Amgen Execs Accused of Insider Trading : Biotechnology: The company’s former contracts administrator filed a lawsuit containing the allegation.
Top executives of Amgen Inc., the Thousand Oaks-based biotechnology firm whose sales and stock price have skyrocketed since FDA approval of its two major drugs, were accused of insider stock trading in a lawsuit filed Monday in Ventura County Superior Court.
The suit, filed by former Amgen contracts administrator Benjamin Y. Mahler, claims that former Amgen President Harry F. Hixson Jr. and two other company officials “publicly traded Amgen stock based on insider information as to when the FDA would approve” Amgen’s products.
As a result of the alleged insider trading, Hixson and the other executives “earned substantial illegal profits,” according to the suit.
In response, Amgen spokesman Mark Brand said: “We are confident that his claim is without merit.”
Hixson, who resigned as Amgen president and chief executive last February, could not be reached for comment, nor could the other executives named in the suit, Vicki Engard and Ed Garnett.
Amgen’s former chairman, George B. Rathmann, also could not be reached for comment. The suit does not name him as a defendant but says he took part in the alleged conspiracy to violate Securities and Exchange Commission rules.
Officials at the SEC’s Los Angeles office said they could not confirm nor deny whether the company is under investigation.
An FDA approval--or rejection--can have a powerful impact on a biotechnology company’s stock price. Amgen’s stock price has soared since June 1, 1989, when the FDA announced approval of Epogen, the anti-anemia drug that has become its best seller. The stock went from $38.50 per share on May 30, 1989, to $46.50 a week later, an increase of more than 20%. Amgen’s stock closed Monday at $121.50 a share.
The suit alleges that Mahler, a Newbury Park resident, was wrongfully terminated in June, 1990, and that one of the reasons was his refusal to participate in the alleged insider-trading conspiracy. It seeks $10 million in punitive damages from each of the defendants as well as compensation for emotional distress, loss of income and loss of benefits such as options to purchase Amgen stock at a discount.
Art Staubitz, Amgen’s general counsel, said: “This is a former employee who left some time ago and did not leave under the most happy of circumstances.”
Mahler’s attorney, David R. Yardley of Los Angeles, said his client “has evidence to back up every specific allegation in that complaint regarding the heavyweights in the company.”
“This is just the tip of the iceberg,” Yardley said, adding that “insider trading was rampant” at Amgen.
Amgen is one of the largest employers in Ventura County, with about 1,100 employees at its Thousand Oaks headquarters. Company officials say they plan to add another 800 employees this year.
