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.2 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.

Mala Aria, Italian For Bad Air

When the ancient Romans were conquering the world they became familiar with the disease malaria. They noticed a correlation between thick musky swamp air and the disease. They deduced that the bad air, mala aria in Italian, was the root cause of the disease. Whenever they encountered the disease they drained the nearby swamps. The solution worked. Of course, scientists later honed in on the real culprits, blood parasites transmitted by anopheles mosquitoes.

Rene Descartes said, "Good sense is, of all things among men, the most equally distributed; for every one thinks himself so abundantly provided with it, that those even who are the most difficult to satisfy in everything else, do not usually desire a larger measure of this quality than they already possess."

One of the greatest obstacles of drug research and development is in the assumption that we know how to do it. Coming from the billions and billions of research dollars and the thousands of disparate workers trying to make money for their employers, is the occasional FDA approval. From the approvals we occasionally get a new treatment that is useful. Like blaming the bad swamp air for malaria, we miss the mark when assigning cause and effect. If we dig a little deeper we find that only science brings about real change.

When a company fails to beef up their pipeline, the C-level execs take action to get rid of the dead wood. In the process, they may very well be axing the only chance science has to do what it does. In that moment, where people and ideas turn over, the C-level execs want you to believe that they have done some good. They are draining the swamp. No one has yet figured out how to research disease and develop drugs without simply spending money, starting and ending projects, and hiring and firing the usual suspects. We don't know what it is that made us succeed at the last project nor why we may be failing at the current one. We succeed quite randomly, if we are to be honest about our profession. If that is not true, and we in fact do have drug development experts, where are the lessons offered by the enlightened? Are we not in need of a larger measure of this quality than we already possess?

There are those, however, who lack the skepticism of the scientists. They are the capitalists.  They will soon be gathering at the 32nd annual JP Morgan Healthcare conference in San Francisco, Jan. 13-16. Luke Timmerman, industry cheerleader, announces the upcoming event:

So what about all the healthcare industry capitalists? Are you ready to make the most of this week when all the decision makers and big investors are together in about a five-block radius?

So much for journalism, this is going to be a love fest. The leaders are gathering. It is time for all good soldiers to make a good impression. The healthcare industry however, is one of many elephants in the room when thinking about the next American crisis. Scientifically, we still do not have a viable career path for our scientists. Financially we have a group of fools and fanatics gathering in a five block radius to talk about ways of profiting from a national disgrace, our healthcare industry.

The whole problem with the world is that fools and fanatics are always

so certain of themselves, but wiser people so full of doubts.

-- Bertrand Russell 

Luke has some advice for the decision makers, big investors and those who want to bend their ear.

Don’t get overscheduled. I’ve made this mistake many times. It’s normal to be such an eager beaver that you pack your entire calendar with 1-on-1 meetings, in 30-minute blocks, from 7 am to 6 pm every day. And that’s all before the evening receptions. 

What will the leaders, investors and journalists who reside over our healthcare system discuss. A reproducibility initiative to strengthen the scientific foundation of the industry? New ways of strengthening the scientific labor force? How well things have gone in the last 32 years? The leaders, investors and journalists may simply be there as the proverbial "bad air", dense, powerful, yet not directly responsible for the success of the industry. For 32 years the leaders have been gathering to inspire one another, resulting in a disastrous system of healthcare. But that is not what they are gathering to talk about.

This conference is one of the largest and most informative healthcare investment symposium in the industry, bringing together global industry leaders, emerging fast-growth companies, innovative technology creators and members of the investment community. 

Approximately 300 companies, both public and private, will deliver presentations to an estimated more than 4,000 investors.

Wouldn't it be interesting if these 300 companies delivered presentations to an empowered, non-biased, career stabilized group of scientists tasked with assessing the science?

Dying Days

Each day my dad awakes to a breakfast of roughly 20 medications. He spent his life smoking, eating a diet of mostly processed food, and not exercising. Now at the age of 72 he is a very sick man. He's had several heart attacks, heart surgery, he has COPD, and his circulation is very poor. He has been in and out of hospitals and nursing homes 13 times. Each time he is released, he goes home and smokes, eats process foods and watches tv until his body gives out again and he has to dial 911. He has racked up bills of well over $700,000.

I've come to live with him to take care of him. Unlike the doctors, I follow the details of my dads end of life experience. His doctors have provided him with the prescriptions. Every now and again he visits them at the various hospitals where they work. They ask him how he's feeling and he tells them he feels terrible. He wants to hide things he thinks will jeopardize his autonomy, like that he has fallen. The brief conversations between the doctor and patient lead to the western solution to every malady, medication. A complex system, the human body at the end of its life, is treated by a simple system. Take old person to doctors work place, read a few vitals, have a talk, prescribe and/or adjust medications that are currently available, and/or maybe schedule a surgery.

The last nursing home experience seemed to transform my dad from a very sick patient to someone whom the authorities deemed acceptable to live on his own, with his sons assistance. Things have gotten worse in this first week. What took place inside his body? The excitement of going home after 2 1/2 months energized my dad. Day one back home he went through his mail, talked on the phone to family, and finished off the day with in his easy chair watching his tv. He also ate a double cheeseburger. The next day he began to feel worse. Since then he's been eating less, sleeping more and he has become far less steady on his feet. Was the cheeseburger a mistake? What took place at the nursing home versus my dads home? The pills and their doses were adjusted, but what was the real change that brought about the improvement?

Confounding factors, such as diet, exercise, and emotional state have not been considered. Some of the pills are simple compounds found in natural food such as KCl and folic acid. What if the patient has decided to give up their wicked ways and eat plenty of fruits and vegetables to get these nutrients? Would that alter the prescription? Then we have the Zoloft to treat depression. It's depressing to be this sick. Perhaps it is unnecessary to pharmaceutically deal with the fact that you are in need of so many pharmaceuticals. Let the patient be sad. Sadness, perhaps, is not a medical condition. To a doctor and the healthcare industry he, as a generic patient, has been understood. Sad? Zoloft. Next problem. To those of us outside looking in, the problem is that he is also a living breathing thinking human being. At the doctors he is probed and interviewed at regular intervals. New paths are set. If he gets worse, its because of the illness or the lack of following the path. If he stays the same or gets better, it's due to the path. Unknown to the doctors is the path outside of their purvey that might have an equal influence on his physical and mental well being.

I think of myself, this blog and why my message does not have an impact whatsoever. I have good points. The industries of biopharma and healthcare are sick. They need to be cheaper, more effective and offer more opportunities. More communication is needed. The science needs to be more rigorous. In spite of my reasoning and the solutions I have proposed, I am not taking into account the confounding factors. Society doesn't like a nattering nabob. An anonymous blog is a poor format to influence others. Just like the doctors and their pills, I am not taking into account the complexity of the system of which I speak. I might have a good remedy, such as the concept of certification of laboratory staff and their work, but I did so here on this blog. Like an ineffectual medicine, I introduced my remedy in the wrong place. It cannot reach the location where it will do the most good. Likewise, a medical remedy may work at a cellular level, in a mouse or culture dish, but how will we get the same mechanism of action to work in a person?

Note: That's just an example of a system that also doesn't bring about change. I write the blog for practice getting ideas out of my head. 

The Cargo Cult message here today is a lesson I am learning as I watch my dad struggle. It is not enough to memorize the parts of an airplane and what they do.

You can learn about the parts, who makes each part, what the name is in Spanish and know nothing about what makes the airplane fly. Now look at the human body:

Each part has its own doctor. The body however is more than parts. That is the area in which the Cargo Cults of medicine must study. What makes a body live, think, age and eventually die?

Doctors and pharmaceutical companies are also mere parts. The leaders of healthcare must invest in understanding the system of healthcare itself. How does the system effect an individual, such as an old man who takes 20 pills every morning. In time we should advance our understanding of life and death, the system we have to  deal with it, reduce the amount of pills, and paradoxically treat the body through all of its stages of life.

Zuckerbergs Nobel Prize in Life Sciences

I don't like honors either. From the Cargo Cult perspective, awards can be given in spite of the arrival of cargo. Imagine an award given to the tribesmen of Vanuatu for best ceremonial dance or best costume. The real award for the tribe would be the cargo. Without the cargo, an award will assuage the tribe and make them feel as though the leaders know what is being done right and what is being done wrong. The truth is that the leaders of Vanuatu do not know right from wrong, as we do in the west. They do not know what makes an airplane fly. Any such award ceremony would simply be another cargo cult ceremony. The people who decide on the winners of any award sell themselves as the deciders of good and bad. That in itself would be a great honor, to be able to tell the world what really matters.

Mark Zuckerberg and Co. have used their money to bestow an award to scientists. The Breakthrough Prize in Life Sciences is no doubt an award that the Silicon Valley gurus hope will solidify their names in the annals of scientific history. The judges who pick the winners will be the previous winners. The first 11 winners were selected by the founders, I assume. You can bet that there is quite a stir among the Nobel committee members over an award given by a group of Silicon Valley rich kids. Who gave these guys the right to create a life sciences prize? Money? Will there be an overlap of Nobel Prize winners and Breakthrough Prize in Life Science winners? Are they suppose to be on par with one another? Money-wise, the new kids on the block offer a better payday. Oh my.

The prize comes with a $3M paycheck, meant to excite young people about a career in science.

The prize is administered by the Breakthrough Prize in Life Sciences Foundation, a not-for-profit corporation dedicated to advancing breakthrough research, celebrating scientists and generating excitement about the pursuit of science as a career.

The next generation of scientists, like the current, is suppose to strive for science that is exciting at the fame and fortune level. The boring details of daily lab work will not get you this prize. The boring narrative of a failed experiment or failed idea will not get you the $3M. It must be exciting, breakthrough and worthy of an award, as decided by others who pursued and won the prize. You must be one of them. In terms laid out from The Amgen Study, you must tell "the best story".

According to the Begley, Ellis paper in Nature:

Some non-reproducible preclinical papers had spawned an entire field, with hundreds of secondary publications that expanded on elements of the original observation, but did not actually seek to confirm or falsify its fundamental basis. More troubling, some of the research has triggered a series of clinical studies — suggesting that many patients had subjected themselves to a trial of a regimen or agent that probably wouldn't work.

This is the kind of research that wins awards unfortunately. If you can spawn an entire field, people are going to take notice. It is known in the scientific community that you can spawn an entire field with a good story, not necessarily good science.

You will not see an award for people who sacrifice their own careers by retracting papers when necessary. You won't see whistle blowers get an award for jeopardizing their careers for the best interest of science. There is no award for "Most Reproducible" or "Best Designed Experiment".
As pointed out in the Begley, Eliis study:

In studies for which findings could be reproduced, authors had paid close attention to controls, reagents, investigator bias and describing the complete data set. For results that could not be reproduced, however, data were not routinely analysed by investigators blinded to the experimental versus control groups. Investigators frequently presented the results of one experiment, such as a single Western-blot analysis. They sometimes said they presented specific experiments that supported their underlying hypothesis, but that were not reflective of the entire data set. There are no guidelines that require all data sets to be reported in a paper; often, original data are removed during the peer review and publication process.

Scientific research that is reproducible, where authors pay close attention to controls and their own biases, is not part of the criteria for a publication, promotion or an award. It is good for your science but it is also a risk. What if your work is not reproducible, as was the case in 90% of the papers looked into by the Begley and Ellis in the Amgen Study? As we learned, nothing will happen. You can still get published, promoted and awarded a prize.

Therein is where we need to see a prize. Take $33M and set up a laboratory where a group of scientists accept "nominations". If you think you've got something that can stand the rigors of another group of scientists looking to poke holes in your theories and evidence, throw your name into the hat. The judges will judge based on communication of ideas, transfer of science, reproducibility and for potential. It is not important what a group of rich kids from Silicon Valley think of your narrative. That is only a story selected on a political level by award committee and their awardees. Something greater than them is happening in science and they are not worthy take interject themselves into this world with another million dollar prize. If only they would use the money for the good of everyone in science and set up a Begley/Ellis-like organization. Select 50 papers to test each year. Award those that are reproducible. Give booby prizes to those that are not.

Enzyte, Religion and Juno Therapeutics

Enzyte is an herbal supplement that some claim promotes natural male enhancement. It is suppose to make your penis bigger. Its effectiveness has been celled into doubt. The original businessmen who marketed this product knew that there was no scientific logic behind the claim. That doesn't mean you have to throw in the towel. What made the leaders successful businessmen was the selection of the product, clever marketing, and the passive nature of some people who accept getting ripped off when it doesn't involve a lot of money. Because Enzyte is an herbal supplement no testing by the FDA is required. The company selling Enzyte, Berkeley Nutraceuticals Inc., went a little too far however. CEO, Steven Warshak was found guilty of 93 counts of conspiracy, fraud and money laundering, sentenced to 25 years in prison and fined $93,000. Berkeley Nutraceuticals had to forfeit $500 million. Several other executives were convicted of crimes but the company lives on. It is now called Vianda LLC and they still sell Enzyte. Hamilton County (Cincinnati OH) commissioners approved a $195,000 property tax break to the "new" company based on projected employment opportunities. They continue to receive customer complaints on the efficacy of the product and improper billing issues. 

During the Middle Ages there were all kinds of crazy ideas, such as that a piece of rhinoceros horn would increase potency. Then a method for separating the ideas--which was to try one to see if it worked, and if it didn't work, to eliminate it. This method became organized, of course into science. And it developed very well, so that we are now in the scientific age. It is such a scientific age, in fact, that we have difficulty in understanding how witch doctors could ever have existed, when nothing that they proposed ever really worked-- or very little of it did. - R. Feynman, Cargo Cult  Science

This little passage only applies to the efficacy of Enzyte. We know that profit is why government agencies support the continuation of this job creating business. Science and business/government in this case, are in opposition to one another. The former is only concerned with the claims of "male enhancement". The latter is only concerned with the interests of the company and the local economy. The customer is offered a useless product and freedom of choice. Scientifically it is a bad choice to pay for and use the product. It is snake oil. From a business and local government perspective, why not make a few bucks off of the naive? It's not a much money and it might even give the men a brief moment of hope.

This leads me to the concept of religion and science. When you really want something to be true, you put your money where your heart is. Churches all over the world make money. They build buildings, pay their leaders and even do a little charity work. Yet religion is snake oil for the soul. There is no God yet every Sunday/Saturday and several times a day somewhere in this world, a preacher will stand up and go on and on about new thoughts they alone have dreamed up regarding their religion. Biopharma, likewise, sells hope, builds buildings, pays its leaders and does a little charity work. Oh yes, we have our charismatic leaders who could have just as easily made a fortune from Enzyte. What makes a biotech different from religion is the component of science. Unlike Enzyte, biopharma drugs must be approved by the FDA. The efficacy must be proven. Although not impossible, science makes FDA approval a complicated problem.

I did not say that the formation of a biotechnology drug company is approved by the FDA. Biotechnology drug companies are approved by investors. Investors really really want to make money, just like the leaders of Berkeley Nutraceuticals/Vivandia and local officials of Cincinnati OH. They do not follow the organized methods of science. Only some of the people at a biotechnology drug company must follow the scientific method.

Which leads me to Juno Therapeutics. This is the latest Seattle based biopharma company. Is it science or is it business? Is it a combination of the two? Is this of little interest to the locals in Seattle who see the $120M investment and call it a success?

According to Xconomy:

The company doesn’t intend to make a conventional pill in a bottle or targeted antibody drug in a vial. Instead, it plans to withdraw blood from individual cancer patients, re-engineer certain immune T-cells from each patient to turn them into super-aggressive cancer cell killers, and then re-infuse the “killer” T-cells back into the body. The great future ambition is to wipe out the tumors and create ongoing immune system memory and surveillance that can potentially keep cancer at bay for years.

Juno Therapeutics is an off-shoot of Dendreon. The CEO of Juno, Hans Bishop, is the former COO of Dendreon. The manufacturing and logistics skills learned through Dendreon will now be parlayed into Juno. The difference will be in the choice of immunogens/cancers Junos induced immune response will attack. In a Utopian world, Dendreon technology would have been the main interest in Dendreon, not Provenge. In a profit motivated world such as ours, a new company has to be formed to remove the stench from Dendreons financial failures. The technology of taking blood from a patient, sending it to a lab to generate an out-of-body anti-cancer immune response, then putting the cells back into the body, is indeed an advanced biotechnology. But so is making a pill.

In the Cynefin system of thinking, this technology is complicated. What is happening on the cancer cell side of the equation however, is complex. Juno has not solved the problem of understanding the cancer cell. Rather they have made the assumption that a cancer cell will have an Achilles heal. One Achilles Heal target means that the cancer cell side of the equation, according to the cynefin framework, is simple. Highly unlikely.

The big idea is in exploiting advances in understanding how to manipulate T cells to fight cancer,” said Larry Corey, the president of the Fred Hutchinson Cancer Research Center and co-founder of Juno.

What I am suggesting is that an even greater understanding of the cancer is required before you apply your T cell/immunology understanding. There is a leap of faith taking place.

Are the investors of Juno like the moneyed interests behind Enzyte? We all want to believe. There is a history of investments. Efficacy has long been an issue. In spite of the troubled past of immunotherapy for fighting cancer, the investments continue to pour in. Fortunately, biotechnology has its scientific side, along with the religious followers (investors) and the great story tellers. I want to follow this company carefully. Their claims have not been submitted to peer review nor have they signed up to present at any conferences. Rather than take the old fashioned science route (peer review) they have started a biotech company and not in a shy way. From my perspective as a long time student of the Cargo Cults, I find this to be suspicious. From a scientific standpoint, they aren't much more Berkeley Nutraceuticals at this point. They have a lot of money, a good story, and people who need what they are promising. The path forward will be beaten down for easy passage by those who want to believe, want to profit and those who want Seattle to take another run a becoming a biotech hub. I will hold onto my skepticism as always and keep my eye on Juno as much as possible. They have moved into the old VLST space, a place where a $50M biotech company once disappeared and no one knew about it for several months! That should not happen to Juno. The bold burst onto the scene should be followed up with an equal amount of attention to what comes next.

Marie Huber and Provenge

Oh my! Marie Huber fined $25,000 for making misleading statements about her Dendreon Provenge clinical trial study and violating the Securities Act for her role in disseminating the study! I talked about Marie Huber back in April 2 and April 4 of 2012. She is the former hedge fund financial analyst who walked away from a lucrative career, much like those I discussed yesterday. It's interesting to see this story one day after posting this quote from a government advisor from the tax haven The Isle of Jersey:

One of the things I found most peculiar working in the financial services was the culture of the workers themselves. Many of them are very intelligent people indeed. Lawyers, accountants, bankers, highly trained through Universities. Very privileged people. By and large, they hate their jobs. The jobs are boring, repetitive, stupid, but the money is fantastic. They know that the work they do is without worth. They don't create value in any economic sense of that term. 

Ms. Huber was a biochemist turned financial analyst who walked away from her financial job to use her science education to fight an evil she uncovered while analyzing the statistical analysis of Dendreon. She measured the measurements, something we see missing in the Cargo Cults of Biopharma. What she found was a concerted effort to hide possible harmful effects and spin the data to fit the narrative that originated this drug discovery project. The first rule we must have when working in  medicine (even though we're not M.D.s) is "do no harm". The courage to question Dendreon and the FDA, give up a high paid job, and offer up a scientific argument for all to scrutinize was a breath of fresh air. Not everyone saw it that way.

The SEC, the agency who could not find much of any wrongdoing on Wall Street throughout the economic meltdown the nearly crippled the world economy, felt the Ms. Huber had crossed a line. Read their report here. They fined Ms. Huber $25,000 for her attempts at influencing a lower stock price for the purpose of profiting by shorting the stock.

We at the CCS are not concerned with matters in the trade of biotechnology stocks. Ms. Huber and Jess Jones maneuvers to turn a profit off of the bad science of Dendreon does not diminish the science behind Ms. Hubers analysis of Provenge. In her own words to Pharmalot:

"I have agreed to a settlement with the SEC and I look forward to putting this issue behind me. I stand by the rigor of my scientific analysis and I shall continue to follow-up on the concerns that I expressed with regard to Provenge in the article published in The Journal of the National Cancer Institute ("JNCI") in 2012.

"My primary motivation has always been the well-being of patients and the safety and effectiveness of this treatment. The accuracy of my research and conclusions are not an issue in the SEC settlement; neither my findings on Provenge submitted to CMS in July 2010, nor the concerns set forth by my co-authors and me in the JNCI article were contested by the SEC. Since first submitting the article to the JNCI in 2011, I have had no financial interest in the fate of Provenge."

The SEC has used up their time and effort to correct Ms. Huber. I'm sure this was easier than digging into Goldman Sachs misleading statements to investors whom they encouraged to go long on stocks they were shorting. Who influenced the SEC to take up this small time issue? Perhaps Ms. Huber did practice the art of deception in her financial occupation. This is possibly a fair decision and fine. If only the scientific community had the same"stick-to-it" attitude of the scorned investment community, perhaps we would revisit the effects of Provenge. Did Dendreon practice the art of deception in their scientific work? Most importantly, has the recent introduction of Provenge to the medical community altered the mortality rate of prostate cancer patients.

The Short Term

In the documentary, "Let's Make Money" Hermann Scheer, a member of the German Bundestag describes the problems created by privatization of public resources.

Society is deprived of a certain good that the private investor is interested in for reasons of profit.

Universities and the value they have provided their societies are a "certain good". Biopharma is the private investor who is interested in the "certain good" for reasons of profit.

The documentary describes, among many other things, the sale of Viennese trams to a U.S. investor. After the city of Vienna sold the trams they had to pay for the rights to operate the trams. The city of Innsbruck sold its public utilities.

They are not interested in what happens after them. This short term attitude... the lack of a will to take responsibility for the long term... knowing it will be up to others to resolve the problems later... is characteristic of the neo-liberal era. In the neo-liberal era, everything is reduced to making the highest profits immediately. And this at any price. - Herman Scheer

Luke Timmerman wrote about 3 biotech comapanies he sees as not taking the neo-liberal path in this article:

The financial world today is obsessed with short-term gains. Many investors don’t want to bet on some hope for the “next Genentech” in hopes of making returns 20 years from now. They want to make money next quarter, they expect a bigger return, and they want less risk. 

The public Universities gave in to private investor money thanks to Judah Folkman.

In 1974, Judah changed academic medicine and Harvard University by accepting the first large industrial-funded research grant from Monsanto Company to support his cancer research. As a result, for the first time, Harvard permitted its faculty to submit patents covering medical inventions.  Judah’s successful experiment in corporate funding also paved the way for industrial support of academic research laboratories at universities and research institutions across the nation, which is commonplace today.

And we were off to the races. Judah Folkman got paid. What came after was the failure of his promise and a new paradigm that has created problems that Judah did not see as his. College professors and their graduate students spend most of their time thinking about money. Working in the business of science is like that described in the "Let's Make Money" documentary by an economic advisor to the government of The Isle of Jersey:

One of the things I found most peculiar working in the financial services was the culture of the workers themselves. Many of them are very intelligent people indeed. Lawyers, accountants, bankers, highly trained through Universities. Very privileged people. By and large, they hate their jobs. The jobs are boring, repetitive, stupid, but the money is fantastic. They know that the work they do is without worth. They don't create value in any economic sense of that term. What they do is allow capital which is being created in one country to be accumulated in a different country where it will become concentrated in the hands of a very small elite of the worlds population. Maybe less than 3%. 

Has science become this bad? We have very intelligent people who are very privileged. We help our investors and executive staff become wealthy but we are the first to go when an issue threatens the short term profit. Yet our jobs are boring, repetitive and stupid. A long term view that should be held by the young and easily manipulated laboratory workforce is that our older workers are unemployable. That is their fate if they fail to fight for a change. Our leaders are now businessmen. Our scientists are working at the Home Depot.

There is great value in a scientific mind. It makes the world a place where we can wonder, ask questions and find clever ways of getting answers. People with scientific minds help those around them by contributing to the body of knowledge that is passed down in our University systems. As we can now see from biopharma, starting in 1980, very little knowledge is being preserved for future generations. The knowledge is patented. The knowledge is of dubious accuracy. The knowledge is not subject to close scrutiny, as witnessed by The Amgen Study. The profits we seek may very well be the cancer that is changing the good name of science into a failing business model.

PharmAthene Theraclone Call It Quits

• Forest Laboratories Inc. To Trim Jobs in $500M Restructuring
• Eisai Inc. R&D Organization Undergoes "Transformation," Chops 130 Jobs
• Merck & Co., Inc. To Shutter Irish Plant, 570 Jobs To Go
• PharmAthene, Inc. Terminates Merger Agreement With Theraclone Sciences, Inc.

On of these stories is not like the others, at least not on the surface. The first three are typical Monday morning job loss stories from the Cargo Cults of BioPharma. The last story is about the failure of a new business model. The failure can be used however, to explain the massive layoffs among scientists who develop drugs.

On Aug. 1, 2013 PharmAthene and Theraclone announced:

ANNAPOLIS, Md. and SEATTLE, Aug. 1, 2013 /PRNewswire/ -- PharmAthene, Inc. (NYSE MKT: PIP) and Theraclone Sciences, Inc., a privately-held monoclonal antibody (mAb) discovery and development company, announced today the signing of a definitive agreement for the merger of PharmAthene and Theraclone in an all-stock transaction.

The combined company will be a fully-integrated and diversified biologics company with four clinical-stage product candidates targeting high-value commercial and government markets.  The merged company will combine vaccine and human monoclonal antibody expertise with a focus on infectious diseases and oncology, and will feature a robust discovery pipeline with four pre-clinical programs and multiple discovery candidates, along with three partnered products.

"A merger with Theraclone will significantly advance PharmAthene's goal of achieving broader portfolio diversification," said Eric I. Richman, President and Chief Executive Officer of PharmAthene. "As a company with multiple clinical, pre-clinical and discovery candidates targeting important indications, the combined company will have the potential to generate substantial value for stockholders through both corporate collaborations and the development of its own proprietary therapeutic mAbs targeting high-value commercial markets."

Mr. Richman continued, "The combined company also expects to be able to leverage non-dilutive government funding sources to support ongoing and future product development efforts, with the possibility to receive a share of revenues from sales of SIGA Technologies' smallpox antiviral, Arestvyr™.  As a stronger company, with expanded access to non-dilutive funding, we expect to be solidly financed through resolution of the SIGA litigation."

Clifford J. Stocks, Chief Executive Officer of Theraclone, who will head the new company, commented, "By combining PharmAthene's strong vaccine and biologics development capabilities and government contracting experience, with our clinical antibody candidates and novel discovery platform we are establishing a premier biologics organization with multiple product candidates possessing significant near- and longer-term revenue potential in high-value commercial markets."

Then came some bad news last week:

Theraclone Sciences, Inc., a therapeutic antibody discovery and development company, today announced that it has received notification from the Biomedical Advanced Research and Development Authority (BARDA) informing the Company that their proposal, “Broad-spectrum anti-influenza A M2e fully human monoclonal antibody TCN-032: Determination of efficacy in serious influenza disease,” was not selected for funding under the current proposal. Theraclone submitted the proposal on August 29, 2013, to apply for government funding to advance development of TCN-032 into Phase 2 clinical development for serious influenza disease, including pandemic flu. - 

Note the hopes of the leaders from each Cargo Cult. They hoped to advance four drug candidates "targeting high-value commercial and government markets".  The merged company will combine vaccine and human monoclonal antibody expertise with a focus on infectious diseases and oncology, and will feature a robust discovery pipeline with four pre-clinical programs.  


And it all fell apart a week after BARDA rejected Theraclones TCN-032 request for funding. As the Theraclone CEO stated in the hopes and dreams section (the press release) of their business model, PharmAthene was suppose to bring the government contracting experience. With the termination of the contract, a $1M termination fee is to be paid by PharmAthene to Theraclone. Thereaclone provided the drug. PharmAthene was to suppose to get BARDA on board. Did the drug fail to impress or did the government contract experts fail?

Either way, things didn't go as expected. One day before the cult leaders (shareholders) were to meet, both companies agreed that the plans they had made were not going to generate value. So much for combining vaccine and monoclonal antibody expertise. So much for their robust pipeline discovery and four pre-clinical programs. The reality of the proposed merger was that it was a bit more short sighted than advertised. One would think that something as simple as a failed attempt at funding wouldn't sink the promise of this combined biopharma company. 

The connection to the layoffs at Forest, Merck and Eisai is the business model designed primarily to make more money. Once again, George W. Merck:

"We never try to forget medicine is for the people. It is not for the profits. The profits follow, and if we remembered that, they have never failed to appear. The better we have remembered it, the larger they have been." Good medicine comes from good science. You have to remember how this science works. It takes many years from start to finish. Often times the finish is disappointing. To divest in the process because of the current lot of disappointments is a misunderstanding of timeline of this science."