Lipoxen leaping as it gets investors’ swine flu vote

Mickey Clark
30 Apr 2009

AIM-listed tiddler Lipoxen has been elected by stock-market investors to lead the global fightback against the deadly swine flu virus.

As a result, shares in the biotechnology specialist more than doubled in value from 7p to 17½p on turnover of more than five million shares, hiking its stock-market price tag from
£8.3 million to almost £20 million.

Lipoxen claims that one of its vaccines could be adapted speedily to combat swine flu. It has been established that the vaccine already creates an “enhanced level of immunity in animals” against a strain of the N1H1 virus, a similar strain to swine flu.

The group points out that the vaccine has still to be clinically tested as to its effectiveness against the virus which has claimed more than 100 lives in Mexico and the US. But it insists that it is suitable for a pandemic because it could be 10 times more effective than previous versions.

Singer Capital Markets points out: “The company is in licensing discussions. It is possible that in an emergency development could be accelerated although, in reality, it's likely to be some time away from the market.”

Another company hoping to take advantage is PuriCore, up 5¼p at 17p. It claims its Sterilox sanitation technology is known to work on the virus. Elsewhere in the sector, Oxford BioMedica was unmoved at 10.75p after Cannacord Adams repeated its buy rating, but dropped its target from 18p to 12p.

The shares generally took their lead from a strong performance by Wall Street overnight and in Asia this morning. Again, stock-market bears were feeling the squeeze in a market short of liquidity. The FTSE 100 index rose 83.41 to 4273. The wider FTSE 250 index was 225.82 higher at 7583.8. Britain's High Street lenders were back in the spotlight after one of their number claimed the road to recovery may be a bit smoother than first thought.

The broking arm of Royal Bank of Scotland expects all the major banks, with the exception of Lloyds Banking Group, to return to profit this year.

Dealers say that should not prove too difficult with the banks borrowing money off the Government for next to nothing and lending to homebuyers and small businesses at significantly higher rates. Any fool can make money in that sort of environment, they argue.

RBS has downgraded Lloyds, 11.4p higher at 114.9p, from hold to sell and slashed its target from 105p to 85p. It is forecasting Lloyds to emerge from the bad-debt cycle with a capital surplus of £10 billion, once it has been able to separate the wheat from the chaff, or the toxic debt from those loans likely to be repaid. But it warns a “large chunk” of that surplus may be retained by tougher regulatory requirements, or reclaimed by a Government-imposed windfall tax.

The broking arm also refuses to rule out the need for further fundraising at Barclays, up 27½p at 284p, after briefly topping 300p for the first time since October, last year. It came after RBS raised its rating on Barclays from sell to buy and jacked up its target from 110p to 300p following its impressive outperformance in recent weeks.

RBS has repeated its sell rating on HSBC, 16p firmer at 481¼p, another bank which avoided the Government's toxic-asset rescue scheme, while lowering its sights on the shares from 450p to 400p. Shares in RBS rose 5.4p to 42.2p.

The life assurers joined in the fun along with the banks and continued to claw back recent losses. Legal & General rose 5.5p to 57.1p, having struck a low of 23p last month. There were also gains for Aviva, up 20p at 315p, and Prudential, 19½p better at 392¾p. Worries about the solvency levels have undermined sentiment and led to fears the lifers would have to make cash calls.

The 13% drop in first-quarter profits to £690 million at BG Group got the thumbs-up from the market, which had been expecting a much worse performance. The shares responded with a rise of 36p to 1113p. Collins Stewart has responded to the outcome by raising its target from 1150p to 1300p.