Wednesday, November 08, 2006

Purple Haze

I’m beginning to wonder what’s going on at your average pharmaceutical company. What kind of drugs are they testing, exactly? Last week we scratched our heads over one Mr. Mucus, proud mascot of a snot-remedy manufacturer. And now, courtesy of Inspire Pharmaceuticals, Inc. (ISPH), the "Eye-Drop Cowboy" comes sauntering into the corral. (Sorry, I don’t know his real name, so I gave him one. I could have been a lot meaner, too, since he has no legs and is dressed entirely in purple.)

Inspire got some bad news recently. The SEC, which has been snooping around since way back in August 2005, just got serious. Apparently they have a beef with the way the company disclosed clinical trial results for a dry eye treatment. In late October they gave "Wells Notices" to the company, CEO Christy Shaffer and Executive VP Mary Bennett. A Wells Notice is the SEC’s way of showing they care about you, so much that the staff wants to start an enforcement action against you and is giving you one last chance to talk them out of it.

A Wells Notice is designed to explain the substance of the government’s charges. Yet in its just-filed third quarter 10-Q, Inspire still seems bewildered. Using a turn of phrase it employed back in September 2005 when the investigation was newly hatched, it refers to the SEC's doings as "a formal, nonpublic investigation which we believe relates to our Phase 3 clinical trial of our dry eye product candidate."

You believe? You’ve been under investigation for over a year, received a bunch of Wells Notices, and you still don’t know why?

My dears, the Eye-Drop Cowboy may be dreamy, but he can’t save you now. Please get A LAWYER. Soon.