- MAKER
OF FAILED AIDS VACCINE
IN FRAUD CLAIM
The Sunday
Times (London) March 16 2003
Brian Deer
The firm
behind the world’s first vaccine claIming to
offer protection against Aids faces allegations of
securities fraud after a four-year trial of the drug
ended in failure last month.
Milberg Weiss,
the American law firm leading the pursuit of the
energy company Enron, plans to file a multi-million-
dollar claim against the medical firm this week.
It will allege
that VaxGen, of Brisbane, California, cheated
thousands of small investors in the firm by allowing
"favoured" insiders to sell stock before it
was announced last month that the vaccine did not
work. After the news, VaxGen's shares fell from a
12-month high of $23.25 to $3.
The company
said last week that the allegations would be
contested vigorously.
VaxGen began
large-scale tests of its AidsVax in 1998, recruiting
5,400 subjects. The trial was launched amid
excitement among investors but incredulity among many
Aids experts.
“The
whole thing was ridiculous,” said Dr Robert
Gallo, co-dicoverer of HIV, last week. “I
don’t know of a serious scientist in the world
who would have expected this to work.”
Nevertheless,
AidsVax was launched by medical entrepreneurs fronted
by Dr Donald Francis, a former employee of the US
government's Centers for Disease Control and
Prevention. Francis, who grossed nearly £4.5m from
VaxGen in its first three years, was backed by his
old government employer, which gave the trial £5m
and helped the firm to brush aside high-level
opposition.
In 1999 The
Sunday Times revealed that a government official who
played a vital role in securing the £5m grant for
VaxGen also had a secret deal to join the company.
This official - Dr William Heyward - was later
prosecuted under federal conflict of interest laws
and was fined £20,500.
Milberg Weiss
will allege that Francis, Heyward and others in the
firm knew the trial was set to fail. It is focusing
on institutional stock sales before the results were
announced on February 24, including sell-offs by
Vulcan Ventures, owned by Paul Allen of Microsoft.
Small
shareholders say they were encouraged by company
statements that all volunteers in small-scale trials
"developed neutralising antibodies to HIV";
and that AidsVax had "protected"
chimpanzees.
What the
company did not emphasise was that an evaluation of
HIV infections among volunteers found antibodies to
be weak, transient and too narrowly type-specific to
protect. Last week Vulcan Ventures declined to
comment on the allegations about VaxGen.
A spokesmen
for VaxGen said: "If indeed this lawsuit exists,
the fact that the lawyers gave it to a newspaper
before VaxGen speaks volumes about its lack of merit.
VaxGen has complied with all securities laws and, if
need be, will defend itself vigorously."
|
brian deer |
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Brian Deer. All rights reserved. No portion of this
article on VaxGen's AidsVax may be copied,
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