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Nov. 19, 2004, 8:58 a.m. EST

FDA view roils drugmaker stocks

Currencies a market focus, Greenspan ahead

By Emily Church, CBS.MarketWatch.com

LONDON (CBS.MW) - The U.S. stock futures were holding the flat line early Friday as the weak dollar and pressure on the pharmaceutical stocks held investor attention.

Shares of European bellwether pharmaceutical stocks were setting the stage for more declines in the U.S. sector as the market continues to weigh safety concerns flagged by David Graham, a drug reviewer for the Food & Drug Administrator, at a hearing on Thursday.

London's AstraZeneca (NAS:AZN) led sector decliners, dropping as much as 8 percent. Sanofi-Aventis (NAS:SNY) was down 2 percent in Paris. GlaxoSmithKline (NYS:GSK) was down over 3 percent in London. See full story on Graham's comments and See AstraZeneca response

Dealers in London said shares of Pfizer (NYS:PFE) were marked at $27.86, little changed on the close. The stock has attracted volume of over 37,000 shares in the Frankfurt trade of U.S. stocks. Abbott Labs (NYS:ABT) was marked at $42.72, down from a close at $43.37. However, volume in ABT was light, they noted.

The FDA defended its approval of five currently-marketed drugs that Graham warned may be unsafe. Graham's testimony "does not reflect the views of the Agency," FDA official Steven Galson said late Thursday in a statement.

Grahman told lawmakers that AstraZeneca's cholesterol drug Crestor, GlaxoSmithKline's asthma therapy Serevent, Pfizer's arthritis drug Bextra and Abbott Lab's weight loss drug Meridian have been linked to serious side effects and that (OTC:RHHVF) acne drug Accutane should be under controlled distribution.

The euro was last at $1.3055 mark, nearing a record high hit Thursday despite calls from two German ministers for coordination by the world's leading economies on currencies. See story

The dollar selling picked up after Federal Reserve Chairman Alan Greenspan noted that the large size of the U.S. current account deficit means that at some point that foreign investors will have less appetite for acquiring dollar assets. The Fed chief was speaking at a conference on the euro in Frankfurt.

Focus stocks

Cap Gemini shares held up 4 percent in Paris even as the company denied a report in the New York Times that it's mulling a sell of its loss-making North American business. See more

Genentech (NYS:DNA) and OSI Pharmaceuticals said late Thursday that Tarceva, a drug used to treat locally advanced or metastatic non-small cell lung cancer, has been approved by FDA. Tarceva could be a competitor to AstraZeneca drug, Iressa.

OSIP shares dropped 6.6 percent in the speculative pre-open trade to $60.01.

Shares of Brocade Communications slipped 15 cents, or 2.1 percent, to $7.20 in pre-market trade after Piper Jaffray downgraded the networking company to "market perform" from "outperform" in a valuation call ahead of its fourth-quarter profit report set for release Monday.

PortalPlayer Inc., (NAS:PLAY) a fabless semiconductor company based in Santa Clara, Calif., priced its initial public offering at $17 per share.

UBS raised its Marvell Technology (NAS:MRVL) calendar 2005 revenue estimate but cut its expected earnings per share. The broker said it saw sales at the communications chip company rising $30 million to $1.45 billion, citing ongoing share gains and success with new products. But it added it continued to expect significant deceleration and cut its earnings per share forecast to $1.10 from $1.15.

Steven Theede, the president and CEO of Russian oil group Yukos , slammed the government's plans to break up the group by selling a 76.8 percent in its production unit after a government newspaper said bids would be accepted starting Friday starting at $8.6 billion. The asset has been estimated to have a value at between $14.7 billion and $17.3 billion.

"The sale is clearly illegal under Russian law, which states that non-core assets are to be disposed of first in tax settlement cases," Theede said in a statement. "The starting bid price bears no resemblance to the true value of Yuganskneftegas... What we are witnessing is, simply put, a government organized theft to settle a political score."

Advancis Pharma Friday said it plans to reduce its workforce by about 18 percent as part of some cost-saving initiatives. The Germantown, Md. developer of drugs for infectious diseases said the job cuts and other efforts to reduce operating expenses are expected to result in a reduction of more than $20 million in spending in 2005.

Shares of U.K. recorded music group EMI surged 8 percent. reiterated it sees a fall of between 0 percent and 4 percent for the music market as a whole - an improvement on 2003.

A euters Group PLC spokesman told MarketWatch tat the company had "no intention of changing" its position on Instinet (OTC:INGP) . In September Reuters Chief Executive Tom Glocer told investors that in the long-term Instinet was not seen as central to Reuters but that in the short-to-medium term, Instinet was doing well.

Oracle's (NYS:ORCL) hostile takeover bid for PeopleSoft (OTC:PSFT) appeared to be gaining momentum, with an estimated 37 percent of PeopleSoft's stock supporting the $24-a-share offer and PeopleSoft itself warning its employees that a majority of stockholders may tender their shares. Shareholders have until midnight Eastern on Friday to support or reject Oracle's hostile $9.2 billion bid. See story

Walt Disney Co. (NYS:DIS) reported higher income and sales for its fourth quarter, saying late Thursday that it was helped by growth at its media networks, theme parks and consumer product divisions.

Goldman Sachs Friday raised its 2005 earnings estimate for Disney to $1.24 vs. $1.18. "We recommend investors buy DIS shares, which we see as having 15 percent appreciation potential," Goldman said. Bear Stearns said that if the company's ABC division can continue to perform well and if a deal can be worked out with Pixar , COO Robert Iger is well-placed to replace Michael Eisner as CEO when he retires.

Sirius Satellite Radio (NAS:SIRI) late Thursday said former Viacom head Mel Karmazin is following shock jock Howard Stern to the satellite network. See more

SIRI spiked 16.5 percent in the speculative pre-open trade to $5.50.

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