The former chief executive of US firm Transkaryotic Therapies, Richard Selden, has been charged with fraud by the US Securities and Exchange Commission.
The SEC says that Richard Selden misled investors over trials of TKT’s Fabry disease treatment, Replagal (agalsidase alfa) in order to artificially inflate the company’s stock price before selling his own shares.
It is alleged that from at least October 2000 until October 2002, Dr Selden and TKT made positive statements about Replagal, which was filed for approval with the US Food and Drug Administration in June 2000. Upbeat press releases were sent out, despite Dr Selden knowing that the FDA had informed TKT “on several occasions beginning at least as early as January 2001” that the pivotal trial conducted with the drug was a failed study.
Also, the SEC alleges that from early 2001, TKT had informed the FDA that it did not intend to seek approval for Replagal but only disclosed the negative data after the close of markets on October 2, 2002. The stock plummeted from $33.25 per share on October 2 to $12.75 the day after. The SEC says that TKT’s stock price had been kept at artificially high levels for months and Dr Selden benefited by selling 90,000 shares and “unjustly enriched” himself by $1.66 million. The Commission is demanding that sum along with the $1.1 million in salary and bonuses he earned during the period.
Dr Selden, who was forced to step down as TKT’s CEO in February 2003, has come out fighting. His attorney told the Boston Globe that his client had only acted on advice from TKT’s lawyers and “he deserves and expects to prevail at any trial of the issues.” Furthermore, “when the FDA determined that Replagal was not approved, Dr Selden helped assure that that bad news was immediately publicly announced,” attorney Thomas Dougherty told the newspaper.
This is not the first time that TKT and the Replagal case has attracted the attention of the SEC [[26/07/04c]], but this latest complaint only cites Dr Selden so it remains to be seen whether TKT’s new owners Shire gets drawn into the case: TKT was recently acquired by the UK’s Shire Pharmaceuticals in a $1.6 billion deal [[28/07/05g]].