Stock Commentary - Europe - week to Feb 19, 2007

EUROPEAN: bourses were all significantly stronger for the reporting week to February 19, but there was a very mixed performance for the drug sector. On AMSTERDAM, where the market was up 1.1%, DSM slumped 9.0% on the week (having fallen 10.6% on February 14) after reporting 2006 results (see page 5), when the company warned of a forthcoming operating profit decline, and speculation that the mainly chemicals group might shed its penicillin business. Solvay met with a 7.6% drop on the BRUSSELS bourse, also after posting figure which, though good on the surface (see page 4), were weaker than had been expected. PARIS saw a further decline in Sanofi-Aventis, down 1.9%, after the firm posted what were seen as disappointing 2006 results. although these were somewhat overshadowed by news of a further delay in the USA for the firm's anti-obesity drug Acomplia (rimonabant; Marketletter February 19). Also, Sanofi-Aventis' R&D update failing to enthuse investors. In FRANKFURT, little Evotec leapt 11.6% ahead of its R&D presentation, while Merck KGaA rose 5.6 and Bayer dipped 1.1%.

LONDON: share prices edged higher, with the FTSE 100 settling up 1.4% on the week. Acambis continued its strong climb, rising a further 9.6%, after the previous week's news that Goldman Sachs had upped its stake in the firm. There was a rise of 6.1% for Alizyme, despite no actual news on pending licensing deals such as for its anti-obesity agent cetilistat, a gastrointestinal lipase inhibitor. Among the drug majors, GlaxoSmithKline gained 2.3% on an upgrade from Collins Stewart and AstraZeneca edged 0.9% higher, both following results.