BOSTON (AP) — The withdrawal of a new multiple sclerosis drug has focused scrutiny on millions of dollars in insider stock sales at Biogen Idec Inc. and executive bonuses awarded before the company disclosed a death and illness that led to the drug’s removal from the market.
The stock transactions — one of them on the same day the company notified federal regulators about the problems — came before Monday’s withdrawal of Tysabri wiped out $17.8 billion in shareholder equity in a single day for Biogen and Elan Corp.
The biotechnology partners had enjoyed surging share prices the past year on high expectations for their jointly developed drug.
Within a four-day span before the drug’s makers notified the Food and Drug Administration of the problem, three Biogen executives sold stock.
That notification occurred Feb. 18 — the same day Thomas Bucknum, a Biogen executive vice president and the company’s general counsel, sold 89,700 shares for a profit of $1.9 million, according to the company’s filings with the Securities and Exchange Commission. Mr. Bucknum’s gain reflected the rise in the value of company shares since the options were granted starting in 1998.
Mr. Bucknum also was awarded new options on 55,000 shares on Feb. 17, the day the company’s board approved a committee recommendation granting Biogen executives cash bonuses totaling $4.6 million based on its performance last year.
Biogen’s executive chairman, William Rastetter, sold more than 120,000 shares on Feb. 15, yielding a $7.45 million profit, the filings show.
The day before that, Biogen director Robert Pangia sold 15,570 shares for a profit of $954,844.
Walter Ricciardi, head of the SEC’s Boston office, declined to comment yesterday, citing agency policy not to discuss what his office may or may not investigate.
Biogen spokesman Jose Juves said the stock transactions were planned before the company learned of Tysabri’s problems and notified the FDA.
“All these trades preceded that quick and decisive action, which was guided exclusively by concern for patient safety and our commitment to the MS community,” Mr. Juves said.
“No one waited around to inform the FDA, and the trading window was immediately shut as soon as the senior management became aware of the safety issue,” Mr. Juves said.
The company notified the FDA after a patient died from a rare and frequently fatal disease of the central nervous system. Another, with a suspected case of the same illness, survived.
Monday’s withdrawal of Tysabri and suspension of clinical tests came 10 days after the companies notified the FDA.
Biogen shares lost more than 42 percent of their value Monday, while Elan’s stock fell 70 percent.
Yesterday, Biogen shares rose $2.61, or 6.8 percent, to close at $41.26 on the Nasdaq Stock Market. Elan shares closed down 3 cents at $7.97 on the New York Stock Exchange.
Regardless of Biogen’s statement that executives were unaware of Tysabri’s problems before their recent stock transactions, W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass., said he found it “suspiciously coincidental that they would be selling these shares almost on the eve of this occurring with the FDA.”