Subject: Insiders Shed Shares of Sagging Epitope 
Date: Published: 6/17/92 (88 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    Inside Track:
    Insiders Shed Shares of Sagging Epitope
    ----
    By Alexandra Peers
    Staff Reporter of The Wall Street Journal

    NEW YORK -- Insiders have been selling at Epitope Inc., a
 biotechnology highflier whose shares took a hit this week
 amid reports that the Food and Drug Administration is
 questioning the company's research data.
    At issue is Epitope's chief product, OraSure, a saliva
 test for the AIDS virus that hasn't yet been approved for
 sale in the U. S. by the FDA, but is sold in Canada, among
 other countries.
    A 22-page document about OraSure, said to be issued by the
 FDA's Bothell, Wash., district office in April, has been
 making the rounds of Wall Street fax machines lately.
 "Questions and rumors" about the document have been driving
 down the company's stock price, said Adolph J. Ferro,
 Epitope's president.
    FDA officials declined to comment about the document.
    Shares of the Beaverton, Ore., company have fallen $2.25,
 or 13%, since last Friday.  They closed at $15.75, down $1.25,
 in American Stock Exchange composite trading yesterday.  The
 stock closed as high as $27 on Jan. 15.
    So far this year, Securities and Exchange Commission
 filings show, seven insiders at Epitope have trimmed their
 holdings by a total of 59,138 shares, all at prices above the
 current level.  Their shares fetched prices ranging from $18
 to $24.25 each, according to the filings.
    About half the shares were sold in option-related
 transactions, according to SEC filings.  But in two cases, SEC
 filings show, insiders sold large blocks of stock outright.
 On Feb. 26, Mr. Ferro sold 14,000 shares at $20.13 a share,
 retaining an indirect holding of just 35 shares, according to
 the filings.  On Jan. 30, Director F. Douglas Lawrason sold
 all his holdings, 16,500 shares, at $24.50 each, SEC filings
 show.
    Charles Biderman, editor of Market Trim Tabs, an
 investment newsletter based in Santa Monica, Calif., that
 recommends short-selling the stock, said that "the insider
 selling started right after" Epitope was visited by FDA
 officials in November and December.  Since early last year, he
 said, "insiders have sold about $1.5 million in stock --
 about as much as company revenues" in its past two quarters.
    Mr. Lawrason couldn't be reached for comment on the sales.
    Mr. Ferro said the insider selling and the purported FDA
 report have been completely misinterpreted on Wall Street.  As
 far as his sale of stock goes, he said that in 1991, the
 company paid him in Epitope shares and he sold in part to pay
 taxes on their receipt.  He said he holds vested options
 representing another 70,000 shares.
    The Epitope president said that the report attributed to
 the FDA, dated April 30, is essentially old news, and that
 the issues it raises have "already been addressed" with FDA
 staff or in an amendment Epitope added to its request for
 approval of OraSure in mid-April.  He said the FDA's problems
 were with recordkeeping and procedures, "not the data."
    The document, obtained by this newspaper, states that
 Epitope's research data boosted the number of samples studied
 by taking more than one saliva sample from each patient, and
 that some data was not verified.  It also claims that Epitope
 gave out literature at the American Dental Association annual
 convention last year that "inappropriately promotes safety
 and effectiveness of OraSure."
    OraSure is a kind of high-technology absorbent toothbrush
 soaked in chemicals that collects saliva and cheek tissue for
 laboratory testing for AIDS-virus antibodies, evidence of
 drug use or other diseases such as mumps or measles.  Epitope
 also sells standard blood tests for AIDS and is developing
 OraQuick, a product similar to OraSure that wouldn't have to
 be sent to a lab for testing.  Epitope claims saliva tests are
 as reliable as blood tests for AIDS.  
    Mr. Ferro said investors are overlooking the fact that, if
 approved by the FDA, OraSure and OraQuick products have
 "enormous market potential."  He predicted that the company
 would be profitable almost immediately after approval.
 Epitope is also developing genetically altered food and
 flowers.

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