Dow Jones Newswires -- January 6, 1999
Chiroscience Shrs Up 4.7% On Press Tip, Zeneca
Rumor>U.CCC
By Michael Reid
LONDON (Dow Jones)--Shares of Chiroscience PLC (U.CCC) rallied 4.7% Wednesday on positive press comment and on speculation that a rival bid for Zeneca PLC (ZEN), which owns the marketing rights for Chiroscience's Chirocaine anesthetic, could yet preserve its links with the pharmaceutical major.
At 1212 GMT, Chiroscience shares were up 12 pence at 267.5 pence, having traded as high as 275 pence earlier in the session. Volume was about 305,000 shares.
Retail buying in small tranches was the key driver of the gain, with analysts citing an upbeat report in Wednesday's Daily Telegraph.
But also contributing is the persistent rumor that Zeneca's planned merger with Sweden's Astra AB (A) may be threatened by a rival bid. Among market participants Glaxo Wellcome PLC's (GLX) name has been mentioned, although most analysts think that tie-up is unlikely.
Zeneca told Dow Jones Newswires it won't comment on market rumors.
But if such a bid did emerge, it may solve Chiroscience's dilemma with Chirocaine, its long-acting local anesthetic licensed to Zeneca for marketing everywhere except Japan.
Zeneca, which has expertise in anesthetics, took on Chirocaine to compete with rival Astra's anesthetics stable of Marcaine and Naropin.
That was before it decided to hook up with Astra. Fears that Zeneca might therefore either not want, or not be permitted by regulators, to keep Chirocaine's marketing rights fueled a December markdown in Chiroscience's share price.
But now the rumor-mill has come a full circle. Drug stocks gained strongly Monday and Tuesday, sparking the rival-bidder rumor. Zeneca was among the risers; shares have added almost 6% since Monday's open. At 1212 GMT, Zeneca shares were changing hands at 2828 pence, up 54 pence on the day.
However, some observers reckon Zeneca's gains have been fueled by technical factors such as re-weightings by institutional buyers.
Glaxo Wellcome, which gained 8% Monday and Tuesday, was up a further 37 pence, or 1.7%, at 2256 pence, by 1212 GMT. SmithKline Beecham PLC (SBH), which gained 5.6% to Tuesday's close, was up 17 pence at 904 pence.
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