Warner Chilcott tumbles on anti-depressant fears

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The Independent Online

Worries About Warner Chilcott's anti-depressant treatment Sarafem had a rather depressing effect on shares in the Northern Irish drug maker yesterday. The company, formerly known as Galen Holdings, saw its stock price retreat 15.5p to 599.5p as a plethora of stories about Sarafem swirled around the Square Mile.

Worries About Warner Chilcott's anti-depressant treatment Sarafem had a rather depressing effect on shares in the Northern Irish drug maker yesterday. The company, formerly known as Galen Holdings, saw its stock price retreat 15.5p to 599.5p as a plethora of stories about Sarafem swirled around the Square Mile.

Some raised concerns about possible effects on fertility while others were concerned about Warner Chilcott's patent dispute with the generic drug maker Teva. The level of interest among investors in the future of Sarafem should not come as a surprise. Analysts estimate that the product could account for up to 15 per cent of the company's valuation.

Despite the excitement of some in the City, Warner Chilcott was keen to stress that it knew of no reason for the share price weakness and that it had no new news on the future of Sarafem.

It should be noted that clinical research has shown no link between the drug and fertility. A court decision regarding the patent dispute with Teva is due soon and most analysts predict Warner Chilcott will win the case.

Elsewhere, news that the European Commission had approved the merger of Bertelsmann Music Group and Sony Music sent EMI 5.75p higher to 224.75p. Among those buying into EMI was the hope that the Commission is now more likely to allow the group to merge with Warner Music.

The FTSE 100 gained 18.3 points to 4,339.4 as US indices went higher in early trade on Wall Street. The mobile phone operator mmO2 firmed 1.75p to 89.5p as brokers tipped the group to post a solid set of subscriber figures today.

Shire Pharmaceuticals put on 9p to 445p with investors unconcerned by news that America's Food & Drug Administration has extended its review of Shire's Fosrenol drug by three months. Dresdner Kleinwort Wasserstein weighed on Wm Morrison, down 2.5p to 178.5p, after it slashed its price target on the stock to 190p from 240p. Cairn Energy dropped below the 1,375p price of its most recent fund-raising and closed 37p weaker at 1,353p. Technical analysts, who merely look at a company's share price chart without paying too much attention to its fundamentals, believe this is likely to spell further weakness in the stock short-term. They also said the same of lastminute.com, down 4p to 157.5p. The 159p level was a key technical support for the online travel group and it was breached yesterday.

Cable & Wireless dropped 2.25p to 113.75p amid slight nervousness ahead of today's first-quarter trading statement from the group. Market professionals are worried about the performance of C&W's UK business following Colt Telecom's profits warning earlier this month.

Elsewhere in the sector, Thus gave up 0.25p to 17p as ABN Amro returned from a meeting with the company in a rather downbeat mood. The Dutch broker warned that competition in the alternative carrier arena remains intense and revealed that its favourite player in the sector is easynet, unchanged a 94p.

The Innovation Group (TIG) dropped 1.5p to 24.5p after brokers placed a sell order for 7.25 million shares with a series of institutional investors at 21.5p. On Monday, shares in the software group were hit by rumours that Robert Bonnier, TIG's largest shareholder, was looking to sell down his stake. Whether the sell order belonged to the former Scoot.com boss was unclear, but if it was Mr Bonnier he will have to declare it by the start of next week.

At the last count he held 80 million TIG shares, or 18 per cent of the company.

Tadpole Technology dropped 0.75p to 11.75p amid talk that a number of punters have been forced to close contracts-for-difference positions in the software group by their brokers. Contracts-for-difference are a derivative offered by some brokers which allow investors to take a large position in a stock but only put up a fraction of the value of that position in hard cash. When that position goes badly against a punter (for example the stock collapses when the punter was betting on it rising) the broker can force him to close his bet and sell out of his holding in an attempt to prevent losses spiralling out of control.

The Australian winemaker Palandri closed 3p better at 29p after unveiling a new distribution agreement in Scandinavia. Darrell Jarvis, the company's chief executive, is believed to be in the City for most of this week to meet with various institutional investors and word has it the meetings so far have been a bullish affair. Palandri floated on AIM last month, when it raised £3.3m at 28p.

Oilexco added 14p to 111.5p on talk of positive news from the company before the end of the month. Finally, investors should look out for today's float by TRL Electronics. The defence electronics specialist has raised £10m at 130p and brokers expect the stock to jump to a good premium to this in its debut session.

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