Suit Accuses Amgen Executives of Insider Stock Trading : Business: A former contracts administrator files the legal action. A company spokesman says the charge is without merit.
Top executives of Amgen Inc., one of Ventura County’s largest employers, 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, maintains that the company’s former president, Harry F. Hixson Jr., and two current officials “publicly traded Amgen stock based on insider information as to when the FDA would approve” Amgen pharmaceuticals.
As a result of the alleged insider trading, Hixson and other executives of the Thousand Oaks-based company “earned substantial illegal profits,” according to the suit.
A Food and Drug Administration approval--or rejection--can have a powerful effect on a biotechnology company’s stock. Amgen’s price has soared since June 1, 1989, when the FDA announced approval of Epogen, an anti-anemia drug for kidney dialysis patients.
The stock rose from $38.50 per share on May 30, 1989, to $46.50 a week later, an increase of more than 20%. On Monday, Amgen closed at $121.50.
In response to Mahler’s suit, Amgen spokesman Mark Brand said: “We are confident that his claim is without merit.”
Hixson, who resigned as Amgen president and chief executive officer in February, could not be reached for comment, nor could former Amgen chairman George B. Rathmann. The suit does not name Rathmann 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 or deny whether the company is under investigation.
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.
Yardley said he has not discussed the allegations in the suit with federal investigators. “We’ve just filed the lawsuit, and we intend to attempt to settle the case,” he said, adding that he will cooperate with any investigation.
Amgen has about 1,100 employees at its Thousand Oaks headquarters, and company officials say they plan to add another 800 this year. Monday night, the Thousand Oaks Planning Commission approved Amgen’s proposal to build a two-story office building and a three-level underground parking garage as part of a 300,000-square-foot expansion plan for the firm’s 40-acre site.
Amgen’s sales have soared from virtually nothing a few years ago to $381 million in the year that ended March 31, Brand said. That growth was largely based on sales of Epogen.
The company has also received FDA approval for another drug, Neupogen, that strengthens the immune systems of chemotherapy patients. Brand said that drug is expected to eventually surpass Epogen in sales.
No hearing has been scheduled on the suit, which has been assigned to Ventura County Superior Court Judge Bruce A. Thompson.
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