One of the side effects of the Vytorin trial has been the blow to Schering-Plough’s credibility, given that the drugmaker - along with its partner, Merck - delayed releasing the results for nearly two years, briefly changed the primary endpoint without consulting the lead investigator and then named a so-called independent panel to review data, even though some members had financial conflicts. Compounding matters were reports that several Schering-Plough execs sold off big chunks of stock last year, prompting Congress to add speculation of insider trading to an ongoing investigation.

The stock sales, though, have helped fueled what has become a polarizing debate over the drugmaker’s conduct and the larger issue of whether there was disregard for patient well-being until the trial results were finally disclosed the other day. So we asked Michael Steiner, a manager at RegentAtlantic Capital, which is a financial planning firm in Chatham, NJ, that caters to many pharma employees,* as well as others, for some insight into the potential scenarios that may have prompted the stock sales - other than that toxic mix of bad behavior and greed. Here is an excerpt…

Pharmalot: At first blush, the reports that several Schering-Plough execs were selling stock last year doesn’t look good. Carrie Smith Cox, their president, sold shares worth $28 million last spring. In your experience, how plausible is the accusation that she and other execs reacted to concerns over the Vytorin trial versus the company explanation that the drugmaker followed proper procedures?
Steiner: I went back and reviewed the sales and I don’t find an issue with the timing. You know, you would expect that smart people would have learned from Martha Stewart. You’re talking about a high-ranking exec lopping off 900,000 shares. The dots aren’t connecting. There’s too much at risk for any shenanigans.

Pharmalot: Why don’t you find an issue with the timing?
Steiner: They sold securities with expiration dates. The other thing you’re seeing is the options are being exercised from a risk management perspective. Their careers and ability to earn compensation is all based on that one company and the industry is at risk - it’s more volatile than most. Meanwhile, they have all that stock, and they’re being issued more. So selling some makes sense.

Pharmalot: Is there any particular pattern that’s noticeable?
Steiner: A couple of them look like they were doing systematic distribution - regular sales. And another one or two appeared to be isolated, one-time events. But to say they’ve all occurred at one shot is stretching. Also, there were black-out periods when shares couldn’t be disposed of.

Pharmalot: You make all this sound reasonable, but we can’t read their minds. We really don’t know what they were thinking or what they knew when the shares were sold. Isn’t this still worth exploring?
Steiner: Well, look, you’ve got an indusry that’s down on its luck and has really become a whipping boy for Congress. That said, Congress and the SEC really should look to protect the interests of shareholders. We need oversight and protection. I don’t mean to suggest otherwise. What I get uncomfortable with is the presumption of guilt. I don’t see anything compelling to indicate it’s insider trading. I’ve read speculation, but not evidence. But we’ll see.

* - Steiner says his client list doesn’t include Schering-Plough execs.