Schering-Plough Execs Got Vytorin Results When?
11 CommentsBy Ed Silverman // January 28th, 2008 // 7:54 am
In their ongoing effort to defend themselves from accusations of insider trading and improper marketing, the drugmaker has filed a document with the Securities and Exchange Commission offering more precise info about when they were informed of the Vytorin study results.
Tom Koestler, chief scientist: Jan. 7 at 2 p.m.
Fred Hassan, ceo: Jan. 10 at 8 a.m.
Tom Sabatino, general counsel: Jan. 10 at 8 a.m.
Carrie Smith Cox, exec vp and president: Jan. 10 at 8:30 a.m.
Bob Bertolini, exec vp: Jan. 10 at 9 a.m.
The study results were issued in a press release on Jan. 14, although that came after a delay of nearly two years with scant info from either Schering-Plough or Merck, its joint-venture partner. By then, however, the drugmakers endured two months of withering criticism for briefly changing the primary study endpoint without consulting the lead investigator and appointing an independent panel to review the data, but no one knew three members had financial conflicts until the names were later released. Meanwhile, Smith Cox and others sold huge chunks of stock last spring.
Also from the SEC filing:
Q: Did Fred Hassan sell stock in 2006 or since?
A: No. Fred Hassan’s December 2006 transaction did not involve any sale of Schering-Plough stock. It was his only disposition of stock since being named Chairman and CEO in 2003. As noted on the SEC Form 4 dated Dec. 4, 2006, shares were withheld (and retained by the company) to satisfy tax withholding obligations on stock awards which vested at that time. The stock awards had been granted in 2003 and the vesting date was set by the compensation committee of the board at the time of grant, so Fred Hassan had no control over the transaction date. Other executives who have had shares withheld to satisfy tax withholding obligations from 2006 through today, but had no sales or other dispositions of Schering-Plough securities are Robert Bertolini, Thomas Koestler and Thomas Sabatino.
Q: What processes does Schering-Plough use to help executives comply with federal securities laws?
A: Schering-Plough uses a number of overlapping processes. First, when someone is elected as an executive officer, they are trained on federal securities laws about trading and reporting stock transactions. Second, executive officers, as well as other members of the operations management team and other employees are subject to window period trading restrictions.
Third, Schering-Plough institutes specific trading blackout periods when executives and certain other employees are told material non-public information. Schering-Plough’s corporate secretary instituted such a blackout on December 21, 2007, 10 days before the unblinding of the Enhance trial. The blackout period has remained in effect for the identified executives and employees.
Fourth, executive officers are instructed to pre-clear every transaction in Schering-Plough securities with one of the company’s securities lawyers. During the pre-clearance discussion, the lawyer reviews the window period and any applicable blackout period, and confirms that the executive requesting pre-clearance does not have access to any material non-public information.
Last, executive officers and the company’s controller are subject to SEC reporting of transactions in Schering-Plough securities on SEC Form 4 which is available to the public upon filing. Once a year, the corporate secretary’s staff obtains representations from these officers confirming that all required reports have been filed. Schering-Plough’s corporate secretary has confirmed that to the company’s knowledge all executive officers who have had any transactions in Schering-Plough securities have followed these procedures, including Carrie Cox for the transactions that have been reported in the press.
Q: Has Schering-Plough’s corporate secretary confirmed that Ms. Carrie Cox’s transactions in Schering-Plough securities were conducted in accordance with these procedures?
A: Yes, Susan Wolf, Schering-Plough’s senior securities lawyer has confirmed that she pre-cleared these transactions and that Ms. Cox followed Schering-Plough’s procedures.
ol cranky
I find it very difficult to believe that they didn’t receive earlier “headline” results to justify the delay in finalizing the CSR and discussion about revisions to the statistical analysis plan. This was a hyped study for them so I’m sure they were pushing for some high level info to be delivered within weeks of the DB freeze.
Bob Freeman
Given it’s SP’s most important product, I would think top-line results would have been presented far earlier. Unfortunately, giving bad news or contrarian views to upper management is now the kiss of death. It didn’t used to be that way but it cerainly is now.
The new breed of senior managers want to hear 1) information that supports their existing positions and 2) would rather rely on advice from consultants than employees. Frankly, they are farther removed from reality than ever before.
I started in the industry when CEOs were approachable and open. Now they’re shielded. To be blunt, I have very little respect for any of them.
BDM
This is pure, unadulterated corporate crap. Final results - maybe? Knowledge that the study had serious data problems and was going to be a failure - 18-24 months earlier than the information given. These people simply cannot be trusted. This is well-known inside SP. I can’t wait until the investigation. Only then will their dihonesty and unethical behavior be exposed. They can’t hide it forever and eventually it will all come to light.
Insider
Find the statisticians!
Andy B.
Let’s all remember that the original plan by Schering-Plough was to release the results of ENHANCE at the AHA in Nov 2005!! As Cranky suggests, the “pedal to the Metal” approach would have been used in the case of ENHANCE to try and make the deadline. As Insider suggests, the stories of the statisticians who were involved in ENHANCE are critical. Information from the research group that ran and wrapped up ENHANCE is critical. Debriefings and updates that were delivered to the executives are crucial. The only way to get this will be under oath as the update sessions within SP are “closed door”, “need to know” only and without minutes. This is where the NY AG, SEC, and Congress may be able to have success where others can’t. That is, if they can find someone who will tell the real truth under oath.
Dave B..
Don’t believe a word of this misleading information. perhaps they didn’t know the unblinded results, but they sure knew that the study was in deep, deep trouble and likely were informed of the blinded results. You don’t simply just fool around with data froman important study for almost two years and not know what’s going on!
ol cranky
I’m sure they unblinded and had high level results within a couple of weeks of the DB freeze. Does anyone know if there was any interim analysis performed? If so, they may have had an inkling of a problem while the study was ongoing.
What’s the next excuse, are they going to start pointing the finger at the CRO?
SPRI
The truth? Schering-Plough didn’t say what year. Perhaps all the January dates are 2007!!!!
PRSP
Schering-Plough holds the ENHANCE database.
BDM
January of 2007
BP Watch
Many have been robbed in this case, but none of them are the top executives at Schering-Plough. First and foremost, there are the patients who had to pay much more for their medications than they should have. Next, there are the poor stockholders who hung onto their shares while Carrie Smith Cox and her friends sold off huge blocks of stock. Finally, there are the regular employees who worked very hard for the company and have large amounts of stock in their 401K plans with much less value than previously. The regular people went unprotected while the executives with inside information raked in millions. These actions are unethical, illegal and absolutely disgusting! I really hope that the SEC is successful with its’ ionvestigation and subsequent prosecution of these individuals.