Biogen’s General Counsel Resigns Amid SEC Probe
Biogen Idec Inc.’s top lawyer, who sold shares at near-record prices on the day the company told regulators that patients in a clinical trial had fallen ill, resigned Wednesday.
A Biogen spokesman declined to comment on the abrupt departure of its executive vice president and general counsel, Thomas J. Bucknum. Attempts to reach Bucknum were unsuccessful.
Biogen Idec and Elan Corp. pulled the multiple sclerosis drug Tysabri off the market Feb. 28 after one patient died and a second became seriously ill while taking the medicine. Shares of Cambridge, Mass.-based Biogen plummeted 42% as a result.
Securities laws bar company executives from trading shares when they have nonpublic information that could affect the stock.
Biogen learned Feb. 18 that one patient, and possibly a second, had developed a rare and often fatal sickness called progressive multifocal leukoencephalopathy, or PML, an ailment found in patients whose immune systems are severely compromised. The company immediately reported the cases to the Food and Drug Administration.
That same day, Bucknum sold 89,700 shares for $6 million, making a profit of $1.9 million, according to Securities and Exchange Commission filings. Bucknum purchased the shares just before selling them by exercising stock options.
In response to questions last week, Biogen said that Bucknum’s trades had been planned and executed before he had learned that the two patients were ill. On Wednesday, company spokesman Tim Hunt refused to confirm that as the explanation for Bucknum’s trades.
Biogen said last week that it was cooperating with the SEC in unspecified matters related to the withdrawal of Tysabri; some legal experts thought the SEC could be looking at possible insider trading.
The timing of Bucknum’s trades, “to put it modestly, looks suspicious,” said Stephen L. Meagher, a former federal prosecutor who now represents corporate whistle-blowers.
An SEC spokesman declined to comment.
In addition to Bucknum, three other Biogen executives sold shares before the Tysabri news broke. Chairman William Rastetter sold 120,313 shares on Feb. 15 for a $7.7-million profit. On Feb. 14, Executive Vice President Craig Eric Schneier sold 3,500 shares for a profit of $102,024, and director Robert Pangia sold 15,750 shares for a gain of $951,657.
On Wednesday, Hunt confirmed the company’s previous statements about these insiders’ actions being unrelated to Tysabri: Sales by Rastetter and Schneier were part of automatic share divestiture programs, and Pangia “had no knowledge” of problems with Tysabri when he sold his stock.
The FDA approved Tysabri in November under an accelerated review program designed to speed drugs to market. The agency looked at the first year of data from two clinical trials, which were designed to last two years.
The FDA found that patients using Tysabri had more infections but that they were generally not serious and easily treated. The higher rate of infection was not a surprise because Tysabri binds to immune cells that are believed to play a role in MS but may also help fight disease.
Then, on Feb. 24, the patient died of PML, an illness typically found in AIDS patients. Last week Biogen confirmed that the second patient also had developed PML. The two had been taking Tysabri and Avonex, another Biogen drug for multiple sclerosis.
Bucknum, 58, became general counsel in 1999 and joined the company as chief corporate counsel in 1996. Before that, he was senior vice president and general counsel of DuPont Merck Pharmaceutical Co. Bucknum earned $595,950 in salary and bonus last year.
Biogen’s shares rose 96 cents to $39.31 on Nasdaq.
