Monday, September 20, 1999
In an attempt to increase investor interest, the London Stock Exchange has devised a new mechanism to plug its high technology and biotechnology companies. Beginning in November, companies on the main exchange list falling under LSE's definition of high-tech will be highlighted in a new index called the techMARK.
At this point, 170 companies will be included in techMARK, including 28 biotech and three pharma companies. The companies will maintain their presence on other FTSE indexes, but companies trading on London's Alternative Investment Market (AIM) are not included.
The techMARK is intended to increase the visibility of technology companies to both institutional and private investors. According to LSE spokesperson Jeremey Hughes, technology companies will get attention because "fund managers tracking the techMARK would have to buy stock in all the companies in the index."
Indeed, David Porter of healthcare corporate finance at Nomura said the bank "would be interested in assisting fund managers establish tracker funds." As a result, he said, "if you are an emerging health care company, you will get some attention."
There also is speculation that bioinformatics companies may be able to take advantage of new changes to Chapter 25 of the LSE listing requirements that are intended to make it easier to list IT and internet stocks.
Otherwise, the prospects for new biotechs seeking equity in London continue to be governed by the LSE's Chapter 20 rules, which have undergone little change since 1993.
Nevertheless, according to Nomura's Charles Spicer, the techMARK represents the LSE's "change in attitude towards encouraging technology stocks" as a result of increasing competition from Nasdaq and the Neuer Markt, plus the desire to fit in with the U.K. government's emphasis on high-tech development.
Idec (IDPH) got back $14.188 (13 percent) to $119.625 on 2.7 million shares on Monday, helped by an upgrade by Merrill Lynch's Eric Hecht to "buy" from "accumulate" following the prior week's sell-off. But the stock rolled back down the hill, finishing Friday at $107.563, up $2.125. IDPH had plunged $27.062 (20 percent) to $105.438 in the previous week after CEO William Rastetter's comments at the NewsMakers in the Biotech Industry conference were interpreted to mean that the company would not meet the whisper target for sales of Rituxan for non-Hodgkin's lymphoma.
Marketing partner Genentech (DNA), also off the prior week, was down $12.50 to $155.50 on the week.