A Biogen Idec Inc. memo to doctors involved in a clinical trial offers a timeline that has become important as U.S. federal investigators look into trading by four company officials ahead of the Feb. 28 withdrawal of the MS drug Tysabri from the marketplace.
Two patients who developed a rare brain disorder while taking Tysabri initially showed neurological problems in December, according to the Feb. 28 memo, which was sent to clinical-trial doctors by Biogen and its Irish marketing partner, Elan Corp. of Dublin. Tysabri, a multiple sclerosis drug, was pulled from the market on the same date the memo was written. One of the patients died Feb. 24 after being diagnosed with the disease, a deadly nervous-system disorder called progressive multifocal leukoencephalopathy, or PML. The other patient's diagnosis was confirmed March 3 but suspected prior to that.
The Securities and Exchange Commission is investigating sales of Biogen shares by four company executives between Feb. 14 and 18. The shares fell $28.63, or nearly 43%, to $38.65 on Feb. 28 when the withdrawal was announced.
The Biogen-Elan memo's description of one of the patients, a 46-year-old woman, is written chronologically. She was hospitalized Feb. 12 and underwent an MRI that "suggested a differential diagnosis that included PML." The memo doesn't specify the date of the MRI and possible PML diagnosis. She died Feb. 24. Her case was confirmed by analysis of spinal fluid.
A Biogen spokesman declined to say when the Cambridge, Mass., company learned of the MRI exam and possible PML diagnosis. The company has said that senior executives learned Feb. 18 that one of the PML cases had been confirmed and a second case was suspected. The second case, that of a 46-year-old male patient, was confirmed in early March.
The second patient underwent a brain biopsy Feb. 15 that was used to confirm his case of PML March 3. The male patient was recently released from the hospital and showing some signs of improvement, according to Elan Chief Executive Kelly Martin.
The SEC is examining the timing of the patients' diagnoses to determine what company executives knew about their condition and when, according to a person familiar with the inquiry.
Two of the Biogen officials who sold shares in advance of the withdrawal did so as part of a preplanned selling program established in April 2004, the company said. Those are Executive Chairman William Rastetter and Craig Schneier, a vice president of human resources. On Feb. 15, Mr. Rastetter exercised options for 120,313 shares and realized a profit of $7.7 million from their sale. Mr. Schneier exercised options for 3,500 shares on Feb. 14 that earned him a profit of $102,000.
The two officials who didn't sell as part of a preplanned program were director Robert Pangia and then-general counsel Thomas Bucknum. Mr. Bucknum exercised options for 89,700 shares and sold those shares on Feb. 18 for a profit of $1.9 million. Mr. Bucknum resigned from the company last week. His lawyer, Juan Marcelino, said Mr. Bucknum didn't want to become a distraction to the company and "believes he has done nothing wrong."
Mr. Pangia exercised options to purchase 16,250 shares on Feb. 14 for $103,593 and sold 15,750 of those shares on the same day for $1.1 million. A Biogen spokesman said Mr. Pangia made his trade before company officials knew that any patient had PML.
All of the men sold when Biogen shares were trading around $67. At 4 p.m. Friday on the Nasdaq Stock Market, they were trading at $38.26.
The two patients who developed PML were among 500 people taking Tysabri and another MS drug from Biogen, called Avonex, as part of a clinical trial. The first patient received 37 doses of Tysabri, which is injected once a month. The second patient had received 28 monthly infusions.
According to the WSJ report BIIB officals sold well before a memo regarding PML was sent to clinicians. Does this memo represent the time when the "news" became public? If it does then are those who sold open to accusations of insider trading? If this is the case then considering today's climate (Martha just got out of jail), these guys are either oblivious or have cover of some sort. S
A note about Mr. Bucknum, the former BIIB general counsel. The options he exercised on February 18th included EVERY SINGLE OPTION THAT HAD VESTED, in other words, he bailed. Some of these options had been vested for some time, yet he had not sold them previously even during windows when he was permitted to sell. He had also not filed a schedule of "planned sales," as other managers had done, as far as I can determine.