Stock Commentary - Europe - week to Sept 17, 2007

EUROPEAN: bourses started the reporting week to September 17 with a strong rebound after the dismal showing the previous week, which had been heavily impacted by credit crisis woes. However, these returned, to see markets decline on the last two reporting days, but still leaving the leading ones up overall. FRANKFURT saw a good deal of activity in the pharmaceutical sector. Merck KGaA jumped 5.9% on September 11, after reporting good Phase III data for the use of its Erbitux (cetuximab) in the treatment of advanced, non-small cell lung cancer (Marketletter September 17), and closed with week with a 5.3% gain. Evotec was down 2.7% on profit-taking, after its previous week's 9.1% rise on news of the sale of its chemicals unit to USA-based Aptuit for $64.0 million. The German firm's decision to buy Renovis for $152.0 million in a stock deal came to late to impact the current share movement (see page 4). In PARIS, Sanofi-Aventis underperformed, with a 0.7% rise. The small overall increase was despite the stock dipping on the last day, after the company's R&D presentation, which included disappointing news for its anti-obesity drug Acomplia (rimonabant) and Alzheimer's drug xaliproden (see page 19).

LONDON: saw the week's star performer, XTL Bio, rocketing 37.5%, after the company initiated a Phase IIb trial of its diabetic neuropathic pain drug candidate bicifadine (Marketletter September 17). Phytopharm fell 11.5%, despite news of the discontinuation of xaliproden, a potential competitor for its Cogane (PYM50028; see see above). Analysts at Edison said the demise of the Sanofi drug could inject uncertainty over the mechanism of action of this class of products.