This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ASCO Cracks Down on Drug Research Leaks

The American Society of Clinical Oncology is taking steps to clamp down on the selective disclosure of nonpublic research data prior to its big cancer meeting in May.

This is a significant step for the medical group, which runs one of the most important and closely watched scientific meetings of the year. Shares in biotech and pharmaceutical companies rise and fall based on drug research results presented at the ASCO annual meeting, slated this year to run May 18-21 in Orlando, Fla.

As TheStreet.com reported extensively last year, ASCO members and Wall Street insiders get early access to preliminary, but still market-moving, information contained in research abstracts. And they use that advantage to trade before the general investing public has any inkling of what's happening.

As a nonprofit organization, ASCO is not subject to Regulation FD, which the Securities and Exchange Commission designed to quash selective disclosure of market-moving information. But as this year's meeting approaches, ASCO officials are acknowledging for the first time that its previous policies ran counter to the spirit of the law, and they're trying to do something to stop it.

Whether ASCO will be successful is still an unanswered question.

New Confidentiality Policy

ASCO will not comment on its new policies, but TheStreet.com has obtained a letter written in February to all companies that have submitted research for the annual meeting.

In the letter, ASCO acknowledges that information contained in its research abstract book has been distributed and publicly discussed prior to the meeting. To stop this, the group is instituting a new confidentiality policy that will govern the use of abstract information. ASCO is also prohibiting the dissemination of any abstract reprints before the meeting.

"Recently, the Securities and Exchange Commission has stepped up its efforts to ensure that nonpublic research data is not selectively released," the letter begins.

After detailing the above-mentioned changes, the letter ends by stating that, "although ASCO is not subject to the new SEC regulations regarding fair disclosure, this change does help to align our Society's policies with the spirit of those SEC regulations."

Laura Livingston, ASCO's deputy director of communications, confirmed the letter but would not comment on its contents, including providing specifics on the new confidentiality policy.

"We will make these changes public after we've communicated them to our members," she says. ASCO expects that to happen by mid-April, when research abstracts will be released to people who have preregistered for the annual meeting.

Will It Work?

Without knowing how strict ASCO's confidentiality clause will be, it's hard to judge the effectiveness of the new policies. For instance, it's not known whether Wall Street analysts will be prohibited from writing research reports that recommend stocks of presenting drug companies based on information they get from the research abstracts.

In past years, ASCO has allowed this practice to go on unfettered, allowing the institutional clients of investment banks to get a leg up on ASCO stock tips.

But at the same time, ASCO prohibits the media from publishing research abstract data before the meeting, and it even extends this embargo to any information gleaned from analyst reports. Last year, TheStreet.com was barred from attending ASCO's meeting after writing about ASCO research data contained in Wall Street analysts' reports.

This restrictive policy is still in place this year, and TheStreet.com has been warned by ASCO that it may be barred from the upcoming meeting if it once again reports in advance on what Wall Street analysts are saying about "embargoed" ASCO research.

And no confidentiality policy, no matter how strict, will stop aggressive fund managers from gaining access to the ASCO information. This year's meeting is still two months away, but buzz is already building. It's been a tough year in the drug and biotech sectors, so many fund managers see ASCO as an even more important catalyst for the second half of the year. Companies like Genentech, ImClone Systems, AstraZeneca and Cell Therapeutics (CTIC) are all expected to release important new cancer drug research at this year's meeting.

In years past, ASCO has published its research abstracts online, available only to its members. But passwords to the private site are very easy to come by for savvy buy-side fund managers. They're not so easy to get for the average investor.

To get around this problem and level the playing field, other medical research groups such as the American Society of Hematology, the American College of Cardiology and the American Association for Cancer Research make research abstracts for their meetings open to everyone via public Web sites.

ASCO's Livingston would not comment on whether her group is considering this approach this year.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,083.80 -2.83 -0.02%
S&P 500 1,987.98 +0.97 0.05%
NASDAQ 4,472.1080 -1.5890 -0.04%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs