Stock trading questions at Schering-Plough

Did Schering-Plough execs peek at the Vytorin trial data and, spooked, bail out of millions worth of stock?

Of course not. That would be insider trading. But four company officials--Carrie S. Cox, president; Thomas J. Sabatino Jr., executive VP and general counsel; Brent Saunders, senior VP and president, Consumer Health Care; and C. Ron Cheeley, senior VP for global HR--did unload a bunch of shares in April and May of 2007. Cox alone sold about $28 million worth. Sabatino sold off $907,000 in stock; Saunders raised $1.4 million; and Cheeley sold $3.3 million worth.

The company says the Enhance data was only unblinded two weeks ago. But it's been almost two years since the study wrapped in April 2006, and company officials knew enough last fall to ask experts for advice on changing its primary endpoint. The House Committee on Oversight and Investigations says it's investigating, with plans to send out letters requesting information later today.

Let's assume there's been no wrongdoing. Why, then, might Cox have exercised almost all her options and then sold out? Whatever the reason, the sale suggests that she lacks faith in the company's long-term prospects. Now, that may be completely false; she may have sold her stock reluctantly to pay her ARM balloon or to buy a vineyard in Tuscany. But to the average shareholder--and the average Schering staffer--dumping 900,000 shares of stock looks bad, even if it isn't.

And looking bad isn't something the company can afford right now. As the Wall Street Journal reports today, Schering has the most to lose from the dismal Enhance results; Zetia and Vytorin are its lead products, accounting for more than half of the company's earnings.

- see the release from the Subcommittee on Oversight and Investigations
- here's story at CBS News
- read the WSJ's analysis of Schering's fortunes
- check out the stock-sale item at BrandWeek NRX
- get more on Cox's sale from BrandWeek

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