HEARD ON THE STREET
from The Wall Street Journal.

Hedge funds and other investment firms are turning to well-respected
medical experts to help them with their investment ideas.

http://online.wsj.com/articles/heard_on_the_street

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?As?of?Friday,?December?3,?2004? ????

The Doctor Is In
And, Increasingly,
Advising Investors

By GREGORY ZUCKERMAN and GEETA ANAND
Staff Reporters of THE WALL STREET JOURNAL
December?3,?2004;?Page?C1

Caring for patients isn't enough for some doctors.

Leaders in the field of medicine are tending to a new group of clients:
big health-care investors.

Eric Topol, a vocal critic of Merck & Co.'s Vioxx arthritis drug and
chairman of cardiovascular medicine at the prestigious Cleveland Clinic,
recently quit as an adviser to a hedge fund after news emerged that the
hedge fund made big money betting against Merck shares.

Dr. Topol's involvement with the hedge fund is just one example of a
little-noticed phenomenon that has been going on for years, but now
seems to be picking up, say people in the health-care and investment
worlds. Increasingly, hedge funds and other investment firms are turning
to well-respected medical experts to help them with their investment
ideas.

At times, doctors interact directly with hedge funds and others,
charging them for a short phone chat about a product, or serving as
on-call advisers for the investors. Dr. Topol dealt directly with the
hedge fund, Great Point Partners LLC of Greenwich, Conn. Dr. Topol says
he didn't invest in the hedge fund and never discussed Merck with the
fund.

Some fast-growing brokerage and consulting firms, such as Leerink Swan &
Co. in Boston and Gerson Lehrman Group in New York, specialize in
introducing doctors to investors, or asking doctors a series of
questions on behalf of investors. Large securities firms also link
doctors with investors.

There is nothing illegal about giving guidance to an investment firm,
and many doctors have been doing it for years to pick up a few extra
bucks. Many investors take steps to ensure that the doctors don't know
about their investment positions, and simply ask the doctors for their
views about industry trends or drugs on the market. Dr. Topol emphasizes
that his concerns about Vioxx, which eventually were borne out, weren't
influenced by his relationship with Great Point. He also says he wasn't
aware the hedge fund was short-selling Merck's shares. Great Point
didn't return calls requesting comment.

But the growing contacts between top doctors and big investment firms
raise potential conflicts of interest. For example, a doctor might be
tempted to be more negative in his public comments about a company's
drug or medical product if he is on retainer or is an investor in a firm
that he knows has been betting against the company. Such negative
comments could affect the outlook for the drug as well as the stock of
the company in question. At the same time, leaders in the field of
medicine sometimes have early and confidential access to the views or
leanings of the Food and Drug Administration. For instance, members of
FDA advisory committees get agency analyses of key products weeks before
the regulators' findings become public. The physicians being paid by
investors might feel tempted to hint at their knowledge, or share their
own leanings before a FDA committee vote.

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Rest of article cut for brevity and copyright concerns.

Bill