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 themost important and closely watched scientific meetings of the year. Sharesin biotech and pharmaceutical companies rise and fall based on drugresearch results presented at the ASCO annual meeting, slated this year torun May 18-21 in Orlando, Fla.

As TheStreet.com reported extensively last year, ASCOmembers and Wall Street insiders get early access to preliminary, but stillmarket-moving, information contained in research abstracts. And they usethat advantage to trade before the general investing public has any inklingof what's happening.

As a nonprofit organization, ASCO is not subject to RegulationFD, which the Securities and Exchange Commission designed toquash selective disclosure of market-moving information. But as this year'smeeting approaches, ASCO officials are acknowledging for the first timethat its previous policies ran counter to the spirit of the law, andthey'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 hasobtained a letter written in February to all companies that have submittedresearch for the annual meeting.

In the letter, ASCO acknowledges that information contained in itsresearch abstract book has been distributed and publicly discussed prior tothe meeting. To stop this, the group is instituting a newconfidentiality policy that will govern the use of abstract information.ASCO is also prohibiting the dissemination of any abstract reprints beforethe meeting.

"Recently, the Securities and Exchange Commission has stepped up itsefforts to ensure that nonpublic research data is not selectivelyreleased," the letter begins.

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

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

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

Will It Work?

Without knowing how strict ASCO's confidentiality clause will be, it'shard to judge the effectiveness of the new policies. For instance, it's notknown whether Wall Street analysts will be prohibited from writing researchreports that recommend stocks of presenting drug companies based oninformation 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 onASCO stock tips.

But at the same time, ASCO prohibits the media from publishing researchabstract data before the meeting, and it even extends this embargo to anyinformation gleaned from analyst reports. Last year, TheStreet.com wasbarred from attending ASCO's meeting after writing about ASCO research datacontained 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 theupcoming meeting if it once again reports in advance on what Wall Streetanalysts are saying about "embargoed" ASCO research.

And no confidentiality policy, no matter how strict, will stopaggressive fund managers from gaining access to the ASCO information. Thisyear's meeting is still two months away, but buzz is alreadybuilding. It's been a tough year in the drug and biotech sectors, so manyfund managers see ASCO as an even more important catalyst for the secondhalf of the year. Companies like Genentech ( DNA), ImClone Systems ( IMCL), AstraZeneca ( AZN) and Cell Therapeutics ( CTIC) are all expected to releaseimportant 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 veryeasy 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 medicalresearch 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.

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