Before a big meeting of doctors, a handful of pharmaceutical stocks move in mysterious ways. With an annual gathering of cancer specialists coming June 1, the action already has begun.
Shares of ImClone Systems have tumbled more than 9% since Tuesday on heavy volume after embargoed data from an important cancer trial was released to 24,000 physicians expected to attend the conference of one of the largest oncology groups, the American Society of Clinical Oncology, or ASCO. Shares of Regeneron Pharmaceuticals have fallen almost 15% since and Genentech is down 3%, while Onyx Pharmaceuticals is up almost 10%, as investors pass around abstracts, or summaries, of data to be released as part of the ASCO meeting.
'Oncology stocks consistently have shown unexplained volatility around the time ASCO releases data on embargo to its members,' says Steven Harr, an analyst at Morgan Stanley.
In fact, a number of analysts and investors have urged ASCO officials to stop sending the summaries to doctors before the conference, or make them available to everyone, in order to give investors an equal opportunity.
'We have pointed out the volatility to ASCO in multiple communications over the past several years,' says Dr. Harr, who also is a physician.
But the oncology group says that while it has tweaked the way it shares the data ahead of the meeting, it doesn't have plans to stop releasing the summaries beforehand. Officials say they have tried waiting until the conference to release the data but its members were inconvenienced, noting that ASCO serves its members, doctors and cancer patients, not Wall Street.
Officials say the abstracts, which can be submitted as much as six months in advance of the meeting, only go to ASCO members, and that they come in a shrink-wrap package that has written instructions that the recipient can't "publish the information or provide it to others or use it for trading purposes," says Kristin Ludwig, senior director of communications and patient information for ASCO.
"We've worked very hard to communicate the policies to members," Ms. Ludwig says. She says ASCO will review its policies after the meeting.
The strategy doesn't seem to be working. The summaries were sent out last week, and a broad range of investors say they got their hands on the abstracts this week.
Almost two years ago we posted about the related "drug secrets" controversy. At that time, the issue was researchers involved in particular clinical trials being paid to talk about ongoing clinical trials to investors. Then, and again now, the controversy focused more on the possibility of insider trading than the drawbacks of restricting the distribution of data from clinical research.
In my humble opinion, however, the real concern is how in both contexts information about clinical research was being made available a select group before it was made more generally available. Restricting data from clinical research to a select group, even temporarily, is bad for science, bad for patients and health care, and bad for the patients who participate in clinical research.
It is bad for science, because advancing science requires open discussion of results and methods, and open discussion is not possible when only a few people have the results. It is bad for patients and health care, because restricting the dissemination of information restricts which patients may benefit from it. Finally, it is bad for patients who participate in research, because it may break promises given to the original research subjects that data from their participation would be used to advance science and benefit other patients.
I understand that in the current case, the ASCO members might want to see meeting abstracts before they go to the meeting, if for no other reason, to help them plan which sessions they will attend. But I see no good reason not to make the abstracts available to anyone else who is interested at the same time they go out to he society members (subject to a reasonable fee to cover publication costs). Making the abstracts more widely available would not inconvenience physicians who want to plan their time at the meeting, but it would ensure there would be no "insiders" to trade.
As clinical research has become increasingly commercialized, we risk forgetting what the point of research on patients ought to be. It should not primarily be about marketing drugs or pricing stocks. It should be about advancing science and health care.
See also discussion on GoozNews and on PharmaLot, both focused on the insider trading issue.
ADDENDUM (May 19, 2007): Listen to our brief comments on this issue during a report aired on the NPR Marketplace program May 18 here.