Biopure

(BPUR)

executives and other insiders will now be allowed to sell their company's shares after the biotech firm amended its corporate by-laws Friday.

The new insider-selling program is being instituted just one month after Biopure disclosed a

significant delay in its efforts to develop a human blood substitute.

Pursuant to

Securities and Exchange Commission

rules, Biopure says it will now permit officers, directors and other company insiders to enter into approved, predetermined trading plans that will allow them to unload company stock without running afoul of insider-trading liabilities.

The first Biopure executive to step up to the trading plate is Chairman and CEO Carl Rausch, who plans to sell 10,000 shares of Biopure stock every month for the next year. Rausch, who owns 2.2 million shares in the company, will begin selling his shares on Jan. 15. Biopure said other undisclosed officers are also preparing to unload their stock.

In an unrelated transaction, Marilyn Jacobs, wife of former senior vice president of medical affairs Edward Jacobs, filed papers with the SEC on Dec. 28, seeking to sell 10,000 shares of Biopure stock. Jacobs resigned from Biopure on Nov. 27.

Raising Eyebrows

It's not uncommon for executives to regularly sell portions of the stock in the companies they manage, but the timing of such insider selling is closely watched as a barometer of possible corporate hijinks. Enron executives are now the focus of at least eight criminal and regulatory investigations, in part, because they sold hundreds of millions of dollars in stock before the energy trader plunged into bankruptcy.

Even more recently, questions are being raised about

ImClone Systems'

(IMCL)

COO Harlan Waksal, who sold $50 million in company stock three weeks before the Food and Drug Administration rejected the company's approval application for the cancer drug Erbitux. The FDA rejection has sent ImClone shares into a tailspin.

Biopure said Friday that it is allowing company executives to sell stock at regular intervals to facilitate their financial planning and investment diversification. But questions will be raised about the timing of the new plan. In early December, Biopure admitted that it was being forced to delay the filing of an approval application for Hemopure, the company's experimental blood substitute, by at least six months.

The Hemopure Mess

TheStreet.com has reported that Biopure is facing many more serious

problems with Hemopure than just a six-month filing delay -- including serious safety concerns with the product and problems with the data collection and analysis of Hemopure's pivotal clinical trial that may force the company to conduct additional testing.

Biopure's CEO Rausch has long insisted that Hemopure is safe and effective, and that the blood substitute, once approved in the U.S., will reap the benefits of a $16 billion market.

But if Hemopure is destined for such success, then why are Biopure executives so eager to sell stock now? Shares of Biopure have fallen almost 40% since mid-October, and now trade for under $14 per share. By comparison, the American Stock Exchange Biotech Index is up 10% during the same time period.

Biopure executives could not be reached for comment. CEO Rausch made a corporate presentation at last week's J.P. Morgan H&Q health care conference but didn't mention the new insider-selling program.

The selloff in Biopure's stock has accelerated since the end of December because the company, facing a cash shortage, has been forced to raise funds through a $75 million equity line of credit from French bank Societe Generale.

Beginning Dec. 24, the company has raised a total of $6.8 million by selling approximately 490,000 shares of its common stock in three separate installments, or equity draw-downs. The French bank gets the stock at a discount, then flips it at market prices for a quick profit. And the bank can bolster its gains by using various short-selling strategies that put even more downward pressure on the stock, according to company documents filed with the SEC.

But Biopure's ability to raise cash this way could be coming to an end. Societe Generale has the right to terminate the equity line of credit if Biopure's stock price falls below $13 per share. Shares of Biopure closed Friday at $13.65 per share, and have fallen as low as $13.32 per share in recent days. Biopure and the French bank could mutually agree to lower the floor price on the financing deal, which would allow the company to continue to raise money, according to terms of the deal.

Biopure could test Societe Generale's willingness to renegotiate the deal this week. On Friday, the company said it was requesting another draw-down, this time seeking to raise $2.2 million by selling 169,230 shares starting Jan. 11 and ending Jan. 17.