Senior executives at Vertex Pharmaceuticals made millions of dollars each by selling company stock in the days after the Cambridge-based pharmaceutical reported promising clinical trial data on an experimental drug for cystic fibrosis. And then weeks after they cashed in, the company said, oops, we overstated the trial’s interim findings. They weren’t quite as good as initially reported.
The whole sordid tale is in The Boston Globe today, including details on which five top executives of the company benefited from the stock sales and the degree to which Vertex overstated its initial findings on May 7. According to The Globe, chief commercial officer Nancy Wysenski walked away with $8.8 million and Peter Mueller, the executive vice president of global research and development (who no doubt oversaw the trial) with $3.4 million. Even its founder, Joshua Boger, who is still a company director, got in on the action.
Vertex officials blamed the mistake on a “misinterpretation between Vertex and our outside statistical vendor” who analyzed the clinical trial data, the Globe reports. But they would not identify the outside vendor, a contract research organization.
Right. Does anyone besides myself smell a rat? This strikes me as a too convenient explanation for a “mistake” that hugely benefited Vertex’s top management. And it makes me wonder why drug companies are allowed to release preliminary findings to the public at all before the results are vetted by peer-reviewed journals. This strikes me a recipe for stock trading abuse.
I sure hope the Securities and Exchange Commission is all over these trades. Left holding the bag are not only the investors who bought shares in the company when its stock surged on the erroneous news, but all the families of cystic fibrosis patients whose hopes were falsely and cruelly raised.
I don’t smell a rat at all. While its true that executives sold shares following the extraordinary run up in valuation, the published information that sparked the increase was not, in fact, misleading. There was a technical mistake between ‘absolute’ vs ‘relative’ improvement in the lung function of some patients, but further analysis (see both Forbes and WS Journal articles) shows clearly that the early results are remarkably, and unexpectedly, positive. As a parent of a child with CF for 17 years now (and not a Vertex investor) I think it would be totally irresponsible to NOT publish important interim results like this. Bottom line is that lung function improved dramatically for patients within two months of taking the Vertex combination therapy (VX770 & VX809), and the price of Vertex stock is back up near $60 – not far from the peak at which executives sold. Next time, look a little deeper than the knee-jerk conspiracy theory that assumes these folks lied in order to make money. Perhaps they are developing a therapy that could essentially cure an inherited, progressive and ultimately fatal diesease.