Executive Business Briefing
www.upi.com From the Business & Economics Desk Published 1/29/2003 6:47 AM
Here is a look at more of Wednesday's top business stories:
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Arthritis drugs 'examined for cancer risk'
WASHINGTON, Jan. 29 (UPI) -- Federal regulators and medical experts are reportedly re-evaluating a new generation of arthritis drugs to find out if they increase the risk for cancer.
The review, according to marketwatch.com, a financial Web site, "could shake up the multibillion-dollar market for treating millions of rheumatoid arthritis patients." It said it has learned that the Food and Drug Administration has scheduled a review meeting for March 4-5.
It said FDA officials wouldn't say much about the meeting and refused to disclose what the review of drugs from Abbott Labs, Amgen and Johnson & Johnson would cover. But analysts -- and Amgen's head of research and development, who spoke about the issue in the company's fourth-quarter conference call -- said the agency "is looking at a possible link between the rheumatoid arthritis therapies and a form of cancer called lymphoma."
Agency officials, the site said, "declined to talk about what data they have regarding a potential link between the arthritis drugs and cancer."
The drugs involved are Amgen's product, Enbrel: J&J's drug, Remicade, and Abbott's medication, Humira. If they're found to pose equal risks, according to marketwatch.com, sales might not be affected even if the FDA orders strong lymphoma warnings on their labels. Pharmaceutical analysts said doctors would still prescribe them because there are no real alternative treatments for rheumatoid arthritis.
But things would be different if only some of the drugs carry a risk. "Any perceived safety advantage could shake up the balance of power in the high-stakes battle for rheumatoid arthritis patients. Enbrel and Remicade have been available since the late '90s, and both drugs hold significant market share," said the site. "The newest entrant is Humira, approved by the FDA on the last day of 2002."
It added: "All three drugs are considered crucial to the future profits of their makers."
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Kmart job cuts larger than indicated
DETROIT, Jan. 29 (UPI) -- Kmart Corp. has won approval from a court in Chicago to close more than 300 stores, and new documents in its bankruptcy case show that its financial collapse will cost 67,000 employees their jobs.
That's far more than the discount retailer had indicated until now, the Detroit Free Press reports Wednesday. Previously, the article says, Kmart said that 22,000 employees were pushed out of work when the company closed 283 stores shortly after declaring the largest retail bankruptcy in history a year ago.
In court records filed in Chicago, it said, Kmart indicated that as of Jan. 21, 32,000 workers had lost their jobs with the Troy, Mich.-based discounter in the first year of its bankruptcy. Another 35,000 will be unemployed when Kmart closes as many as 318 more stores by March.
U.S. Bankruptcy Judge Susan Pierson Sonderby approved Kmart's latest store closing plan on Tuesday, as well as a $2 billion revolving loan fund to provide the cash it needs as it seeks to emerge from bankruptcy by April 30, it said.
Going-out-of-business sales will begin Thursday as Kmart sells off as much as $1.8 billion in inventory at the 318 stores on its list, the Free Press said.
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Rural wireless operators to restructure
NEW YORK, Jan. 29 (UPI) -- Almost a dozen companies in the regional and rural wireless communications sector, which took on nearly $13 billion in debt when their revenues and valuations were much higher, might soon need fiscal restructuring.
Bankers say that this is likely for more than one reason -- but mainly because of rising leverage multiples as these companies' revenue plummets. Many of these firms' debt securities are trading at deep discounts -- 60 cents on the dollar or less, in some cases, according to Corporate Finance Week.
It said bankers cited "American Wireless, Centennial Communications, Dobson Communications, Leap Wireless, NTELOS, Rural Cellular Corp. and Sprint affiliates Airgate PCS, Alamosa PCS, Horizon, UbiquiTel and US Unwired as companies they expect to see involved in restructuring either out of court or following bankruptcy filings."
CFW said the 11 companies' revenue, by some measures, was down as much as 25 percent to 30 percent over the past two years.
CFW is published by the Institutional Investor group.
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Sell-off makes many oil shares attractive
NEW YORK, Jan. 29 (UPI) -- They got something of a respite on Tuesday, but up till then, big oil stocks were headed lower.
Shares in some of the so-called "supermajors" are trading at levels not seen since 1999, when oil was heading toward $10 a barrel. But now oil is $32 and natural gas is at nearly $5.50. The sell-off has been "straight out of the Big Portfolio Manager Playbook," the Wall Street Journal says Wednesday.
"Most investors think oil prices have nowhere to go but down." Most seem to think that problems in Venezuela will be resolved and that the United States will "go into Iraq on a Friday night, be in Baghdad on Monday and pumping Iraqi oil to the world by Tuesday," the newspaper says.
If that's what really happens, oil prices will fall, just like after the Gulf War, perhaps to the low 20s or below. And if world economies continue to stall, oil will plummet further. "Believing that scenario, you sell big oil now to be ahead of your peers. Except that the sell-off in the stocks already has taken place," the newspaper said.
The implication for investors: Big Oil stocks look attractive, such as BP or Royal Dutch Petroleum. Exxon Mobil is expensive. And "some of the mini-supermajors, such as ChevronTexaco, are worth a look, as is ConocoPhillips, which reports Wednesday."
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SEC finds 1,600 securities crimes since 1998
NEW YORK, Jan. 29 (UPI) -- Almost 1,600 brokers, dealers, investment advisers, bankers, attorneys and accountants were caught violating U.S. securities laws from 1998 to 2001, according to the Securities and Exchange Commission.
Most of the violations were committed by individuals associated with broker-dealers, but companies and investment advisers were also frequently involved, the Financial Times reports Wednesday.
It said that the most common offenses involved equity and debt offerings. Next came fraud against broker-dealer clients. There were also many cases of poor disclosure and market manipulation.
The SEC issued 782 permanent injunctions and 730 civil penalties that totaled $226 million. But only $78 million of that has so far been collected.
Disgorgement, under which "ill-gotten gains" are ordered to be returned, involved 673 cases and amounted to $799 million.