Are The Feds Probing The Dendreon ‘Bear Raid?’
September 7th, 2011 // 12:52 pm @ jmpickett
Last year, the US Securities and Exchange Commission’s Office of Inspector General released a report indicating the agency’s Enforcement Division was investigating allegations into market manipulation and a “bear raid†on shares of Dendreon, the maker of the controversial Provenge prostate cancer vaccine. A bear raid occurs when a trader tries to force down the price of a stock to cover a short position.
The OIG opened its investigation two years ago, after receiving an investor complaint from US Senator Chuck Grassley, alleging that such a raid took place in April 2009 and caused a 65 percent drop in Dendreon shares within 75 seconds. According to the complaint, an Internet message board posting warned of the raid, which occurred not long before Provenge clinical trial results were to be released.
So whatever happened? An unnamed individual, who asked not to be identified, subsequently asked the SEC for a copy of its report into the bear raid allegation and the agency responded to the Freedom of Information Act request by sending a partially redacted 7-page document. This indicated the OIG had, in late 2009, referred the matter to the Enforcement staff (read this). Since then, there has been silence.
However, there appears to be an interesting wrinkle. In the August 29 cover letter accompanying the heavily redacted report, the SEC Office of FOIA Services writes that certain information was withheld, or redacted, pursuant to federal law granting an exemption. And this is the intriguing part, because it suggests that an unnamed law enforcement agency is pursuing the bear raid allegation.
“This exemption protects from disclosure information compiled for law enforcement purposes, the release of which could reasonably be expected to interfere with enforcement activities. Because the underlying circumstances may change, we may later disclose some of this information,†according to the letter, which you can read here.
Is this boilerplate language, though? We asked the SEC for some insight and a spokesperson declined to comment. However, a source familiar with agency workings explains that it is reasonable to assume that law enforcement scrutiny is under way, although that does not automatically suggest that the SEC is the agency conducting a law enforcement test.
The issue remains open, but this is one of the many strands that have comprised the Provenge saga, which has been characterized by allegations of conflicts of interest among FDA advisory committee members who reviewed the vaccine in 2007 and convinced agency officials to withhold approval even after its own panel issued a recommendation. That maneuver generated probes and lawsuits.
More recently, there was controversy over the extent to which physicians can be expected to receive reimbursement for paying for the vaccine upfront, which costs patients $93,000 to have three shots administered (read here and, here here). The issue prompted the vaccine maker to roll back sales forecasts, which sent its shares plunging and was only the latest twist to enrage Dendreon investors.
Source: Pharmalot
