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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (13145)	9/27/2004 5:54:34 PM
From: Biomaven	Respond to of 52153

The SEC focus quoted in the story below is good news long term for the biotechs, although it may create some pressure in the short run. To some extent there is a clash between good scientific practice, which calls for disclosure of results only at scientific meetings and the needs of the financial community, which want the results immediately. Note that the SEC may to some extent be breaking new ground here in terms of requiring quick disclosure. (Maybe RCMac could comment). Biotechs under SEC microscope on drug disclosure Mon Sep 27, 2004 05:30 PM ET By Kevin Drawbaugh WASHINGTON, Sept 27 (Reuters) - Biotechnology companies are under U.S. regulatory scrutiny over their disclosure of information about drugs under development, people familiar with the matter said on Monday. Inquiries by the Securities and Exchange Commission have not risen to the level of an industry-wide probe, but the sources said a handful of investigations are under way. An SEC spokesman declined to comment. The biggest news in biotech is often the progress and results of clinical trials for experimental drugs, which are the backbone of applications to the U.S. Food and Drug Administration for marketing approval and can heavily affect a company's share price. The inquiries come amid increased pressure from Wall Street for good news on the biotech front, lawyers said. "The SEC has focused on disclosure with respect to the status of FDA trials more than they have in the past," said Jeffrey Baumel, partner at the law firm of McCarter & English LLP in Newark, New Jersey, who advises biotech firms. With fewer "story stocks" around since the technology and telecoms bubble burst, young biotech firms can come under intense pressure from the Street to provide positive news to support their share prices and hold investor interest. When a company decides to provide information on trials, it must do so "fairly and on an even-handed basis, which means you have to give the bad with the good," Baumel said. Often, difficulties arise when companies give information on a trial before it's over and fail to present the whole picture. "That's what leads to these problems," he said. The issue was highlighted by the insider trading scandal at ImClone Systems Inc. (IMCL.O: Quote, Profile, Research) ahead of the company revealing that the FDA had refused to review the company's application for its cancer drug, Erbitux, in December 2001. When ImClone publicly announced the rejection, executives painted the FDA's concerns as relatively minor. But portions of the FDA's rejection letter were later revealed to contain major concerns over Erbitux trials. Erbitux finally won FDA approval in February 2004 to treat colon cancer, but not before the scandal resulted in prison sentences for ImClone's founder, Sam Waksal. The SEC's increased interest in drug data disclosure also comes after it pledged in February to work more closely with the FDA on probing questionable disclosures. Transkaryotic Therapies Inc. (TKTX.O: Quote, Profile, Research) said in late July it and its former chief executive had received SEC notices of possible actions against them related to a probe of the FDA's approval process for the drug Replagal, which treats a rare genetic disorder. In January 2003, Transkaryotic failed to convince an FDA panel that Replagal could help patients. Transkaryotic faces shareholder lawsuits alleging it knew as early as December 2000 of FDA reservations about Replagal, but failed to tell investors about them until October 2002. Transkaryotic, which is approved to sell Replagal in other countries, has denied the accusations. The company said it was fully cooperating with the SEC. Biopure Corp. (BPUR.O: Quote, Profile, Research) has said it has been told by the SEC that it was considering civil action over concerns the company may have misled investors about the blood substitute Hemopure. A Biopure spokesman said it has cooperated and responded in writing to the SEC, saying it ought not initiate a proceeding. He said Biopure does not know whether any action will follow. © Reuters 2004. All Rights Reserved. Peter