Celebrations for some

SCRUTINEER

ProStrakan

101.25p +3.25

Aggreko

616.5p -22p

IT WOULD seem an odd day to be breaking out the bubbly for a listed company, but news that Borders-based ProStrakan had yesterday been cleared for a US launch of Sancuso, a patch which treats the nausea associated with chemotherapy, was a pivotal and long-awaited moment.

Expected in May but delayed by staffing problems at the US Food & Drug Administration, approval for one of the company's potential "star" drugs gives it clearance to launch into the world's largest pharmaceutical market.

The relatively modest performance of ProStrakan shares yesterday had less to do with the state of the market – indeed, defensive sectors such as pharma typically rise in such conditions – than the fact that every analyst who covers the company issued notes yesterday reporting that they had told us this would happen (a couple did, however, think it was worth pushing up their target prices).

But the significance should not be understated. ProStrakan named two key events at the start of the year which would make it certain – or as near as can be – that the company would break into profitability in 2010.

First was the Europe-wide approval of Abstral, another drug (an oral treatment for a different form of pain associated with cancer) which Galashiels-based ProStrakan believes could one day give it revenues of $100 million a year.

Second was Sancuso, and while the skin patch may have the same sales or even less than Abstral (which is called Rapinyl in the US), the significance of the approval is certainly greater, as it gives ProStrakan a platform on which to launch, then grow, an American business.

The significance for Scotland in absolute terms may be insignificant in the short term.

ProStrakan is manufacturing the US stock of Sancuso across the Atlantic, while almost all of the additional staff related to expansion into North America are also based there.

However, in terms of achievement its impact is profound.

ProStrakan already has several drugs on sale, but all have been purchased from rivals midway through development or even after the drugs were launched.

Sancuso, though, has been built from the ground, dreamed up by the research team of what was then Strakan at least five years ago. More important to Scotland could also be the plans of ProStrakan's management.

Scotland has seen several notable failures in recent years in the listed pharmaceutical sector, while Axis-Shield, the profitable medical diagnostics company, appears to be shaping up for a sale in the next few years.

But Wilson Totten, ProStrakan's chief executive, has no plans for an exit, predicting that at least a large slice of future cash flow would be funnelled into licensing deals for additional treatments. Perhaps the company, which was last year forced to borrow cash because its shares were so out of favour, could now go on to become the medical sector major which many in Scotland have hoped to become, but none have achieved.

MEANWHILE, although the media on both sides of the Atlantic – and indeed both the financial and mainstream media – has been preoccupied with bigger stories, there were more signs of a benefit from the hurricane season to Aggreko, the temporary power supplier.

With Wall Street in freefall and the US elections in full swing, Hurricane Ike has not made a great impression in terms of media coverage.

But there are now reports in the US that the storm caused $10 billion in damage and left 2.6 million homes without power, with a destruction footprint of around 600 sq km across Texas and Louisiana.

This would make Ike the third-most expensive since the 2005 disaster wrought by Hurricane Katrina.

Aggreko has been at pains to point out how little of its profits now come from supplying power to disaster areas compared to five years ago, but it will now welcome the boost, after two years with no significant storms.

RBS forecast recently that the smaller Hurricane Gustav would have added £3 million to the Glasgow-based group's bottom line. Ike caused more damage over a larger area, so it could add significantly more.

This comes at a time when Aggreko's US business, previously its chief profit machine, is experiencing much lower growth, hit by its exposure to the housing and construction industry, a rare glitch on an otherwise remarkable recent rise.

Bryan Johnston of Bell Lawrie

ONE TO WATCH

Speymill

31p -1.5p

Scotsman says HOLD

SPEYMILL has three divisions: Speymill Property Group, which develops, invests and manages funds in real estate; Speymill Contracts, a specialist contractor working predominantly in the leisure, hotel and retail industry; and Goal, a German property manager in which Speymill acquired the outstanding 49 per cent share-holding in June.

Speymill Property Group's property investment management services operate through Aim-quoted residential vehicles, focussing on Macau and Germany. Speymill Contracts is a specialist contractor, with focus on the budget hotel and leisure sector. The company's management operations are not "deal dependent", its income based, instead, on a fixed 10 per cent value of the assets or equity under management. As a result, they do have defensive attractions even in these challenging times.

Speymill is hardly immune to the travails within the property sector. Moreover, it has a rather opaque ownership structure. It evolved out of the restructuring of the Wigmore Group.

Registered in the Isle of Man, it is controlled by Jim Mellon, the non-executive chairman, and Burnbrae, an Isle of Man investment group owned by Mellon. This may be one reason why the shares have been shunned by the market, falling from a peak of 120p last year to current levels.

Nevertheless, on fairly conservative forecasts Speymill's shares do not look expensive, on a prospective p/e of around six and a dividend cover, admittedly on a fairly mean yield, of ten. This could be a proposition on which to keep an eye.

• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

MARKET CHATTER

UBS – 'We have enough cash'

UBS last night sought to reassure investors that it had enough cash to face the fallout from Lehman's collapse and any future financial crises.

The Swiss bank's shares yesterday fell twice as much as the overall European banks' stock index, dented by media reports that it will have to write down another $5 billion (£2.8bn) on its "risky" investments in the second half of the year.

UBS said it was among the ten banks willing to establish a $70bn facility to bolster worldwide liquidity, which the bank said demonstrated it was comfortable with its liquidity base. UBS is the European bank hardest-hit by the global credit crisis.

It launched a rights issue in May worth $15.6bn to help rebuild its capital base. Its Tier 1 ratio stood at 11.6 per cent at the end of June.

SCOTS STOCKS

ProStrakan leads the way for the medical stocks on patch approval

PROSTRAKAN was one of the few Scottish risers on London's main market yesterday, boosted by the approval of its treatment Sancuso, clearing the way for the launch of US sales later this year.

Analysts had widely predicted approval, but Nomura Code's Samir Devani increased his "fair value range" by 20p to 150p-160p. Shares added 3.25p to 101.25p.

The traditionally-defensive medical sector appeared to be the place to be in London yesterday with retinal scanning company Optos bouncing back 5.5p to 130p and diagnostics kit company Axis-Shield adding 5p to 315p.

Elsewhere, Devro, the sausage skin maker, which has seen a sales boost in the UK this year, added 2p to 82p.

Outside the financial sector, oil companies dominated the fallers. Oil services major Wood Group pared back losses in the afternoon but closed down 6 per cent at 389.5p, while oil producer Dana Petroleum dropped 105p to 1,255p and Venture Production 5 per cent to 656.5p.

Melrose Resources slipped 6.5 per cent to 379p, while Aim-listed Bowleven eased 9.75p to 205.25p. Only Ramco, the Aberdeen-based exploration minnow, was in favour, closing up 1.25p at 59.75p.

SMALL BUT BEAUTIFUL

Firm in Coffeeheaven as it defies the credit crunch

COFFEE drinkers in central Europe do not appear to be feeling the credit crunch after Coffeeheaven International reported a 63 per cent surge in turnover in the year to 31 March to £16.4 million.

The group's loss before tax fell to £70,000, compared with £137,000 in its previous financial year.

Like-for-like sales grew by 16 per cent, down from 27 per cent in the previous year but ahead of the board's target. Coffeeheaven, which has a market cap of about £45m, opened 24 outlets in its past financial year, expanding into Romania and Hungary.

The company – which now has 90 stores in total, including shops spread across Poland, the Czech Republic, Latvia, Bulgaria and Slovakia – aims eventually to have 350 stores in central Europe.

Richard Worthington, the group's executive chairman, said: "To date we have experienced only a limited and localised effect from the world 'credit crunch' on our business.

"Sales growth in most of our markets remains robust and Coffeeheaven continues to improve market share."

Coffeeheaven added that its outlook for most of central Europe's economies remains "broadly positive".