Sam Brownback’s gubernatorial campaign wasted no time in pouncing on the news that Democratic candidate Tom Wiggans’ former pharmaceutical company misled investors.
“Tom Wiggans is a fraud,” said Brownback campaign manager David Kensinger. “His candidacy is a fraud. The Democratic Party is attempting to perpetrate a fraud on the people of Kansas.”
So far leading Democrats are staying behind Wiggans. He faces Herbert West in the Democratic Primary; the winner faces Brownback, the Republican U.S. Senator, in the Nov. 2010 election.
Wiggans was CEO at Connectics Corp. when the California pharmaceutical company hid from investors the results of lab tests showing its latest acne treatment caused cancer in mice. A group of investors – led by the Oklahoma teacher’s pension fund – filed a class action suit which Connectics later settled for $12.75 million.
In addition, two employees were disciplined by the Securities and Exchange Commission for selling stock in Connetics when they released the new treatment was in trouble.
The acne treatment, Velac, was never approved by the FDA, in part because 2004 lab tests found it caused skin tumors in 56 percent of the lab mice exposed to it. Yet Connetics continued to assure investors the drug was safe and profitable.
“Rather than disclose to investors that Velac had tested positive … in a mice carcinogenicity test, the Defendants concealed the results of the Mouse Study from the market and actively misled investors as to Velac’s prospects for FDA approval,” according to court documents.
The documents also allege that Connetics mistated its sales and revenue.
One confidential witness, according to the court filings, said Connetics “numbers have have never been real from day one,” and that the company was “not honest with the public.”
The witness said Wiggans personally instructed him to “increase the forecasts so that they were in line with Wall Street’s expectionats for Connetics’ future sales.”
Wiggans, through a spokeswoman, released a statement denying any wrong doing.
“As a CEO, Tom has had to deal with lots of challenging situations,” readys the statement. “Anyone who has owned or run a business knows that, unfortunately, legal matters are one of the challenges any business will face from time-to-time. Tom was able to lead Connectics through this situation, with no findings of wrongdoing, and come out stronger on the other side. It’s proof that he knows how to roll up his sleeves and manage during challenging times.”
Wiggans already faced an uphill climb to the governor’s mansion. He’s little known in the state he wants to lead, has never cast a vote in a Kansas election, and gave large campaign contributions to Republicans until recently.