Companies: APC    ARM    MOR    PTS    SPT   

In a month that saw the techMARK 100 dip below 600 points for the first time, there was good news at last for followers of Patsystems. The electronic trading software group hit the headlines in January after all but admitting its previous management had sold its wares too cheaply. At the time several analysts urged the company to wind itself up and return cash to shareholders. It now appears Pat is taking partial notice of this advice.

Business has picked up considerably of late. And with cash-burn rapidly slowing and around £17 million remaining in the bank, Pat has decided to return 8p or 9p per share to investors. The news boosted the company to a ten-month high of 12p.

Fresh warnings

Elsewhere the profit warnings continued to flow. Among those hardest hit this month were chip manufacturer ARM, network solutions business Azlan, integration specialist Morse and telecoms equipment leaser Spirent.

ARM was hit particularly hard as it produced third-quarter profits of £8 million – less than half those achieved in the second quarter – and revealed a 10 per cent reduction in headcount. The firm acknowledged: 'We do not anticipate any significant upturn in business activity before next year.' ARM was wrestled down 70 per cent on the month to 40.75p.

Azlan and Morse were also panned by the market (dropping 27 per cent and 36 per cent respectively) as they too warned of falling profits. The former says it expects a £2 million drop in first-half profits (to £6 million); the latter reported an £18 million fall in first-quarter sales to £93 million.

Usurping all these was Spirent, which collapsed from 52p to 11.4p thanks to news that 'in the third quarter conditions in the market remained challenging'. Second-half operating profits are now expected to be 'significantly lower' than the first half.

Biotech round-up

On a brighter note, there were plenty of positive developments among the constituents of techMARK's mediscience index.

Medical devices giant Smith & Nephew was the star, putting on 4 per cent as it outlined plans to acquire the remaining 50 per cent of its joint venture with US firm Advanced Tissue Sciences (ATS).

ATS is filing for bankruptcy and petitioning for Smith & Nephew to be sold the 50 per cent stake in Dermagraft, a tissue-engineering venture, for $12 million. Dermagraft's products are used to provide temporary skin covers for the treatment of diabetic foot ulcers and serious burns. They are expected to generate sales of $8 million this year.

At a much earlier stage in the development process, British Biotech and KS Biomedix also revealed welcome news.

British Biotech is on the verge of launching Phase l clinical trials of peptide deformylase inhibitor BB-83698, which may lead to a new class of antibiotics.

KS Biomedix has meanwhile been granted permission to begin Phase I/II trials of its KSB303 antibody, which is being developed to help fight pancreatic cancer. The trials — aimed at evaluating 'the safety, tolerability and maximum tolerated dose of the radiolabelled antibody' — will begin this month.

Finally, Powderject Pharmaceuticals, the world's leading independent vaccine company, has launched its yellow fever vaccine Arilvax in the Netherlands. The vaccine is aimed at the 3.5 million Europeans (250,000 of whom are Dutch) who travel to yellow fever-infected regions every year.

Looking forward

TechMARK is next month poised to lose two of its number when Advanced Power Components and Transware defect to Aim. Valued at a lowly £3.2 million, APC intends to make the switch on 12 November. Its directors have explained that, with its lighter regulatory load, the junior market is a 'more appropriate and cost-efficient' home for a company of this size.

E-learning localisation specialist Transware, which will move a day earlier, cited similar reasoning when it revealed its decision at the time of a recent full-year statement.

Spun out of Gladstone in 2001, Transware endured a mixed year. On the one hand, turnover rose 23 per cent to £12.8 million, profits (before plc costs) inched forward and major new customers including Avon Cosmetics, Dell and JC Penny were signed up. On the other, the directors had to pump more than £750,000 into the business to guarantee its future following problems with its bankers.