The Old Way of Doing Things is Long Over...

By Cydney Posner

Here's a somewhat chilling article from Forbes, "How A Tweet Undermined A Drugmaker At A Medical Conference," (Thanks to Cooley Partner Brent Fassett for sharing.) The article describes what happened during a pharma research conference that led the Nasdaq OMX Stockholm to impose a fine on a Swedish pharma. The company was apparently presenting at a research conference on retroviruses and opportunistic infections, when someone (unknown, but reportedly not connected to the company) took a photo of the company's data related to the results from the first part of a Phase II study and then tweeted the photo. According to the article, the stock jumped sufficiently to cause Nasdaq to halt trading. Three hours later, the company issued a press release with actual study results, and trading resumed. The article reports that Nasdaq still fined the company almost $59,000 for violating disclosure rules, even though the company disclaimed any responsibility for the tweet: "How did the exchange come to this conclusion? The interim data did not contain any ‘sensational results,' as the exchange acknowledged, and [the company] could have been justified for making an initial assessment that the data did not comprise price-sensitive information.' But once [the company] was aware of the leak, as the exchange described the Tweet, the drugmaker should have moved faster to officially communicate the study results. ‘Since confidential information was leaked and spread through such channels as Twitter, a level of drama and interest was created in the information, which did not necessarily have any rational connection based on the factual content of the information,' the exchange wrote. ‘The nature in which the information was spread is deemed to have impacted the share price.'"

The apparent message, though, is that "the old way of doing things is long over. Drugmakers that display posters at medical conferences have to monitor Twitter to see what, if any, information is being tweeted. And they will need to have a press release, or more, on hand to circulate in order to manage the flow of information. And this includes Tweets. Of course, this poses a challenge. After all, to what extent can a drugmaker or conference organizer attempt to refrain Tweeting? Restrictions can be attempted, but who will be the cop on the beat? As for regulators, well, they may keep busy chasing down insider trading scenarios."

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