Senator Charles Grassley asked U.S. regulators to probe whether Vertex Pharmaceuticals Inc. executives profited unfairly from stock sales before corrected drug data sent shares down.
Calling the sales “a potentially troubling issue for investors in the pharmaceutical industry and for the federal government,” Grassley wrote Securities and Exchange Commission Chairwoman Mary Schapiro to ask her to look into share sales by five company executives and two board members.
Vertex gained 55 percent on May 7 after the company said a study of its experimental cystic fibrosis drug VX-809 combined with Kalydeco helped patients’ breathing. On May 29, the shares fell the most in three years after the Cambridge, Massachusetts-based company revised those results, saying the therapy wasn’t as effective as claimed.
“It could appear that these Vertex executives potentially took advantage of the spike in the stock knowing the news of the clinical data being overstated would be made public eventually, which in turn would negatively affect the stock value,” Grassley said in his letter, dated today.
The executives and two board members got rid of their shares from May 7 to May 29, as part of timed sales, according to Grassley’s letter. He has asked for an answer from the SEC by June 28.
Vertex spokesman Zach Barber said that the share sales had been scheduled ahead of time according to a pre-planned shares process, and that Vertex disclosed the correction to the data quickly.
“All shares sold by our executives and directors were either part of pre-existing 10B5-1 plans or followed Vertex’s internal stock trading policy,” Barber said in an e-mail.
Vertex shares fell 1.1 percent to $56.77 at the close in New York. The company has gained 4.8 percent in the past 12 months.
Grassley could open his own investigation of the stock sales. The Iowa senator has used his position as the top Republican on the Senate Judiciary Committee and a member of the Senate Finance Committee to investigate potential wrongdoing by health-care companies in the past.
Vertex said on May 29 that a misinterpretation between Vertex and an outside data-analysis firm led to the correction. It doesn’t affect Vertex’s plans to start final-stage trials for U.S. marketing approval, Chief Executive Officer Jeffrey Leiden said on a conference call that day.
John Nester, an SEC spokesman, said the agency had received the letter but declined to comment on its substance.