SEC probes former Dendreon CEO’s stock sales

Tracy Staton

The Securities and Exchange Commission's insider trading team has ($ DNDN) under a microscope. The agency has launched a civil investigation into trades by CEO Mitchell Gold to see whether he acted on inside information about disappointing Provenge .

Anyone who has followed Dendreon over the past several years remembers August 2011, when Gold pulled its sales forecast for the prostate cancer treatment. The highly anticipated drug faltered once it hit the market, partly because of a necessary ramp-up in production, partly because of doctors' reimbursement worries, and partly because of competition from Johnson & Johnson's easier-to-use oral drug Zytiga. The drug's $ 93,000 price tag–and limited survival benefit–didn't help either.

Dendreon's shares plummeted on the announcement, naturally–by a whopping 67%. The retrenchment began almost immediately, with 500 job cuts in September 2011. By February 2012, Dendreon's board had brought in Savient CEO John Johnson to replace Gold as CEO. Last September, the company announced another 600 layoffs, and by December it had sold off one of its Provenge plants to Novartis ($ NVS).

As Dendreon was backpedaling, the SEC was checking out some documents a former company employee had turned over. As The Wall Street Journal reports, the documents detailed Provenge's troubled launch and highlighted stock sales by Gold and others. He had set up an automatic sale plan to unload hundreds of thousands of shares in December 2010, the WSJ notes, and the whistleblower contended that Dendreon execs knew by late 2010 that Provenge faced some serious obstacles. "[T]he writing was on the wall," a former sales rep said (as quoted by the Journal).

By July 2011, Gold had sold 114,000 shares for $ 4.3 million total, the WSJ says; had he held onto the shares, he would have lost $ 3 million.

– see the WSJ piece (sub. req.)

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