Ex-InterMune CEO's PR rap sheet could leave legal legacy

While W. Scott Harkonen, the former InterMune ($ITMN) CEO convicted over an overzealous press release, is notorious in biotech circles, he and his nuanced case of wire fraud could land on a much bigger stage if the Supreme Court decides to listen in.

As The Washington Post reports, Harkonen has quite a bit of time on his hands as he serves out his 6-month house arrest sentence, and, after years of appeals, the deposed CEO is asking the high court to review his 2009 conviction, arguing that prosecutors violated his First Amendment rights. And though the news of Harkonen's crime has largely blown over, many in the legal community see his case as a potential bellwether for the future of how research is regulated.

Harkonen's story is well-told: InterMune craved an idiopathic pulmonary fibrosis (IPF) indication for the on-the-market Actimmune, and when its 330-patient trial came up lame, the company took a closer look at the data and found that a small subset of patients with mild to moderate IPF responded well.

So, InterMune ran with that, firing off a press release touting the drug as bolstering survival rates among patients with a deadly lung disease, and Harkonen, by failing to indicate that those data, however accurate, were sussed out after the trial missed its actual endpoints, committed a federal crime.

What has raised the eyebrows of legal scholars, however, is the legacy his conviction could create.

Harkonen's prosecutors all agree: The CEO did not falsify data, did not cover up that the Actimmune study flunked its stated goal and didn't say anything demonstrably untrue. What he did was say he "believed" the study demonstrated Actimmune's worth in that patient population and would lead to up to $500 million in annual sales for the drug.

What awaits the Supreme Court, if it chooses to take up Harkonen's case, is a debate on whether the government gets to decide whether such gray-area statements of belief are lies. And, if so, what separates forward-looking statements on a drug's potential from licentious falsities designed to inflate a stock price?

"The fact that somebody else doesn't think the evidence is enough--does that foreclose you from holding a different view?" Mark Haddad, Harkonen's lawyer, said in an interview with the Post.

As for Harkonen, while his sentence will wrap up in a few months, his life as a researcher is likely over. Unless his conviction is overturned, he will remain barred from working for any company that gets money from Medicare or ever plans to seek FDA approval for anything, and now the state of California is coming after his license to practice medicine, the Post reports.

"The shoes never stop falling," he told the newspaper.

- read the article

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