Market Report: Shire soars on upbeat talk of drugs in pipeline

An upbeat presentation from Shire Pharmaceuticals' boss Matthew Emmens at a health-care conference organised by Lehman Brothers sent shares in the group to the top of the FTSE 100 leaderboard yesterday.

An upbeat presentation from Shire Pharmaceuticals' boss Matthew Emmens at a health-care conference organised by Lehman Brothers sent shares in the group to the top of the FTSE 100 leaderboard yesterday.

Shire roared 42.5p higher to 604.5p as its chief executive highlighted its large number of late-stage pipeline products which are due to be filed with regulators in the next couple of years. And Shire will have no trouble funding its development thanks to a $1.5bn (£800m) cash pile. There was also bullish news from the company on the progress of its existing products.

Fosrenol, Shire's drug for people with kidney problems, has achieved a 15 per cent share of new prescriptions in the US after being on sale for just nine weeks. Mr Emmens is believed to have indicated that his company has seen no significant impact on Adderall XR prescriptions in the US after Canadian authorities withdrew it from pharmacy shelves in February on safety fears. Adderall XR, which treats children with attention deficit disorder, still retains a 25 per cent market share.

Shire expects a resolution on its appeal to Canadian authorities by early summer and is still hopeful the drug can return to the market by the end of the year. In terms of the group's pipeline, Mr Emmens indicated it has four new attention-deficit drugs in late-stage development and is convinced that each of them will find a niche in the marketplace without cannabilising its current offering.

Elsewhere, O ₂ gained 1.75p to 119.25p on rumours of a 150p-a-share bid for the mobile group from Deutsche Telekom. Deutsche Bank seemed to agree that a tie-up between the two would make sense. The broker takes the view that such a move would have regulatory issues but is convinced that they are surmountable.

Meanwhile, the FTSE 100, which had made a positive start to trading in the morning hitting 4,933, closed 6 points lower at a two-month low of 4,894.4. Dealers blamed the sudden retreat on a spike in the oil price. Comments from Goldman Sachs on the issue of crude did not help matters. The US broker argued that oil markets have entered a "super-spike" period that could see a Seventies-style price surge to as high as $105 a barrel. This, of course, would be great news for oil companies. Hence BG Group rose 6.5p to 411.5p, BP ticked 1.5p higher to 548.5p and Premier Oil soared 23p to 560p. Singer & Friedlander gained 8.5p to 280.5p on hopes that the Icelanders who already take up a big chunk of the merchant bank's shareholder register will soon takeover the whole group. At present they control a little below 30 per cent of S&F.

Game soared 12.5p to 89p on news the computer games retailer has received a takeover approach. Brokers reckon it is likely to be from either a fellow retailer such as HMV, America's Electronic Boutique or a private equity house. But Peel Hunt urged its clients to take advantage of the strength in Game's share price and reduce their holdings. The broker said: "Our underlying view is to sell into strength, as the upside for the stock from here is limited while the downside could be over 20 per cent."

Patientline gained 2.5p to 93p after Per Jonsson, its chief executive, disclosed the purchase of 50,000 shares at 91p. Ross Graham, a non-executive, bought a more modest 22,000 at the same price. Among the slew of cash shells floating yesterday was Sweet China. The company plans to invest in Chinese sweet producers. Its stock started trading at 35p and closed at 45.5p - a tasty premium on its first day of dealings.

Finally, an interesting situation seems to be developing at Prelude Trust, up 7.75p to 121p. Eurovestech, an activist investor, has disclosed a 4.5 per cent stake in Prelude, an investment company with £50m of funds under management, and word has it is looking to add to its holding. Eurovestech seems to be unhappy with the way Prelude is being run, particularly by the fact that the group's main investment, of £25m, is held in cash.

Eurovestech complains that the bulk of the interest earned on this cash is used by Prelude merely to pay the company running its investments, which incidentally is connected to some of Prelude's directors.

Richard Bertstein, Eurovestech's chief executive, said he is appalled that those managing Prelude get paid a 2.5 per cent management fee merely to put the company's money in the bank. He said: "With the total administration cost of Prelude Trust running at £150,000 per month, a significant proportion of which is directly attributable to the management fee, were are amazed the directors have not acted sooner to reduce this expenditure in the interests of all shareholders". Eurovestech, listed on AIM, rose 0.25p to 11.5p.