Stock Commentary - Europe - week to Feb 26, 2007

EUROPEAN: bourses put in a mixed performance for the reporting week to February 26. In the drug sector, the strongest showing came from Fidia in MILAN, where the stock bucked the market's downturn, leaping 24.3% after the company reported a return to profit, with 2006 sales up 6%. FRANKFURT saw Bayer rise 1.0% after Dresdner Kleinwort analysts downgraded Danish group Novo Nordisk, recommending its investors to switch to the German company, noting also that Bayer is free of major patent expiries over the next few years. In ZURICH there was a significant underperformance by most drug stocks, with Actelion falling 5.9% - largely on profit-taking but also due to the firm's cautious guidance (see page 5), Roche down 3.4% - impacted by news of a halt on a Phase III trial of its anemia drug (see page 23) and Novartis declining 2.9%. The latter was hurt by a second "approvable letter" from the US Food and Drug Administration, requesting a further clinical study on its antidiabetes drug candidate Galvus (vildagliptin) with analysts now seeing the product's launch in the USA delayed to early-2009 (see page 18).

LONDON: share prices ended in fairly good form, but the FTSE 100 was down a slight 0.2% on the week. Alizyme maintained its forward momentum, rising a massive 18.7% on the week, as the obesity drug developer attracted some positive press comment and several of its directors increased their holdings in the firm. Shire gained 5.9%, after saying it would buy US development partner New River (for $2.6 billion in cash) as well as reporting strong 2006 results (Marketletter February 26). Elan fell 8.5% to 10.20 euros despite reporting a downturn in its loss (see page 5).