The heat is on

The stock market roared back to a four-year high after October's sharp decline of almost 6.5 per cent, as record levels of bids gained momentum and underlying share value, allied with useful yields, attracted investors. The market took the Chancellor's Pre-Budget Speech in its stride closing only slightly lower at 5,510. Although it is gaining in strength, the stock market still has some way to go if it is to hit its all time peak of 6,930, last reached on the final trading day of 1999.

The volatile biotech sector is not keeping pace with the market as a whole, with leading biotech shares sitting well below levels seen over the last five years. This is due to market analysts being unable to calculate biotech share price levels for the next five years because of the uncertainty surrounding their ability to develop marketable products.

SkyePharma bid saga thickens

The SkyePharma sale saga continues with news that HBM Bioventures (Cayman) has boosted its shareholding in the company to 7.6 per cent. The chairman of HBM is Henri Meier, who was once finance director of Roche and is now an entrepreneurial Swiss investor.

Substantial shareholders in SkyePharma seek a speedy and credible plan from the company about its future. SkyePharma appointed investment bankers Lehman Brothers to assess all available options after the company found itself on the receiving end of a bid from smaller rival, Innovata.

Lehmans is believed to have received potential bid interest from at least three US companies, including Endo Pharmaceuticals. In addition, Novartis, AstraZeneca and GlaxoSmithKline (GSK) have been tipped as possible buyers of SkyePharma.

Broker Seymour Pierce says it anticipates bids over the next few weeks. The broker doubts that AstraZeneca is in the frame as a possible bidder because its asthma product, Symbicort, is in the same class as SkyePharma's Flutiform.

Indifferent response

Hikma Pharma, the first Jordanian company to join the London stock market, had a lukewarm reception when it floated, with its shares dropping below the offer price of 290p to trade at 285p.

Hikma is a generic manufacturer and has gained the green light for 950 drugs over the last decade.

GSK linked with Institut Pasteur

GSK has hooked up with the Institut Pasteur to develop a vaccine for HIV. The potential breakthrough vaccine is to be created by infiltrating genes from the HIV virus onto an existing measles vaccine to create a drug providing immunity against HIV.

Separately, at a recent investor seminar in New York, GSK reported 'significant progress' in the development of its portfolio of cancer drugs moving through the pipeline. The combined drugs, if successful, could generate annual sales of £580m.

No less than four GSK cancer drugs have entered the advanced stages of development with significant patient trials. Three more potential cancer treatments are also entering late-stage trials.

Currently, cancer drugs account for some 6 per cent of GSK's almost £10bn annual sales. Of the drugs being trialled, Tykerb could establish itself as a first line treatment for breast cancer. Other treatments include, Pazopanib to prevent tumour growth, Casopitant to reduce sickness caused by chemotherapy and Eltrombopag, a blood-clotting agent for use in cancer treatment.

The company is also expected to seek the green light from regulators for its drug Cervarix over the next few months. However, Merck is racing ahead of GSK seeking fast track approval from the US Food and Drug Administration (FDA) for its cervical cancer vaccine, Gardasil. By the year-end it will also have approached the UK and European regulators for approval for the drug, which could be worth $4bn annually.

Boston Scientific bids for Guidant

US firm, Boston Scientific has surprised the market by launching a £14.4bn bid for medical device maker, Guidant. The bid is considerably lower than the $25.4bn initial offer put forward by Johnson & Johnson, which has now revised its offer to $21.5bn.

Boston Scientific reckons that by buying Guidant it will gain access to the market for implantable heart devices, which is worth nearly £6bn a year and served by just three providers. However, there has been speculation that Abbott Laboratories could bid for Boston Scientific.

Plethora jumps sharply

Shares in Plethora Solutions had a stratospheric leap of 99p to 221p as the drug developer announced a successful clinical trial for PSD502, a treatment for premature ejaculation.

Major pharmaceutical companies calculate the potential market for drugs to treat premature ejaculation could be worth £3bn a year. There is currently no clinically approved treatment available for the condition.