Brit Biotech Directors Could Face US Lawsuits over Marimastat Claims

By Jonathan Guthrie

British Biotech confirmed that one or more of its directors could face civil lawsuits in the US, brought by the Securities and Exchange Commission. The markets watchdog has been investigating whether press releases issued in 1995 and 1996 were over-optimistic about the prospects for the anti-cancer drug marimastat. A spokesman for Biotech said that the advice received from their lawyers was that there was no basis for the case, because the company had not violated any US securities laws.

It was understood by Biotech that the SEC's concerns were based on claims made on the use of cancer antigens (substances, often toxins that can help the human body produce antibodies which fight disease). At least one company release reported that the rate of antigen production had fallen in patients taking their drug, marimastat, suggesting the treatment was effective.

Dr Andrew Millar was sacked as head of clinical research at British Biotech. He had claimed that the trials of the drug had become amatter of public interest following extensive media coverage. This had been prompted by his campaign to oust the British Biotech chief executive and change the strategy of the company.

Dr Millar became concerned about the company's over-optimism about the future of two drugs under trial, so he decided to take extreme measures by himself. He did not believe the drugs worked well enough to achieve regulatory approval, which would allow them to he launched com­mercially, and was concerned that the drugs were actually causing serious side-effects on the trial patients. He was also aware of neg­ative assessments of the drug by the Danish Medicines Agency but Biotech issued a press release that the results were 'statistically significant'. He contacted one of the main investors supporting Biotech (Perpetual) and warned them of his fears. He hoped to stop the drugs being tested, and to reveal that they were far less promising than investors had been led to believe. He hoped that the share-holders of Biotech would change the strategy of ambitious expan­sion, envisioned by the Chief Executive.

The Chief Executive, hearing of these moves, suspended Dr Millar and a few weeks later, he was fired without compensation at a disci­plinary meeting for 'revealing confidential information to third parties'. In announcing the sacking, British Biotech cited a confidential report prepared by Cameron McKenna, the law firm. The document proved, the company said, that directors' share dealings had complied with stock exchange rules, and there was no case for it to answer to the SEC. The company has threatened to take legal action against Dr Millar to prevent him disclosing information gained as an employee. He says jail - a possible consequence of breaking any injunction placed upon him -is a small price to pay for the freedom to speak out.

Legal brief

Employees who blow the whistle on their employers {expose illegal or dishonest practices) are protected by law in the US. If they are fired or otherwise penalized for whistle-blowing, they can sue. If the employee just complains to someone inside the company that is not whistle-blowing. They must report their concerns to someone outside the company, who works for the government or a law enforcement agency.

Over to you

1. Think of examples of whistle-blowing by private or government workers that you have heard about. What was their employer doing that made them blow the whistle? Who did they tell?

2. You have heard your boss explaining very confidential matters to someone on the phone about plans your company has for a major investment. You suspect he is leaking information to someone outside the company. Write a letter to the managing director setting out your concerns and asking her for advice on how to proceed.

LIABILITY