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Tuesday, December 31, 2013

Marie Hubers SEC Fine

The website Logical Fallacies is an invaluable tool for any scientist or person who wishes to battle the status quo and those who most benefit most from maintaining the status quo.  As stated in the opening paragraph of the website, "Fallacious reasoning keeps us from knowing the truth, and the inability to think critically makes us vulnerable to manipulation by those skilled in the art of rhetoric." Let's look into the logical fallacies surrounding Dendreons Provenge saga.

We have two sides, Dendreon and Marie Huber. One is a once-multi billion dollar biotech company. The other is a private citizen who took issue with the reasoning behind the approval of Dendreons Provenge. Both sides of this story have presented a scientific sounding argument in peer reviewed journals. Both sides appear to have had a monetary motive for practicing the art of deception. Both sides have been accused of some serious shenanigans. In the end, Dendreon is a company on the verge of bankruptcy and Marie Huber has been dragged through the mud.

Here is the final verdict as posted by a pro-Dendreon bully on the Wikipedia site:
Huber's contentions were ultimately exposed as a scheme to profit from speculation in put option contracts in the underlying security of Dendreon Corporation, which would have produced enrichment in the event the stock price were to have declined; the SEC accordingly found in November 2013 that in their reporting of Provenge, she and a colleague, via the dissemination of untrue statements and omissions of fact as a means to obtain money or property, violated Section 17(a)(2) of the Securities Act of 1933 (Securities Act), and imposed against each of them a six-month suspension, a $25,000 civil penalty, and a cease-and-desist order. - Wikipedia entry for Provenge 
"Hubers contentions were ultimately exposed as a scheme to profit from speculation..." The author here is referring to Ms Hubers "Alternative Explanation" as "contentions. This is an important point. The SEC report on Ms. Huber states:
After reviewing and analyzing the FDA documents, Huber concluded that 
the Provenge treatment was hastening the death of patients.  In June 2010, Huber began 
drafting a report for HFA-A, entitled “Provenge PhIII Trials – The Alternative Explanation 
of Survival Results” (hereinafter referred to as the “Alternative Explanation”)
The SEC report later makes the distinction:
A version of the Alternative Explanation was subsequently published in the “Journal of the National Cancer Institute” on February 22, 2012. The findings in this Order do not address the conclusions set forth in the Alternative Explanation. 

The SECs claims against Ms. Huber was that she tried to profit from her June 2010 Alternative Explanation report.
During the period of June 17, 2010 through July 12, 2010, Huber purchased $125,431 in July Dendreon put options and $110,627 in August put options.Huber also purchased put options in her mother’s account, and shared her analysis with friends and family who subsequently traded in Dendreon securities. The July put options that Huber purchased were set to expire on July 17, 2010, and had strike prices ranging from $10 to $30. All of the put options were “out-of-the-money” and most of them had strike prices of $25 or less.   Dendreon common stock was selling in the low to mid $30s.
Ms. Huber did her analysis in June 2010 and purchased put options in July. The argument that the Alternative Explanation report is thus a "scheme for profit" might seem logical on the surface. The problem is that the Alternative Explanation exists separately. Was it developed in order to short the stock? Or was it the impetus to short the stock? We don't know nor have we, nor the SEC, attempted to sort that one out.

The logical fallacy is called the Genetic Fallacy. This fallacy is committed when an idea is either accepted or rejected because of its source, rather than its merit. The idea that we are most concerned about here is the truth behind Provenge. Does it work? Is it safe? We mustn't make the Appeal to Authority and accept the FDA ruling, nor can we assume that the demise of Dendreon means Provenge doesn't work. Locially, there is still work to do regarding the Dendreon Provenge saga. One path we should take is in the practice of clinical trials and how a biopharma company interacts with the FDA. But we'll save that for another day.

I think the Genetic Fallacy addresses the Wikipedia damnation, along with all of the other detractors who wish to write off the scientific arguments made in the JNCI paper. The Alternative Explanation and the JNCI paper have not been called into question. The science is not the issue behind the SEC smackdown of Ms. Huber. The scientific method is a journey. It begins one day with a hypothesis. You test your ideas and maybe one day you decide to publish them. The merits of that journey remain untouched by Dendreon bullies and Wikipedia ghost authors.

Now then, as for Marie Hubers SEC troubles. Marie Huber recently made the following comments on the CCS from this post. 
  • A trial would have cost me at least a year and $100,000 -$250,000 in legal fees.
  • Settling cost me $25,000 and a 6 month suspension.
  • My legal defense bill over the 3 years of this SEC investigation has run into SEVEN FIGURES.
The terms of settlement prohibit me from making any statement other than "I neither admit nor deny the SEC's allegations". This means that YOU KNOW NO MORE AFTER READING THE SEC's ALLEGATIONS THAN YOU KNEW BEFOREHAND. An allegation, by definition, need not have anything behind it but the alleger's motivated imagination. Again, "I neither admit nor deny the SEC's allegations".

July 14/15, 2010: An anonymous report that I had written (exposing hidden results from the Provenge trials) was emailed to a bunch of biomedical folks (only 2-3% of whom were investors).

July 15, 2010: my employer files my report with CMS, identifying us as investment advisers.

August 5, 2010: I log the i.p. addresses of Kroll (private investigators) and Marsh McLennan (their former parent company), trawling through decades of archives of my personal website (www.mariehuber.com)

August 10-20, 2010: i.p. addresses from Seattle, WA, hit my personal website.

August 12, 2010: "Someone from Dendreon Corp" browses my LinkedIn Profile.

Sept 14, 2010: Mitch Gold approaches me, out of 300+ analysts who had just listened to his presentation at the Morgan Stanley conference (he does not know me, but I wear my distinctive long, curly hair down in order to lure him, and he obliges). After a little fun, Mitch reveals that he knows that I wrote the anonymous report on Provenge.

October 6, 2010: [I only learned this in 2013] the SEC contacts gmail regarding the account Jess had created to email my report.



The SEC settlement over my friend's distribution of a report I had written in 2010 is unrelated to my JNCI publication.

The JNCI publication occurred 1.5 years after my puts had expired worthless. I had no financial interest, in any way, around the time of the JNCI publication, or which could have been influenced by it. I was completely truthful in my disclosures to the journal, and given that the SEC had been all up in my business from early 2011 onwards, the settlement acts as PROOF of this.

I wished I HAD written in bold at the top of my report: "I believe so strongly in the shocking nature of the data that Dendreon has hidden and the only logical conclusions to be drawn from it, that I have bought thousands of puts betting on a decline of 30-80% in the price of DNDN stock over the next month". Maybe if i'd written that some people might actually have read it.

Anyone that did read it and understand it would have saved themselves from a 66% decline in the value of any DNDN shares they held in August 2011, when the "efficacy" of Provenge spoke for itself.
---------------------------

She ends with a logical fallacy of her own. The stock tanked in August because Mitch Gold made some promises he couldn't keep. He priced his product too high and didn't give his sales team a chance to make money. The efficacy of Provenge may have contributed to the doctors decisions not to prescribe the treatment but a stock price has no logic. 

I believe Ms. Huber and her analysis of Provenge. She was brave to take the journey, even though she may have tried to turn a profit Wall Street style. What matters here is the way in which clinical trials are conducted and reported to the FDA and the rest of us. Big Pharma has the same for-profit motivations as anyone trying to short their stock.


4 comments:

Marie Huber said...

You have earned my deep gratitude and respect for this follow-up to your earlier article. Thank you. Sincerely.
Had I known you'd quote me verbatim, I'd have striven for greater eloquence and concision.

There is much I would like to share, but I shall limit myself to two comments.

(1)
The oldest and most blatant logical fallacy of all is that in the SEC's allegation that the identity and investments of my friend and I would have made any difference to investors. Since EVERYTHING IN MY REPORT WAS TRUE, this ad hominem is baseless. I had written a scientific report exposing CLEARLY HIDDEN DATA (as I subsequently proved) and whose content was almost exclusively fact, not opinion. Facts do not change with who states them. Doctors, patients, even investors had a right to that information, and Dendreon had denied them that right. The only relevant motivations were those of the parties that carefully withheld these key data, even going so far as to falsify the record in the NEJM in order to keep every last red flag from exposing their whole ,elaborate artifice.

(2) I have spent 3.5 years working to expose the truth about the IMPACT trials, much of which has been away from public view. For the first 8 weeks of these 3.5 years, I aligned my financial interests with my belief that Provenge is harmful. That belief, which has only grown stronger the more I have learned, is the only logical conclusion that a legitimate truth-seeker would draw from the data. I invested in anticipation of a decline in Dendreon's stock when I first discovered the unexpected data from the Provenge trials in the FDA's approval documents, and realized what they meant. Ever since the alleged survival benefit in IMPACT was announced, eilte doctors and scientists had been scratching their heads about how (or even if) Provenge could have produced it. Before an audience of hundreds at ASCO I had witnessed a senior IMPACT investigator questioning whether the data were even _real_ just 2 weeks earlier. When I purchased my puts, not only did I believe the scientific community would be eagerly receptive to the solution to this puzzle that had been vexing them, but I also believed that a dozen other curious minds were discovering the same data and reaching the same conclusions as I. I thought the truth would break any day.

Obviously I was wrong. Painfully wrong. But my relentless effort to uncover and expose the truth about Provenge did not lessen one iotum after my puts expired worthless. (n.b. even the SEC did not allege that my report was part of a scheme: my puts would only profit from a 30-80% decline, which no scheme could ever precipitate. It was already clear by the evening of July 15th, that Dr Jones' dissemination of my report had had no impact: DNDN had risen above its opening price before closing at -4%. Had my trades been a bet on my report, I would have sold my August puts on July 16th, and recouped most of their cost. The fact that I did not suggests that I invested anticipating the truth about Provenge would be exposed. My miniscule sale of July puts (7 cents per share) was reinvested into August puts.

Not only did I work just as intensely once my options had expired, it COST me dearly to continue in these efforts. I had always wanted to take ownership of the report that I had written, but anonymity was a mandate imposed by my employer. Thus I had to choose between my job (income, healthcare, status, etc) and pursuing publication of the scientific paper I had co-authored. I paid a huge price in quitting my job, with nothing to gain but the ability to look myself in the mirror knowing I had done the right thing.

If indeed it was Dendreon that set the SEC on me, then hats off to Mitch Gold (erstwhile CEO). Using a powerful government agency to silence a dissenter was an inspired stroke of cunning.

The final word on Provenge has not been uttered...

p.s. It is no logical fallacy to say that an investor that sold their stock in 2010 would have been spared the huge losses of its 2011 decline. it's just true.

Ginsberg said...

You are welcome Marie. You have made your case with great eloquence and concision, here and on your website. Right or wrong (and I think you are right), no one has taken quite the risk you have.

Anonymous said...

Marie Huber is a fraud and should have been handed a lengthy prison sentence for her criminal wrongdoing. Scientists from the NIH completely debunk her ludicrous "theory" here:

http://www.abstractsonline.com/Plan/ViewAbstract.aspx?mID=3086&sKey=8dc35a86-d973-4f4b-abdd-717b8e5c4096&cKey=26207d5b-db55-4851-95fc-17c7ba2446e2&mKey={9B2D28E7-24A0-466F-A3C9-07C21F6E9BC9}

Ginsberg said...

Please refrain from ad hominem arguments.