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MS drug withdrawal prompts 2nd look at Biogen Idec stock sales
Mark Jewell, Associated Press
March 2, 2005

BOSTON -- The withdrawal of a new multiple sclerosis drug has focused scrutiny on millions of dollars in insider stock sales at Biogen Idec Inc. and executive bonuses awarded before the company disclosed a death and illness that led to the drug's removal from the market.

The stock transactions -- one of them on the same day the company notified federal regulators about the problems -- came before Monday's withdrawal of Tysabri wiped out a total $17.8 billion in shareholder equity in a single day for Biogen and Elan Corp. The biotechnology partners had enjoyed surging share prices during the past year on high expectations for their jointly developed drug.

Within a four-day span before the drug's makers notified the Food and Drug Administration of the problem, three Biogen executives sold stock.

That notification occurred Feb. 18 -- the same day Thomas Bucknum, a Biogen executive vice president and the company's general counsel, sold 89,700 shares for a profit of $1.9 million, according to the company's filings with the Securities and Exchange Commission. Bucknum's gain reflected the rise in the value of company shares since the options were granted starting in 1998.

Bucknum also was awarded new options of 55,000 shares on Feb. 17, the day the company's board approved a committee recommendation granting Biogen executives cash bonuses totaling $4.6 million based on its performance last year.

Biogen's executive chairman, William Rastetter, sold more than 120,000 shares on Feb. 15, yielding a $7.45 million profit, the filings show. The day before that, Biogen director Robert Pangia sold 15,570 shares for a profit of $954,844.

Walter Ricciardi, head of the SEC's Boston office, declined to comment Tuesday, citing agency policy not to discuss what his office may or may not investigate.

Biogen spokesman Jose Juves said the stock transactions were planned before the company learned of Tysabri's problems and notified the FDA.

"All these trades preceded that quick and decisive action, which was guided exclusively by concern for patient safety and our commitment to the MS community," Juves said.

"No one waited around to inform the FDA, and the trading window was immediately shut as soon as the senior management became aware of the safety issue," Juves said.

After the company notified the FDA, one patient died from a rare and frequently fatal disease of the central nervous system. Another, with a suspected case of the same illness, survived. Monday's withdrawal of Tysabri and suspension of clinical tests came 10 days after the companies notified the FDA.

Biogen shares lost more than 42 percent of their value Monday, while Elan's stock fell 70 percent.

On Tuesday, Biogen shares rose $2.61, or 6.8 percent, to close at $41.26. Elan shares closed down 3 cents at $7.97.

Regardless of Biogen's statement that executives were unaware of Tysabri's problems before their recent stock transactions, W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, said he found it "suspiciously coincidental that they would be selling these shares almost on the eve of this occurring with the FDA."

Corporate America faces increased scrutiny of insider stock sales in advance of bad news because of revelations at companies such as Enron. Some executives at the energy trader were accused of dumping stock days before Enron went bankrupt.

Such sales "have not only been considered illegal in terms of insider trading but are not building up the trust in the corporations the executives are overseeing," Hoffman said.

Until Monday, Biogen's portfolio of cancer and autoimmune-disease treatments made the company one of the top-performing biotechnology stocks in the past decade.

Biogen and Elan continue to hold out hope that Tysabri eventually may return to the market if it can be proven safe.

The drug, which won FDA approval in late November, accounted for $3 million in sales for Biogen in the final weeks of 2004. Tysabri had been forecast to reach $1.5 billion in annual sales by 2007 and continue growing in coming years.

Now, Cambridge, Mass.-based Biogen and Ireland-based Elan are left to rely on other medications in their portfolios. Biogen's Avonex is a nine-year-old MS treatment that accounted for nearly two-thirds of the $2.2 billion in revenue last year at the world's third-largest biotech company.

While Avonex most likely will pick up some of the sales lost from Tysabri's withdrawal, the newer drug "was Biogen's growth engine," said Jason Kantor, an analyst with WR Hambrecht & Co. "Now, the prospects for it are zero until we hear otherwise."

The Securities and Exchange Commission is preparing to interview executives who made $10.7 million on stock sales before the company yanked its high-flying new multiple sclerosis drug.

Both Biogen and the SEC yesterday refused to comment.

Whatever the outcome of the investigation, Monday's news ended a golden period on the stock market for Biogen. The stock, just $35 a year ago, soared above $60 last spring on high hopes and largely stayed there till now.

An analysis by the Herald shows that during that time directors and executives made $32 million - perfectly legally - cashing in their share options.

That's funny. How and why is it then, that Harry knew about it WAY before the release from Biogen. If Harry knew, believe me, I can't help but "suspect" that Biogen knew. (Forgive me, but the accusations and chances of Harry just making that up out of thin air or spreading "rumors" doesn't cut it anymore, does it?) And besides, it's not just "us" on this website asking about it. It's the SEC. You might want to consider voicing that opinion and your support to the SEC, then, and help Biogen Idec/Elan that way.



Well, there's "one". (Sorry for the sarcasm.) But wait.......you said "most likely". For someone so positive about everything, is that "doubt" that you are expressing after all? And what if you don't meet the very probable new and narrowed down "criteria" for taking Tysabri when and/or if (as you yourself eloquently stated) it comes out again?



And as Harry and I (to mention just two) are always so respectfully "asked", is that statement simply based on rumor or from unknown "sources", or can written verifiable "proof" be provided?

Actually, there's no need to answer.

Deb

Harry heard about it from Cherie Binns and Cherie Binns information was inacurate! She said that there were 3 deaths. I'm not sure how many, but she has stated over and over that some were caused from anaphalyactic shock. Where's the proof of that?

BTW, until I'm asked to leave this forum by the owner, I'll show my support for Tysabri here or anywhere else I choose, thank you very much.

Biogen Idec Inc. and Elan Announce Update on TYSABRI
2005 Mar 3 7:18 PM

Biogen Idec Inc. and Elan Corporation, plc announced an update on the voluntary suspension in the marketing of TYSABRI (natalizumab), a treatment for multiple sclerosis (MS). On February 28, 2005, the companies reported that they had suspended marketing of TYSABRI based on one confirmed case and one suspected case of progressive multifocal leukoencephalopathy (PML), a rare and frequently fatal, demyelinating disease of the central nervous system. The investigator has now changed the status of the second case from suspected to confirmed. The companies are continuing to examine these two cases. Both patients received more than two years of TYSABRI therapy in combination with AVONEX. To date, the companies have received no reports of PML in patients receiving TYSABRI monotherapy for MS or in patients with Crohn's disease or rheumatoid arthritis. Biogen Idec has not received any reports of PML in patients treated with AVONEX alone, a product on the market since 1996. Biogen Idec and Elan will work with clinical investigators to evaluate TYSABRI-treated patients and will consult with experts to better understand the possible risk of PML. Based on the full results of these evaluations, the companies, in consultation with regulatory authorities, will determine the appropriate next steps. In addition, Biogen Idec and Elan have undertaken to provide information to the Securities and Exchange Commission in connection with the voluntary suspension in the marketing of TYSABRI.

My, my, aren't we the fussy odd duck