Novogen pulled up over ads for top seller
AFR Net Services March 21 2000
By Ray Moynihan
A joint government-industry tribunal has upheld a complaint that
successful Australian biotech company Novogen misrepresented scientific
evidence in advertisements for its top-selling Promensil, which is
aimed at women at menopause.
At the same time, a number of experts have told The Australian
Financial Review that in their opinions some of Novogen's announcements
to the market about Promensil are misleading. They say that on the
available scientific evidence, the product may be no better than a
placebo, or dummy pill, in reducing the hot flushes associated with
menopause.
Novogen is seen as one of Australia's leading biotech companies,
with anti-cancer drugs in the pipeline as well as worldwide sales of
its dietary red clover supplements.
In the past few years, its share price has quadrupled from $1 to
well over $4, attracting five stock exchange queries about price jumps
along the way. The company's market capitalisation is now $360
million.
In a decision last Thursday, the Therapeutic Goods Advertising Code
Council's complaints resolution panel upheld a serious complaint about
a Promensil ad.
It is understood the panel will ask Novogen to withdraw the
offending advertisement, which has been running in national
newspapers.
Promensil is Novogen's flagship over-the-counter dietary supplement
marketed as a natural way of relieving the symptoms of menopause, such
as hot flushes.
Suggestions the company may have misled the public point to a
problem with the regulatory scrutiny of the burgeoning biotech
industry, where market expectations and investor hopes far outweigh
hard scientific evidence.
Sydney-based Novogen has positioned itself as offering natural
remedies such as Promensil that are rigorously tested in scientific
research.
But almost three years since its launch, there is still no published
peer-reviewed study showing Promensil is any better than a placebo in
reducing hot flushes.
The only two studies that have been published showed Promensil was
no better than a placebo - or dummy pill.
A separate small study has found the product did enhance the
elasticity of women's arteries - pointing to potential cardio-vascular
benefits.
Executive chairman Dr Graham Kelly rejects the view that his company
has made misleading statements, but admits that there is still no good
quality published clinical trial evidence to support the claim that
Promensil is effective in reducing hot flushes.
Dr Kelly points instead to the results of a small South American
pilot study in Lima, Peru, which is awaiting publication in a medical
journal.
"It's on its way. All I can say to you is it's on its way." The
former veterinary expert turned biotech entrepreneur has almost 10
million shares in Novogen, worth close to $40 million, through personal
and family holdings.
On two occasions in 1999, company announcements to the stock
exchange made much of the results of the unpublished Lima study, but on
neither occasion were investors told of its small size or the fact that
it was a "pilot" study.
In November, a Novogen announcement said there was now
"incontrovertible evidence" that Promensil was effective in managing
symptoms of menopause.
But even scientists working on company-sponsored studies contradict
this claim.
San Francisco-based scientist Professor Bruce Ettinger, who is now
running a large trial of Promensil for hot flushes, says: "The evidence
so far provides hope that there could be an effect, but it is by no
means conclusive."
Yet as recently as February, a full-page colour newspaper
advertisement stated: "Promensil's effectiveness has been proven in
clinical trials around the world.
"These studies have demonstrated a significant reduction in
menopausal symptoms such as hot flushes." The Novogen website also
implies that the product is effective in managing menopause symptoms
supported by clinical trials.
Monash University's Professor Henry Burger describes the website
claims as "rubbish" and "totally misleading".
An internationally recognised expert on menopause, Professor Burger
said in his opinion statements to the Australian Stock Exchange
"selectively cited" the evidence, were scientifically dishonest" and
"misleading".
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