Pick of the bunch

Shire was the pick of the bunch for UK pharma stock after speculation in the US that law suits over ADHD drug Adderall XR will soon be concluded

The stock market continued to hit fresh four-and-a-half year peaks on the back of further intense bid speculation before some profit taking set in to leave the FTSE 100 index just above the 5,700 level.

Unchanged interest rates and a strong showing by the US stock market, with the Dow Jones Industrial index breaking through the 11,000 barrier, to reach a four-and-a-half year peak before retreating after a bout of profit taking, has helped propel the UK market higher. Higher oil prices against a backdrop of worries about Iran's nuclear intentions, however, are undermining investment sentiment, which will be influenced by a flood of corporate earnings results unleashed over the next few weeks.

Shire Pharmaceuticals shone among the heavyweight pharma groups with its share price rising strongly to a high of 850.5p, on rumours emanating from the US that the law suits with Barr Laboratories over Shire's attention deficit hyperactivity disorder (ADHD) drug Adderall XR will soon be concluded.

Shire subsequently lost some of the good ground made after stockbroker Merrill Lynch downgraded the stock from 'buy' to 'neutral'. Merrill thinks that a settlement with Barr could put a fair-value target of 935p on Shire. On the other hand, if a deal is not signed its analysts caution that the shares could fall back to 800p.

Meanwhile, AstraZeneca was noticeably weaker after Dresdner Kleinwort Wasserstein decided to cut its rating on the stock from 'reduce' to 'sell'. The broker takes the view that the group's pipeline of future products is poor, although it does believe that bid speculation will provide support for the share price if it falls to around the 24 level.

Media reports suggest that GlaxoSmithKline, whose share price weakened last week, is considering making a bid for Serono, a Swiss biotech group worth around $12 billion. A deadline looms for the end of the month for interested parties to make an offer for the controlling family's 60 per cent stake, led by Ernesto Bertarelli, chief executive of Serono.

SkyePharma was back in the limelight after a bunch of unhappy investors met the non-executive directors of the drug maker on Monday to discuss the future of its founder and chairman, Ian Gowrie-Smith. They have given the group a few weeks to restructure its management team. Moreover, it emerged from the crisis meeting that no bids for the group have been made. An informal deadline for the group or parts of the group set by Lehman, the investment bank advising SkyePharma, passed on Sunday. The group has extended the deadline.

On Friday last week the shares lost almost 5 percent on news that the fund management group Fidelity, one of the biggest shareholders in SkyePharma, had ditched more than 17 million shares recently.

Innovata, formed out of the merger of ML Laboratories and Quadrant, announced that it had terminated merger talks with SkyePharma. It also unveiled annual result figures showing that losses shrank significantly on a near doubling of turnover, which helped boost its share price. Analysts expect the pulmonary products group to turn in healthy pre-tax profits this year.

Shares in Oxford BioMedica, the biotechnology group, which was the subject of takeover talk last year, perked up after rumours surfaced that the group was close to signing a long-awaited licensing deal for TroVax, its bowel cancer treatment. Market talk suggested that Pfizer had already signed a preliminary deal for TroVax or that Genentech was ready to conclude a deal.

Ark Therapeutics' share price was largely unchanged despite news that it had been granted a US patent for Kerraboot, its treatment for lower leg and foot ulcers, which is already on sale in the UK. So far UK sales of Kerraboot have been below expectations. The drug maker has subsequently released research data from its study of Vitor, which treats cancer cachexia. It shows that Vitor significantly slows progression of cachexia in two types of cancer. Ark is now looking to design a confirmatory phase III trial of Vitor.

Ahead of its annual results GW Pharmaceuticals, the cannabis-based drugs maker, saw increased activity in its shares, which moved higher, on the hope that positive news would flow from its figures and the company's results presentation.