As research abstracts for the upcoming American Society of Clinical Oncology annual meeting continue leaking across Wall Street trading floors, ASCO officials expressed dismay Thursday that efforts taken to stop such practices from occurring haven't been successful.
"ASCO has been made aware that there has been some investment activity in recent days related to possible leaks of abstracts. We in no way condone the use of abstracts for such purposes," said ASCO communications director Kristin Ludwig.
As reported Wednesday, shares of
slumped because an ASCO research abstract that detailed results from a study of Erbitux in colon cancer was leaked to select investors this week.
Per ASCO rules, abstract data is supposed to remain confidential until the meeting, which starts June 1.
has been similarly affected. The stock fell for the fourth straight day Thursday as results from a phase II ovarian cancer study of its VEGF drug were shared by investors who ginned up early access to the ASCO abstracts. ASCO began mailing abstract books to its members last week.
Regeneron's VEGF Trap is seen as a potential competitor to
( DNA) blockbuster cancer drug Avastin, so investors have been eagerly anticipating the VEGF data to compare it with results seen in a similar Avastin ovarian cancer study released last year.
Regeneron fell $1.66, or 6%, to $24.07 Thursday. For the week, the stock has lost 15% of its market value.
ASCO's Ludwig says her group has taken strong steps to warn and prevent its members from sharing research abstracts. Each book mailed to members is shrink-wrapped with a sharply worded confidentiality statement that ASCO members are prohibited from sharing clinical data contained in the abstracts -- or from trading on that information on their own behalf.
"ASCO members are ultimately responsible," says Ludwig. "Members or anyone else using the abstract books in an unethical way should remember that the
Securities and Exchange Commission
governs this kind of information. Anyone who breaches these agreements is violating SEC rules and is at risk of prosecution."
But Ludwig says ASCO has not been in contact with the SEC to discuss the abstract leaks, nor have regulators contacted them.
Dr. Mark Ratain, a professor of medicine at the Cancer Research Center of the University of Chicago, says ASCO's underlying distribution policy -- granting access to important cancer research data to its members while keeping the information away from the public (and investors) -- is largely responsible for the leaks.
"If we were only dealing with Big Pharma companies, where this kind of information might not be material
to a company's revenue, it wouldn't be such an issue," says Ratain, a practicing oncologist. "But now that biotech companies have become the dominant players at ASCO, these research abstracts have to be considered material and nonpublic information. This creates a huge problem, a huge liability risk both civil and criminal, for anyone who receives the abstracts."
Ludwig says ASCO has thought about making the meeting abstracts available to everyone, but the group decided against it because of fears that patients and doctors would misinterpret data or make erroneous treatment decisions. Abstracts, by definition, contain preliminary data and conclusions about drugs or treatments that can change once final data are analyzed and peer-reviewed, she adds.
Ratain doesn't buy that argument. "I find it hard to believe that oncologists are going to base treatment decisions on ASCO abstracts," he says.
Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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