Market Report: Shire’s shares dip as wait for US drug approval goes on

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The law of averages suggests that Shire shareholders must be due some good news soon.

The Irish drugmaker slipped 80p, or 1.8%, to 4431p when the US Food and Drug Administration asked it for another clinical study on its dry-eye drug Lifitegrast.

UBS analyst David Evans said the delay in giving the green light was “no big surprise” and always expected the approval to hinge on the results of its phase-3 study which are due before the year is out.

He estimates Lifitegrast could be worth $2 billion (£1.29 billion) in sales to Shire, making it worth £8 a share to investors.

Shire’s share-price decline means it will have to beef up its all-share bid significantly to win over US rare-disease firm Baxalta’s hard-to-please board.

Last week rumours were swirling that Shire was eyeing another company, Radius Health, should the Baxalta deal fall through.

Shire’s decline was trumped by mining stocks, including Anglo American, 29.5p lighter at 645.8p, and Glencore, 3.45p weaker at 112.55p.

They were hurt by industrial woes in China which overrode a better-than-expected third-quarter GDP growth of 6.9%.

The mining sector’s slide dragged the FTSE 100 into the red, which was down by 14.91 points to 6363.13.

Traders shelved shares in Associated British Foods, down 24p at 3284p, after boutique broker Berenberg downgraded it from buy to hold on the back of a strong share-price performance by the Primark owner.

“We remain confident about the group’s long-term potential, in particular from the roll-out of the Primark concept across Europe,” said Berenberg, which added that the continental expansion could be worth 2750p a share to the group which has also just launched in the US.


Allied Minds returned to the bottom of the mid-cap index, falling 20.9p to 422.6p and ending a three-week rally from the business incubator, which came under attack last month from US short-seller Kerrisdale.

RPS Group was 1p firmer at 238.75p even after Liberum Capital cut its annual earnings forecasts for the engineering consultancy from a 5% fall to a 10% slump.

Among the tiddlers, LGO Energy, 0.38p, or 45%, to 0.47p as it abandoned its latest well in Trinidad.

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October 19, 2015 |
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