The Food and Drug Administration has launched an inquiry to determine whether Telik ( TELK) violated federal law by failing to disclose patient deaths in a recent ovarian cancer study, TheStreet.com has learned.

Women taking Telik's experimental drug Telcyta died five months faster than similar women in the study's control arm, according to data presented publicly for the first time on June 3 at the annual meeting of the American Society of Clinical Oncology.

But Telik's management knew since December 2006 -- five months before presenting the data at ASCO -- that Telcyta might be harming ovarian cancer patients instead of helping them. This information was never publicly disclosed.

Furthermore, Telik failed to share the data with the FDA, according to a senior official with the agency.

Concerned for patient safety, the FDA ordered Telik last week to halt all ongoing clinical studies involving Telcyta.

"It is unclear to us at this point whether regulations or laws may have been broken, but we're looking into the matter seriously," said the FDA official, who asked to remain unnamed.

"Sophisticated companies would have reported data like this to us in a timely manner," the FDA official added. "The fact that we learned of this the Telcyta patient deaths at the ASCO meeting will adversely affect the company in the future because we can't trust them."

Telik shares were recently off 2 cents to $3.71. The stock has lost more than 70% of its value since December.

Drug companies are required to notify the FDA when serious adverse events are reported in ongoing clinical studies. In Telik's case, the FDA is seeking to determine if the company misrepresented or failed to report adverse events, including patient deaths, from the ovarian cancer study, dubbed Assist-1.

Telik spokeswoman Carol DeGuzman said company executives would not answer any questions about Telcyta cancer studies at this time, pending discussions with the FDA.

Telik has no marketed products, and Telcyta is the most important drug in its development pipeline. If Telik were forced to shelve Telcyta permanently, tens of millions of dollars in research and development expenses would be wasted. That would be a crippling setback for the company, which has no steady source of revenue and a dwindling stock price.

A rash of shareholder lawsuits has been filed against Telik, alleging that the company and its management violated securities laws by purposely withholding the damaging results from the Telcyta studies and issuing false and misleading statements about the health of the company's business and its prospects for getting Telcyta approved by the FDA.

It's not yet clear whether the patient deaths in the Assist-1 study -- and the fact that Telcyta patients died quicker -- were caused by Telcyta, by other factors or a combination of both. The FDA will try to make that determination once it receives the study data from Telik, the FDA official said.

The median survival time for women with advanced ovarian cancer in the Telcyta arm of Assist-1 was 8.5 months. The women in the control arm of the study treated with the approved drugs doxorubicine or topetecan reported a median survival time of 13.6 months, according to data presented at the ASCO meeting on June 3.

This negative survival effect against Telcyta was statistically significant by a wide margin, which means that, statistically speaking, it was Telcyta and not random chance that caused these women to die faster.

The negative survival effect "took my breath away," says Sherry Salway Black, executive director of the Ovarian Cancer National Alliance, a patient advocacy group.

Ovarian cancer is a very difficult disease to treat, so Black says she is accustomed to seeing experimental drugs fail to help patients when tested in clinical trials. But it's unusual and surprising to see an experimental drug that appears to cut short the lives of patients by a significant margin, she added.

In the aftermath of Telik's disclosure of the Telcyta patient deaths at the ASCO meeting last week, the FDA, ovarian cancer patients advocates such as Black and others want to know why the company didn't quickly make the information public in the interest of patient safety and ethics.

The issue is all the more important because Telik continues to enroll patients in other Telcyta clinical trials, including trials involving ovarian cancer patients. These studies, however, are now stopped because of the clinical hold placed on Telcyta by the FDA.

On Dec. 26, 2006, Telik issued a press release to announce that the Assist-1 trial had failed to prove that Telcyta could prolong the survival of women with advanced ovarian cancer compared to currently approved drugs. At that time, the company declined to provide any details or additional information about the study.

In the same announcement, Telik disclosed that two other Telcyta cancer studies -- Assist-2 and Assist-3 -- also failed.

Shortly after the December announcement, Black says her group sent Telik a letter asking for more details about the Assist-1 study so that it could make sure that the company was sharing all relevant information with ovarian cancer patients.

"We never got a response to our letter," says Salway Black, adding that the first she heard of the Telcyta patient deaths was after the data were made public at the ASCO meeting.

"I think this information definitely should have been distributed sooner," she says.

In conjunction with its Dec. 26 announcement, Telik management held a conference call for investors. On the call, Telik Chief Medical Officer Gail Brown stated that, "Telcyta was generally well tolerated. Telcyta treatment was associated with mild to moderate nausea, vomiting and fatigue, mostly grade 1 or 2. There were few grade 3 or 4 toxicities observed among Telcyta patients," according to a transcript of the conference call.

Brown, who is married to Telik CEO Michael Wick, who was also on the conference call, did not mention that Telcyta patients died significantly faster than patients in the control arm.

Later in the conference call, Lehman Brothers analyst Jim Birchenough asked Brown if there was any evidence in the Telcyta studies to suggest that the drug was benefiting patients more than the control.

Brown responded, "I am not prepared to discuss that today. We have to do further analysis of all the trials."

Lazard analyst Joel Sendek then asked Brown, "Can you let us know if there was a trend toward the comparator control arm being statistically significantly better than Telcyta in any of the trials? Or can you at least tell us if that didn't happen?"

"No, I do not think we can comment on that right now, Joel," replied Brown.

It turns out that Sendek's question was spot-on, since the data that Telik had in front of them during the call showed that Telcyta patients had fared far worse than control patients.

And not just in the Assist-1 study. It turns out that lung cancer patients given Telcyta in the Assist-2 clinical trial also died faster than comparable lung cancer patients in the control arm of the study.

Telik kept this negative information secret from the public and the FDA until finally disclosing it in a press release last week.

Telik does have its defenders. Dr. David Spriggs, an ovarian cancer expert at Memorial Sloan-Kettering Cancer Center in New York, says he does not have a good explanation for the rate at which Telcyta patients died in the ovarian cancer study. But he's also not ready to blame Telik for the poor results -- or for the way in which the company decided to disclose the study results.

"I've known Michael Wick for a long time, and I just can't believe there was malfeasance or evil intent here," 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; click here to send him an email.

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