This company admitted failure — and the stock market rewarded it
Good guys finish last, the saying goes. But here’s a story that should offer hope to those who believe that transparency and corporate success can mix.
Back in 2009, scientists working for a Swedish biotech firm called WntResearch published a proof-of-principle paper about their key molecule. Called Foxy-5, the molecule appeared to help the drug tamoxifen suppress tumor cells, thereby preventing the spread of cancer. It had looked promising, because cells exposed to it succumbed to a drug that wouldn’t normally kill them.
But then, as coauthor Tommy Andersson, chief scientific officer of the company, told Retraction Watch in 2010, “during the continuation of our work, [we] re-examined the lab books and data files for the … paper and in doing so we found serious miscalculations in a figure that is really central for the entire paper.” The company retracted the study, delayed its imminent IPO, and even went as far as to offer its investors a chance to cash out their shares of the firm.
The company knew it was taking a risk. But its lawyer “advised us to act according to good morals rather than to what we were required to do by law. His belief was that this would pay off in the long run,” Andersson told Retraction Watch at the time.
Read more: Introducing the Doing the Right Thing award, honoring those who clean up the scientific literature
That advice was well-heeded. Rather than shunning the company, investors embraced it. Only a small number of them cashed out their shares. (The coauthor of the paper who took responsibility for the error returned the stock, but made the shares a donation.) The IPO, delayed by a few weeks, went forward. And within a few years WntResearch stock went on a surge that to date has left it up nearly 500 percent over 6 1/2 years. In other words: Openness was a risk in the short run but a long-term boon for the company.
Of course, suggesting that only honest companies do well in the stock market would be foolish. Enron, anyone? But that’s not the point here. Rather, the lesson of WntResearch is that a willingness to deal head-on with a serious problem was a signal to both investors and the scientific community that they could trust the company’s findings.
As if to demonstrate, WntResearch recently announced that that same compound is now moving into Phase 2 trials to test its effectiveness in people with colon, prostate, and breast cancer, which will begin later this year.
To be clear, none of this means that the trial will be successful, nor that the compound will ever make it to market as an approved drug. That road is littered with the carcasses of failed would-be blockbusters. But many compounds don’t even make it this far.
WntResearch’s approach is refreshing for another reason: Many drug companies can’t seem to find the time to publish results in the first place, let alone correct the scientific record if something previously published — and favorable to their product — is in error.
Read more: These five biotech CEOs earned big bucks even as their companies tanked
As a case in point, look at how Merck handled the realization of potential dangers of its blockbuster painkiller Vioxx. The pharma Goliath was found to have quashed data showing the risk of heart attacks and strokes, revelations that led to a massive haircut in shareholder value and $5 billion in settlements with consumers before the drug was pulled from the market.
We’ll stipulate that heaping praise in science — or business — is risky, and things can change in a hurry. WntResearch could go belly-up tomorrow, or next year; its approach could fail miserably in clinical tests. But so far, at least, it’s doing the right thing. And that’s the kind of thing we like to praise around here.
