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Independent Article
 
   
 
   
 
AFR Net Services March 21 2000
 
Novogen pulled up over ads for top seller
 
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".