US Senator Charles Grassley, in a letter to the head of the Securities and Exchange Commission Thursday, said he is concerned about a recent dramatic jump in Vertex Pharmaceuticals Inc.’s stock price that followed the release of overstated test data for a drug it is developing.
Grassley, an Iowa Republican, said it was a “potentially troubling issue for investors” that a 55 percent increase in the Cambridge biotechnology company’s stock on May 7 was based on results from a clinical trial that Vertex later said were flawed.
At that time, the company said a small number of patients taking an experimental drug combination to treat cystic fibrosis showed remarkable improvement. But later last month, the company said the results — while still positive — had been overstated, due to an outside vendor’s mistake in interpreting data. In the interim, however, five Vertex executives and two corporate directors cashed in stock and options worth millions of dollars.
Grassley cited the Globe’s report on the stock profits reaped by company officials in his letter to SEC chairwoman Mary Schapiro.
“Despite Vertex’s explanation, it could appear that these Vertex executives potentially took advantage of the spike in the stock knowing the news of the clinical data being overstated would be made public eventually, which in turn would negatively affect the stock value,” Grassley wrote.
Vertex spokesman Zachry Barber declined to comment on Grassley’s letter. He reiterated the company’s position that, after learning late on Friday, May 25, of new information regarding the drug study, “we moved quickly to disclose the new data before the market opened on the next business day.” He added that “all shares sold by our executives and directors were either part of preexisting 10B5-1 plans or followed Vertex’s internal stock trading policy.”
Grassley said the SEC has an “important mission to protect investors and maintain market integrity,” and asked to be briefed on the finding if the agency investigates Vertex.