Stock Commentary - Europe - week to June 12, 2006

EUROPEAN: bourses had a roller coaster reporting week to June 12, with all the markets tracked ending significantly lower. FRANKFURT saw the most activity in the pharmaceutical sector, where Merck KGaA, down 11.0%, started buying Schering AG (+0.9%) stock ahead of Bayer's closing date for acceptance of its 86 euros-a-share offer for Schering. Bayer, which fell 6.0%, also bought Schering shares on the open market, in the hope of gaining the 75% acceptance it needed for the acquisition to go through. The net result, after this reporting period, was that Merck agreed to sell its acquired Schering shares to Bayer, but for 89 euros each (see page 2). In BRUSSELS, there was a 1.7% rise for UCB, after the company's chief executive, Roch Doliveus, put out a positive statement to shareholders saying that "2006 should be another year of continued solid sale growth," as well as substantial re-investment in the firm's "promising future."

LONDON: share prices suffered along with the rest of Europe, with drug stock also mainly lower. Of the majors, AstraZeneca managed a tiny 0.4% rise, while GlaxoSmithKline dipped 0.9 . The worst performance by far came from Alizyme, which moved lower throughout the week to end with a 22.8% decline. Elan fell after the US Food and Drug Administration agreed to the market come-back of the firm's multiple sclerosis drug Tysabri (natalizumab), but with label warnings (Marketletter June 12). The stock rose after the firm set a price for Tysabri some 20% above analysts' expectations, but still ended the week down 17.0%. Antisoma fell a further 14.5% after Roche returned development rights on two of its drugs.