The Week Ahead: The course of treatment isn't over yet for ailing SkyePharma

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The Independent Online

Not everyone is likely to have found the long Easter weekend restful. Just over a month after SkyePharma finally defused a shareholder revolt that led to the resignation of its long-time chairman, Ian Gowrie-Smith, the FTSE 250 drug company's new management faces fresh questions about its strategy.

"The business is going nowhere," said an industry source. "They desperately need to do a deal in the way of a merger." SkyePharma unveils annual results on Wednesday, the first under its recently shuffled management. Jonathan Senior, an analyst at Evolution Securities, estimates that the company will have to agree a major licensing deal or asset sale this year to avoid having to ask investors for more money.

The loss-making company is facing a raft of issues, and there are questions about whether the new managers are moving with sufficient urgency to address them. SkyePharma put itself up for sale last November after receiving an unsolicited approach, but failed to find a buyer. Shareholders, already angered by its chronic underperformance, the falling share price and its failure to find a partner for Flutiform, an asthma treatment it thinks could be a blockbuster, forced out the chairman in January.

Board member Jerry Karabelas was picked to replace him, and Frank Condella, formerly of drug maker Ivax, became chief executive. The company has agreed to appoint two new independent board directors.

The new executives have pledged to sell SkyePharma's San Diego-based injectables business, which is being auctioned by UBS and could fetch up to $100m (£57m). But most attention will be focused on Flutiform, and whether the company has made progress in finding a major pharmaceutical partner to fund its development. Said Mr Senior: "We're coming up on a decade of underperformance."

Sir Martin Sorrell, on the other hand, is expected to build on the momentum established by his media services giant WPP at its annual results when he unveils first-quarter results for the group on Friday. Sir Martin was criticised last week by Ron Berger, head of the American Association of Advertising Agencies, who said the industry would be better off with executives that were "less like him".

Even so, Sir Martin's group, which turned in improved growth rates and margins for 2005, is expected to release numbers for first three months that fall in line with earlier guidance.

Online gambling company PartyGaming is also expected to continue its recent roll, despite uncertainty about the effects of new US gambling regulations on its business. Dresdner Kleinwort Wasserstein expects the company to report $325m in first-quarter revenue, a 46 per cent increase onlast year.

Associated British Foods, meanwhile, is slated to reveal first-half results on Wednesday that will show the differing fortunes of its two businesses: the retailer Primark and British Sugar, which is facing a difficult business environment. The sugar business has been hindered by the EU's effort to bring supply into balance with demand, which led to a change in regulations to reduce supply. British Sugar's subsequent drop in sales has been exacerbated by rising energy prices that have increased input costs for the business.

"It has not been the greatest quarter in terms of share price," said Jeremy Batstone of stockbrokers Charles Stanley. "The company's response to the changed sugar regime will be interesting." He expects the company to report a pedestrian £260m in pre-tax profits, up a tick from £259m the year before. Analysts will also be keen for any kernels about the progress of its possible bid for a controlling stake in Illovo, the South African sugar producer. AB Foods has hired NM Rothschild to explore an offer.

British Sugar is not the only one that may feel the effects of higher energy bills. When the Office for National Statistics reveals the consumer price index and retail price index for March on Thursday, a mix of higher gas bills, more expensive petrol, higher council taxes and a price recovery on the high street after the sales season may begin to show through in the numbers. Most of these factors won't have started to bite until this month, said David Smith of Williams de Broë, but they will have had at least some effect by March.

On Tuesday, the Bank of England will publish the minutes from the Monetary Policy Committee's meeting last month, in which the rate-setting group held interest rates steady for an eighth consecutive month.

Stephen Nickell may be the odd man out again. The lone MPC member to have voted for an interest rate increase in February is expected to have voted the same way this time. His misgivings aside, many economists are betting rates will stay unchanged for the rest of the year.

Finally, Standard Life, Europe's largest customer-owned in-surance company, will unveil its demutualisation and listing plans on Tuesday, details of which will be sent out to shareholders ahead of a vote. The insurer's chairman, Sir Brian Stewart, will be presiding over a press conference at the London Stock Exchange. If the listing is voted through, it will be the largest in London for several years.

CALENDAR

Tomorrow 17

UK RESULTS: None scheduled. Easter Bank Holiday

Tuesday 18

UK RESULTS: (final) China Shoto, XL TechGroup; (interim) Abbey Gilt and Fixed Interest Trust

Wednesday 19

UK RESULTS: (F) ARM Holdings, BNB Recruitment Solutions, Skyepharma, Superscape; (I) Associated British Foods

Thursday 20

UK RESULTS: Genosis, Hunstworth, JJB Sports; (I) Millennium & Copthorne

Friday 21

UK RESULTS: (I) WPP

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