Stock Commentary - Europe - week to Oct 8, 2007

EUROPEAN: bourses, after generally moving higher for the first four reporting days to October 8, went into reverse on the last although leaving the markets in positive territory overall. The biggest gainer of the week was Karo Bio in STOCKHOLM, where the company's shares leapt 20.5% after it reported positive Phase II clinical trial data at two medical meetings on its cholesterol-lowering drug candidate KB2115. In PARIS, Sanofi-Aventis strongly outperformed the market with a 4.5% rise, fuelled by speculation that the US giant Pfizer was looking to buy the stakes now held in the leading French drugmaker by Total and L'Oreal (see page 28). FRANKFURT saw Merck KGaA regain its composure, with a 6.9% gain, after the previous week's 13.7% fall on concerns over the group's liquid crystals business. Bayer, however, dipped a further 1.9% on no particular news.

LONDON: share prices moved mostly in line with the rest of Europe, and the FTSE 100 closed the week up 0.5%. Irish drugmaker Elan rose 8.0% on the week, despite analysts voicing concerns about sales projections made by multiple sclerosis drug Tysabri (natalizumab) marketing partner US firm Biogen Idec. David Amsellem of Friedman Billings Ramsey initiated coverage of the stock with an underperform rating and a 12-month price target of $13 compared with its local price of 15.88 euros ($22.33). Vernalis was up 3.8% on the week, despite being one of the biggest fallers on October 2, after the firm and marketing partner Endo received a "non-approvable" letter from US regulators for their supplemental New Drug Application for the migraine drug Frova (frovatriptan; Marketletter October 8).