Washington Editor

WASHINGTON - The former CEO of Cambridge, Mass.-based Transkaryotic Therapies Inc., now part of Shire Ltd., will pay about $1.2 million to settle charges of withholding negative study results while profiting off of the sale of large amounts of stock.

Richard Selden, of Lincoln, Mass., was accused by the Securities and Exchange Commission (SEC) of misleading investors between October 2000 and October 2002 by describing a pivotal clinical trial of Replagal (agalsidase alfa), an enzyme-replacement therapy for Fabry's disease, as a success when in fact the trial failed to meet its primary endpoint of pain relief.

Selden also misled investors by failing to inform them that the FDA had recommended additional clinical trials of the compound.

While Selden was busy hiding the true study results and pumping up the status of the FDA application, he actually was selling off 90,000 shares of his stock, which the SEC said allowed Selden to avoid a loss of more than $1.6 million.

Selden's misleading statements and omissions about the Replagal trials and the true status of Transkaryotic's FDA application kept the firm's stock price artificially high, the SEC said.

However, when the company disclosed some information about the failed trial on Oct. 2, 2002, its shares plummeted the next day from $33.25 to $12.75, the SEC noted in its complaint.

Selden sold his shares between May 2001 and February 2002 when the stock was artificially inflated, the commission said.

Under the settlement, Selden did not admit to or deny any of the SEC's allegations. He agreed to pay a civil penalty of $125,000 and was held liable for $714,800 in disgorgement related to his trading of stock, plus $326,617 in prejudgment interest.

The judgment was entered by the U.S. District Court Judge for the District of Massachusetts. The SEC said that the court will determine at a later date whether Selden will be barred from serving as an officer or director of any public company.

Shire, which acquired Transkaryotic in April 2005 for $1.6 billion, markets Replagal in the EU, Australia, Canada, Iceland, Israel, New Zealand, Norway, Romania and Switzerland.

FDA, Genentech Warn of Damaged Herceptin

The FDA through its MedWatch reporting program circulated a "Dear Health Care Provider" letter from South San Francisco-based Genentech Inc. warning that the firm has received an increased number of complaints of damaged and broken vials of its breast cancer drug Herceptin.

The company said that the affected vials were shipped from mid-2007 to the present.

Genentech warned doctors not to use the damaged vials, stating a loss in sterility could lead to infections in patients. However, the firm said that it believed the risk to patients is negligible due to a low occurrence rate and the obviousness of the affected vials.

The company said that a survey of its adverse event surveillance systems did not indicate evidence of a change in the safety profile of Herceptin as a result of the vial damage.

Genentech said it has not identified the cause of the vial damage.

The company did not issue a recall of Herceptin. It instead told doctors to carefully inspect all vials of the drug and to contact the firm if any damaged vials were discovered.

FDA Launches E-Filing Program

The FDA last week launched its pilot program allowing manufacturers for the first time to electronically file drug establishment registration and drug listing information, such as ingredients, labeling and manufacturing information, of human drug and biologic products, including over-the-counter medications, and veterinary drugs.

The agency issued a draft guidance and technical documents that instruct companies in filing their information electronically.

The guidance issued last week is one in a series intended to assist companies making regulatory submissions to FDA in electronic format, said Randy Levin, the agency's director of health and regulatory data standards.

The system, he told reporters during a media briefing, will make it easier for firms to meet their registration and listing requirements, and it will help the FDA maintain more accurate information so it can better identify possible safety issues and respond to drug emergencies, such as recalls and drug shortages.

Regulators encouraged companies to begin submitting registration and listing information in an electronic format as part of the agency's voluntary pilot period.

The FDA said it intends to end the transition period and only accept electronic files for drug establishment registration and drug listing beginning June 1, 2009.