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            B R E A K F A S T   W I T H   T H E   F O O L
                     Monday, October 9, 2000

benjamin.rogers@enron.com
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"Business, you know, may bring money, but friendship hardly ever
does." -- Jane Austen


SMITHKLINE TO BUY BLOCK DRUG
The big British drug maker bolsters its consumer business.

By Tom Jacobs

British-based drug producer SmithKline Beecham (NYSE: SBH)
announced today that it would swallow New Jersey's oral products
maker Block Drug (Nasdaq: BLOCA) for $1.24 billion. SmithKline
will pay $53 a share for Block, which closed Friday at $50.63,
up 0.75%. SmithKline ended the week at $67.44, a mere 5% under
its 52-week high.

SmithKline is expanding its consumer business while competitors
such as Bristol-Myers Squibb (NYSE: BMY) are shedding theirs to
focus on drugs. SmithKline already earns one-third of its
revenues from consumer products, which include Aquafresh
toothpaste, and now adds Block's Sensodyne toothpaste and
Polident denture cleaner brands. Commentators speculate that
SmithKline is keeping a consumer division to better deliver
non-prescription versions of its own drugs that have lost patent
protection, or that the Block buyout better positions SmithKline
to spin off its consumer division.

At the same time, the British drug powerhouse is pushing into
genomics: It has joined a new public-private consortium to fund
efforts to decode mouse DNA within the next six months. The $53
million Mouse Sequencing Consortium includes SmithKline,
Affymetrix (Nasdaq: AFFX), the Merck Genome Research Institute,
the U.S. National Institutes of Health, and the British-based
Wellcome Trust. Like its sibling the SNP Consortium, the Mouse
confab hopes to speed genomic data into the public domain.
Celera Genomics (NYSE: CRA) and other companies are competing to
sequence the mouse genome and SNPs (single nucleotide
polymorphisms) to sell in proprietary databases.
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Surrounding these events is the pending merger of SmithKline
with larger drug maker Glaxo Wellcome (NYSE: GLX). The two await
regulatory approval to create the world's second-largest
pharmaceutical firm with a $180 billion market cap. Perhaps
because of their experience -- the Federal Trade Commission has
delayed the merger twice and now won't rule until the end of the
year -- SmithKline hasn't announced a target date to close the
Block deal.
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NEWS TO GO

Reuters reports that General Motors (NYSE: GM) and Fiat are
joining forces for talks to purchase some or all of ailing South
Korean car maker Daewoo. Daewoo Motor is one of 12 units of
Daewoo Group, which creditors rescued in August and seek to
shore up. Ford beat out GM in June for exclusive talks with
Daewoo, but Ford ended negotiations in September. GM and Daewoo
Motors have been around the block before -- several times. Their
15-year alliance ended in 1992.

City delivery speedsters Kozmo.com and Urbanfetch.com are
talking a Kozmo buyout again, according to The New York Times.
Kozmo has not been the most ardent suitor: It sued Urbanfetch
before it opened last year and settled out of court. The parties
have bailed from previous talks at the last minute. The Times'
sources state that the new company would hope to go public in
the next year -- if the Internet IPO market turns up.

Facing tomorrow's announcement of latest quarter earnings,
biotech drug maker Biogen (Nasdaq: BGEN) licensed five new drug
targets from genomics drug discovery company CuraGen (Nasdaq:
CRGN). Biogen has been criticized for the weakness of its drug
development pipeline, and the CuraGen deal gives Biogen a jump
start at the early stages of the pipeline -- five targets
against which to test possible drug candidates. Biogen also
announced a management realignment Friday.

A new gene bank, the First Genetic Trust, will open to allay
people's reluctance to share their genetic data with
researchers. Arthur Holden, chair of the SNP Consortium and
Mouse Consortium (see lead story above), will form the bank with
David Wang, former head of genomics and bioinformatics at
Motorola (NYSE: MOT), and Andrea Califano, former computational
biology director at IBM (NYSE: IBM). The bank would perform two
main functions designed to keep individual information private,
assuage fears that information could be used to deny employment
or insurance, and increase efficiency. The bank would provide
analysis results to researchers, but not the individual genetic
data, and patients could authorize the bank to give their
doctors access to a patient's DNA account for prescription
purposes instead of having to test patients each time.
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