year high of $590 an ounce and silver to a 22-year peak at $11.75 an ounce.

The bid frenzy continues on the London stockmarket - UK mergers rose 10 per cent in the first quarter of 2006 to £32.7bn. Small investors have been entering the market, usually a sign to the professionals that it is time they should be thinking of getting out.

However, there is still upside stockmarket potential, with the index, as measured by the FT-SE 100, on track to go through the 6,500 mark by the summer. In the `real' world, UK productivity dropped to its lowest level since 1990.

The pharmaceutical sector is keeping pace with the markets on continued bid speculation reinforcing its reputation as an attractive defensive sector in which professionals can invest with a certain degree of peace of mind.

Beximco Pharmaceuticals launches Oseflu to combat bird flu
Shares in Bangladeshi drug firm, Beximco Pharmaceuticals, listed on AIM, rose 14.5p to 89p after the company launched its Oseflu capsule, aimed at preventing and treating human cases of bird flu.

Bodisech Biotech - record first quarter profits
Bodisech Biotech saw its share price move up sharply to 950p after kicking in with record first quarter profits.

Hikma Pharma sees share price rise as profits beat market expectations
Jordanian generics company, Hikma Pharmaceuticals, saw its share price rise sharply as it beat market expectations with a 9 per cent rise in full year profits to $64.4m pre-tax.

Serono - change of tack from sale to 'buy'
Serono, the Swiss biotechnology company which has been a bid target for months, has had a change of mind about selling itself. Now it wants to raise £3bn of capital to scoop up smaller rivals.

The change of tack is a result of Serono failing to find a buyer willing to pay £8.6bn for the largest European biotech group. While a number of big pharma companies have been tipped as possible buyers, they may have been put off by the fact that Serono's multiple sclerosis drug, Rebif, will soon be facing more intense competition.

To this prospect is added the problem that Serono has an indifferent pipeline of new drugs coming to the market. The capital-raising plan is based on issuing 7.62m new shares, and has to be approved at the AGM on April 25. If approved, Serono could move to make one large purchase, or several smaller acquisitions.

NeuTec Pharma sees losses soar as drug development costs rise
Drug developer, NeuTec Pharma, posted losses sharply up from £1.64m to £2.93m in the half-year to 31 December 2005 on turnover, which boomed from nil to £11m. The market was pacified by the news that NeuTec has £26m of cash behind it and its yearly cash burn is about £2.6m.

The higher losses were driven by additional manufacturing and approval costs for Mycograb, one of two drugs NeuTec is developing. The drug is aimed at one species of bloodstream infection, invasive candidiasis. Mycograb is also being developed for other uses, such as fighting Cryptococcus neoformans, a fungal disease attacking patients with poor immune systems, and treating metastatic breast cancer. Mycograb should come to the market at the end of this year.

NeuTec also has Aurograb, a drug being developed to attack the hospital superbug MRSA. The drug is moving into phase III trials now that recruitment has been completed.

Assuming NeoTec keeps to its development timetable, Numis Securities is looking to NeuTec to move into the black next year and deliver pre-tax profits of £10m in the year to end June 2007.

Akers Biosciences clinches deal with McKesson Medical in the USA
Akers Biosciences, which produces rapid diagnostic tests, saw its price marked up a couple of pence after it announced it has clinched a deal with McKesson Medical of the USA. The latter will distribute Akers' rapid test for Heparin allergy in the USA. The deal could double the number of US hospitals purchasing the test to 600.

GSK starts trials for vaccine against a worldwide pandemic of bird flu
GlaxoSmithKline (GSK) has started two trials to isolate a vaccine against bird flu, which scientists fear could lead to a worldwide human pandemic.

Governments are keen to stockpile a H5N1 vaccine and this large-scale demand provides an open door to mega revenues to the firms producing a vaccine to fight bird flu.

Also on the GSK front, it was reported by The Lancet that the type of antidepressant known as selective serotonin re-uptake inhibitors (SSRIs), which include GSK's Seroxat/Paxil, could reduce the risk of getting colorectal cancer.

GSK's asthma drug Advair/Seretide, is forecast to reduce deaths among people with chronic obstructive pulmonary disease by 17 per cent over three years.

GSK's share price closed 18p higher at £15.23 after the news that a new breast cancer drug,Tykerb, had been shown to slow the progression of advanced cases by more than half.

Malcolm Craig is one of the leading investment commentators in the country, having written 14 books on different aspects of investment from shares to gold, from gilts to the money markets.