NEWS

Big Business: When Wall Street and Cancer Research Collide

Steve Benowitz

When scientists at Cell Therapeutics Inc. (CTI), a Seattle-based company that specializes in developing cancer drugs, submitted several abstracts in December for the 2002 meeting of the American Society of Clinical Oncology, the scientists could not have known the intense scrutiny they were going to face. Between April and May of this year, officials at the company fielded some 200 calls from investors and financial media asking for comments on rumors that one of CTI’s signature products, Xyotax, a paclitaxel-related drug for ovarian and lung cancer, was too toxic for patients.

This wasn’t supposed to happen.

ASCO, the nation’s preeminent organization of clinical oncologists, last year announced a new policy—which included a confidentiality agreement—for access to abstracts on its Web site for its annual meeting. The meeting, which draws thousands of cancer specialists every year, is seen as a key gathering of oncologists and basic scientists to discuss the latest advances in the clinical cancer arena, particularly the latest cancer drug trial results.

ASCO members are asked not to disclose information prior to the meeting and not to use their members-only access to abstracts for personal gain or provide the information to others who might do so. Organization officials wanted to stem what has become an increasingly common practice: early leaks and rumors of clinical trial results to analysts and investors—information that can make or break drug stock prices, and in some cases, companies themselves, said Charles Balch, M.D., executive vice president and chief executive officer of ASCO.



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Dr. Charles Balch

 
In the last few years, there have been several cases of drug stock prices rising and falling based on early reports of abstracts slated for presentation at ASCO’s annual meeting. This April—about one month prior to the meeting when abstracts were made available to mebers only on a password-protected Web site, a number of newspapers and other news media reported increases in stock prices in Millenium Pharmaceuticals of Cambridge, Mass., and New York’s ImClone Systems, for example, and drops in prices of shares of others such as CTI and Genentech of South San Francisco. Somehow, information leaked out ahead of time.

Big Business

Despite the new policy, "The reality is, when an abstract is released to the ASCO membership, Wall Street also gets it," said one Wall Street analyst who is also a physician and did not want to be identified.

It has become readily apparent that Wall Street, the pharmaceutical and biotechnology industries, and cancer researchers themselves (and now cancer organizations)—if not the federal government—are awkwardly bumping heads. Cancer has become extremely big business.

"There’s more money involved in cancer research today than ever before, particularly in the development of cancer medicines," said Donald Trump, M.D., senior vice president for clinical research at Roswell Park Cancer Institute in Buffalo. New buzzwords like "molecular targeting" mean "many exciting trials of new cancer therapies involving new drug targets," he said.



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Dr. Donald Trump

 
"Early clinical trials can greatly influence stock prices," said Mark Ratain, M.D., Leon O. Jacobson Professor of Medicine at the University of Chicago. Take EntreMed, a Rockville, Md.-based biotechnology company, for example. The company’s stock soared in 1998 after its preclinical anticancer studies were described on the front page of the New York Times. Subsequent phase I trial results have been less than spectacular and, although studies continue, stock prices have suffered.



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Dr. Mark Ratain

 
"In phase I [trials], any information can be tremendously valuable," Ratain said. "Any response can have a huge change in the perspective of a drug and the potential stock price. You could easily move the stock prices of a single drug company with a response in phase I."

John Borzilleri, M.D., an analyst-money manager at MetLife’s State Street Research and Management Unit in Boston and a physician, agrees that "a little rumor can go a long way." Some individuals "selectively disclose" information, he said. "They say, ‘I think there’s a problem with this drug because I heard this comment from this doctor.’ There’s been a lot more premium put on getting information about drug trials and a lot of value put on that because of stock volatility."

ASCO’s Balch complained that the real problem with leaked abstracts is that incomplete, out-of-context information is reaching the public before it has been adequately peer reviewed or put in perspective. The abstract may describe the makeup of the trial—the number of patients, types of treatments compared, and the endpoints, for example—but the bottom-line data typically are given at the meeting itself. What’s more, abstracts are typically 5 or 6 months old.

In the past, the abstract book has been delivered to members ahead of the meeting so they could plan which sessions to attend. This year, ASCO sent out the abstract book to members as usual, but reminded them that it was copyrighted, confidential material and restricted in use and that the information was embargoed until presentation at the meeting.

"We were worried about the potential adverse effect on patient care, particularly if physicians and patients reacted to incomplete information," Balch said. "People might stop taking medication or not participate in a trial."

"Despite those policies, a number of market analysts reported on the contents of the abstracts very specifically as an advisory service to clients, and results to be reported in abstracts at the ASCO meeting were reported in financial sections of major papers," he said.

A particular danger with this, said Roswell Park’s Trump, is that initial analyses of early trials may turn out to be wrong or even reversed in subsequent studies. "One of the things that inside traders need to be aware of is that at least half the time the early assessments of how a clinical trial is going are wrong," he said. "It’s probably riskier than justified to take chances on abstracts at meetings." Still, there will always be "some information buzz" about clinical trials surrounding the meeting, he said.

Information Leak

Cell Therapeutics president and CEO James Bianco, M.D., might see ASCO’s point—if he and his company didn’t get burned. According to Bianco, on April 11, the day before the member-only ASCO Web site was to go live, a "backdoor" entrance to the ASCO Web site opened and the next day CTI stock "came under heavy pressure." Between April 12 and May 19, the company lost about $600 million in market value.

"We were getting calls saying that there’s a rumor saying your trials didn’t work, that the data looks too toxic for a drug we have in phase II development," Bianco said. The CTI abstract spelled out only the study parameters, such as the number of patients enrolled and how much treatment they received—the typical sort of vague data listed in such abstracts. The company issued a statement saying that interim results of the Xyotax trial would be presented at the ASCO meeting.

"There were reports going out for a month that we couldn’t respond to without breaking ASCO’s embargo," explained Leah Grant, CTI’s director of investor relations. "The risk we run by breaking the embargo is having ASCO not let our investigators present at the meeting. We had a number of calls prior to the meeting for comments about the reports out there. Our hands were tied."

Bianco thinks that all of the abstracts should be published prior to the meeting and available to everyone. "It’s a disconnect between ASCO leadership understanding what is happening with company information and their constituency and who is making money from it," he said. "It’s becoming a bigger and bigger issue each year."

Chicago’s Ratain is more concerned about patients and physicians getting and giving out information. He and his colleagues actually stumbled across a patient enrolled in one of their phase I trials who Ratain believes provided "unpublished, nonpublic information" about the study on an investment Web site. He said this kind of insider information being made public is a dangerous trend because much of the current drug discovery and development is left to smaller—and more financially vulnerable—companies that have maybe one or two cancer drugs in their pipeline.

"What do we say to the patient who is trying to make an informed decision about a trial?" Ratain asked. "Do we say, ‘OK, we’ve told you the results, now you can’t tell anyone and you can’t buy stock based on what we told you?’ What do we say to the referring physician? Do I say, ‘you have to sign a confidentiality agreement first?’ How do we manage this flow of information while being an ethical investigator?"



             
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