Analysts haven't exactly been high on Dendreon ($DNDN) lately. The company's lead treatment, prostate cancer vaccine Provenge, continues to post sales losses, leaving many pessimistic that the struggling biotech will be able to right the ship. Now, however, it appears one of the company's doubters may have had an ulterior motive. As Reuters reports, a former hedge-fund analyst who argued against Provenge's safety has settled with the Securities and Exchange Commission (SEC) for failing to disclose her financial interest in Dendreon's failure.
According to the news service, trained biochemist and former analyst Marie Huber will pay a $25,000 fine and face a 6-month ban from the securities industry after keeping a $236,000 investment in Dendreon options on the down-low. Huber also purchased options in her mother's account, banking that the Seattle-based company's stock price would sink, the SEC found. Huber neither confirmed nor denied the agency's findings.
The SEC pointed to emails from Huber signed with a false name--and therefore violating the Securities Act--containing a report on the vaccine. The SEC alleges Huber asked her employer, an unnamed New York hedge fund, to submit her report to a federal agency that had solicited comment on whether Medicare should cover Provenge. After the hedge fund declined, Huber and a colleague allegedly emailed the report to about 450 people from a gmail account in the name "Jonathan White," signing it, "A concerned physician, scientist and citizen."
More recently, Huber published a paper in February 2012 criticizing a Provenge clinical trial. The paper, which appeared in the Journal of the National Cancer Institute, argued that a placebo may have had a negative effect on participants' health, skewing the trial results. In authoring the paper, Huber signed a required claim with the JNCI declaring no financial conflicts of interest, Reuters says.
That said, plenty of other analysts out there have forecast a grim future for the floundering company, including one who in August predicted a bankruptcy filing. While other projections have not been quite as dramatic, hope is slim for Provenge, a treatment that never lived up to expectations and now faces stiff competition from drugs like Zytiga and Xtandi. Looking to avoid the worst-case scenario, Dendreon in October put itself on the block, following up a couple weeks later with a wave of 150 job cuts to slash costs as it looks for a suitor.
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