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Malcolm's Market Eye: 10 to 16 November

Despite the UKís economic woes, sterling has hit a 26-year high against the US dollar with GBP 1 breaching the USD 2.10 level

Despite the UKís economic woes, sterling has hit a 26 year high against the US dollar with GBP 1 breaching the USD 2.10 level. The currencyís strength was underpinned by the Bank of England leaving UK interest rates unchanged at 5.75 per cent.

According to the Halifax, UK house prices fell for two months in a row, a 0.5 per cent fall in October 2007, following a 0.6 per cent dip in September 2007, the first successive monthly drop for two and a half years.

The US stockmarket reacted badly as a result of the credit crunch, with massive bank write downs as a result of that crunch and worries over the US economy. Also, the Chinese are threatening to take their reserves out of US assets and this, plus fears of a total property collapse in the US, have touched off the further plunge in the US dollar.

The UK stockmarket has brushed away all gloom as a result of a turnaround in the banks and financial companies from multi-year low points and has recovered to 6,362 as measured by the FTSE 100 Index.

The UK pharmaceutical sector continues to attract safety-conscious investors, both private and institutional, as its defensive attractions increase in an uncertain world stockmarket scene. It is also enlivened by speculative news of deals and possible bid gossip circulating the market.

One contender in the bid stakes is US biotech Biogen, which dealers reckon is being courted by big pharmaceutical companies anxious to boost their drug pipelines. Other possible bid targets of the big pharmas, according to market speculation, include Alizyme, Shire, Antisoma, Acambis, Protheris and Ark Therapeutics.

Antisoma and Acambis are vaccine producers. The latter company has a useful partnership with Novartis alongside a substantial amount of cash as added attractions to a potential bidder.

In the background, there is always the threat of more litigation over the side effects of block-busting drugs on the market.

Merck & Co to settle Vioxx claims with a GBP 2.3bn payout
Merck & Co, the US pharmaceutical company, is to pay out GBP 2.3bn to settle personal injury claims linked to its arthritis drug Vioxx (rofecoxib), which was taken off the market back on 30 September 2004.

Researchers into Vioxx claimed the drug doubled the risk of heart attacks and strokes. The news of the settlement sent the Merck & Co share price upwards by USD 1.19 to reach USD 55.96.

Merck & Co had been hit by around 50,000 personal claims involving Vioxx from patients suffering heart attacks or ischemic strokes. The company had been on course to tackle each and every claim, on a one-by-one basis which would have taken many years. It had already won 10 out of 15 civil court cases over Vioxx and has spent USD 1.2bn in litigation.

The payout deal was agreed with the claimantsí committee. Merck & Co insists that the agreement is not a class action settlement nor is it admitting fault over Vioxx.

Claimants against Merck & Co must have filed their claims by 8 November 2007 and meet detailed medical criteria, with proof that they had suffered a stroke or heart attack and received enough Vioxx before the attacks. For the deal to be finally settled, 85 per cent of claimants in specific injury categories have to agree the deal. The settlement does not cover Vioxx users outside the UK.

ValiRx wins EU patent for Nucleosomics mass cancer screening
ValiRx, the cancer therapeutics company, saw its share price jump 20 per cent to GBP 14.25, after it was awarded the EU patent for its Nucleosomics mass cancer screening. 

The patent award followed clinching a full license deal with Chroma Therapeutics to commercialise the technology, which is aimed to deliver specific early stage diagnosis and could turn out to be an improvement on anything now available.

Meldex announces new commercial partnership deals
Meldex, the pharmaceutical and biotechnology company, saw a two-day jump in its shares to take them close to their 2007 high.

The stockmarket optimism followed after Meldex announced a clutch of commercial partnership deals. Leading the field is the smoking cessation treatment DP121, which is being tested with an unidentified partner.

Ark raises new cash for drug portfolio trials
Ark Therapeutics raised GBP 35.4m through a placing and open offer to invest in the continued development of drugs in its pipeline.

Cerepro, a treatment for brain cancer, is one of Arkís most important products and needs more finance now it is in late stage trials. Other contenders for the cash include Trinam, which prevents blood vessel blockages in dialysis patients, and Vitor, which treats cancer-related muscle wastage.

International Medical slims down and moves into profit
International Medical Devices, the healthcare company, delivered a pre-tax profit of GBP 538,000 on sales of GBP 11.3m for the year to end August 2007, compared with a loss of GBP 360,000 on sales of GBP 3.8m in the previous year.

Broker J M Finn forecasts 2007/ 2008 profits of GBP 1.1m. The company has slimmed itself down from an unwieldy group of seven subsidiary companies into three divisions. These are the acute care products, devices and aged care products divisions.

International Medical has a good product range which includes own brand suction catheters to naso-gastric bile bags. Branded products include Penfine diabetic needles.

The company has been getting rid of loss-making products and concentrating on selling own-brand products. It has swapped its GE Healthcare ECG machines for those produced by Welch Allyn in the US.

International paid GBP 4.8m for ProCare, a company selling medical and surgical goods, and also acquired Minster Medical which supplies suction catheters.

Two new own label brands are to be launched in 2008. These are ëSuretyí high quality safety devices and ëIntegrityí value for money consumables.

Malcolm Craig, a freelance financial journalist and author, is one of the UKís most respected financial commentators.

16th November 2007


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