My employer asked me to falsify data!

U27111 at uicvm.uic.edu U27111 at uicvm.uic.edu
Tue Jan 2 01:22:26 EST 1996



Appearently this was also posted in another newsgroup...  for
I found some replies in there which were not posted in here.

So... here they are.
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From: pandagroup at aol.com (PandaGroup)
Newsgroups: sci.bio.technology
Subject: Re: My employer asked me to falsify data!
Date: 28 Dec 1995 00:37:32 -0500

I have no direct knowledge of this happening in the biotech
industry, but it certainly does not surprise me.  I don't wish to
paint everyone with the same brush, but you have to understand that
the first "customers" of the young biotech company are its
investors.  Virtually all of these investors have only cursory
knowledge of the science involved.  And they are the people who are
providing the cash to make things work, so bending the rules in
hopes of straightening things out later in order to keep
everything afloat may be termed acceptable behavior in light of the
"higher purpose," the "future goals," which "everybody knows" will
eventually result.

It has been my experience that when I've had a chance to interview
more than one scientist from a given company, and then get the
company's PR material or talk to the execs, I find conflicting
stories.  The science very often does not jibe with the investor
relations picture.

Understand, that this is not just from the company, but also very
often from investors, knowingly or unknowingly.  Look at the way
money is made.  The venture capitalists put in the early cash.  The
company makes "progress" and then goes for an IPO.  The early
investors make money on the IPO; the execs with options make money
on the IPO; the investment banker makes money on the IPO.  All this
is based only on "progress" not final results, as we all know that
it can take 9 to 12 years of work to launch a biotechnology drug.

During this time, the execs are paid quite handsomely, and garner
more options (based on the company's "progress").  After the IPO,
both the VCs and the execs still hold some options and stock
because they are legally prevented from off-loading all their
holdings.  So, they have to keep stock prices up.  The investment
bankers are the market makers for the stock ... part of their
pay-off has been in stock ... so they want to keep the prices up
and tout the stock on the market.  Again this is all based
on "progress."

Poor science is seldom noticed until the "rubber meets the road" in
Phase III trials ... and maybe in Phase II.  But by this time the
company has three or four candidates on the ways .. so we extend
the life of the company ... in the meantime, VCs, execs and
investment bankers have played their hands as long as possible.
While they still have holdings, they have made millions on what
they've cashed in on.  If the science hits, they become even richer
... if not, they can't lose ... it's only the poor slob who bought
in at market that loses his shirt when the Phase IIIs come
back a bust.   It's my contention that all of this could be stopped
early on by really looking at the science.

The sad part is that these same execs (who bailed out at the right
time) will now go off and play the same tired game at another new
company becasue they were "successful" at the first.  They will be
backed by the same arrogant VCs and piss away a lot of money,
hurting a lot of people other than themselves in the process.

Now, I'm not saying that these people set up scams to begin with
... most of them aren't all that bright ... they just don't know
about the science and don't care about the science ... they just
care about the game and haven't the principles to admit when they
are in over their heads or things have gotten out of control and
aren't working.  The lure of the money is too great.  If it could
be proven that any one of them ever did this deliberately, they'd
spend a long time in jail.  But the time factor muddies the waters.
Over 9 to 12 years, who's to tell what was and wasn't due
diligence?

SO, falsifying data?  I'm willing to bet it goes on in at least 75%
to 80% of biotech companies, especially those involved with the
health sciences.  Why?  Money!  An IND can do a lot for a sagging
stock price when you want to cash out some options.  It would make
a nice story for "60 Minutes."
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From: jmcdon04 at interserv.com
Newsgroups: sci.bio.technology
Subject: Re: My employer asked me to falsify data!
Date: 30 Dec 1995 20:30:45 GMT

Hi,

Let the Buyer (Investor) beware!

Bio-tech has already been hurt by these scams, and for years has
suffered from a lack of money because of failures in the early
80's.  I've seen a lot of start ups come and go, and eventually the
truth comes out one way or another.  So don't worry, but thanks for
the warning, because I won't be investing in bio-tech in the near
future.  Meanwhile don't forget there can be an career made out of
debunking fraud.

John McDonald
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