Newspaper article The Evening Standard (London, England)

Glaxo Gets Broker's Vote amid AstraZeneca Doubts; MARKET REPORT

Newspaper article The Evening Standard (London, England)

Glaxo Gets Broker's Vote amid AstraZeneca Doubts; MARKET REPORT

Article excerpt


THE decision by AstraZeneca to pull the plug on its new anticoagulant Exanta may have highlighted management shortcomings with implications for the future.

That is the conclusion of broker Collins Stewart, which is urging clients to switch into rival GlaxoSmithKline for the next drugs pipeline success story.

It has pencilled in a price target of 2000p, for Glaxo, more than 500p above the current value of the shares.

Collins Stewart says the writing had been on the wall about Exanta for some time. The US Food and Drug Administration had already rejected the drug because of the high levels of toxicity it created in the liver when used long-term, and sales in other countries had been minimal. But it had continued to pursue openings for the drug in other world markets and that had demonstrated organisational issues within the group which are "still endemic".

Exanta was a blood-thinner hailed as the successor to Warfarin, which had been around for more than 50 years and is still widely used in the treatment of atrial fibrillation, or irregular heartbeat, as well as cardiac surgery and joint replacement, where there is a high risk of stroke in the days after surgery.

In the early days, analysts were forecasting sales in the region of $3 billion. Collins Stewart said it had always taken a cautious view of prospects for Exanta because of its high risk and safety margin, which made its use too narrow for approval.

The same argument may also apply to four of the current six phase three projects being developed by AZ. These include its Galida diabetes treatment NXY-059 for use against strokes, Zactima and Atherogenics.

Colt Telecom was marked lower after broker Dresdner Kleinwort Wasserstein downgraded its recommendation from buy to hold while maintaining its 70p price target. It reckons all the group's expectations are now in the price, but does expect further benefit from cost-cutting while a big short position in the shares could squeeze the price higher.

Deutsche Bank has cut its rating on Balfour Beatty from buy to hold with a 372p price target. It believes the shares are now fully valued on a sum-of-the-parts basis ahead of results next month. …

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