Rumors and Safety Issues -- One Bad Combination

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Looks like we're on our second sell-the-rumor day for sanofi-aventis (NYSE: SNY). The company dropped 5% yesterday on a generally up day and it's down another 5% today.

The culprit? There are rumors floating around that a study will show that use of Sanofi's insulin product, Lantus, has an increased risk of cancer. Considering that Lantus brought in 8.9% of sales last year and grew more than 20% year over year, the loss of Lantus, or even declining sales, would be heartbreaking.

Safety issues are especially relevant, given the track record of diabetes drugs. GlaxoSmithKline (NYSE: GSK) has seen sales of Avandia plummet as fear of heart issues weighted it down and sales growth of Eli Lilly (NYSE: LLY) and Amylin Pharmaceuticals' (Nasdaq: AMLN) Byetta has stalled as the companies deal with potential pancreatitis issues.

There's even some reason to be worried about insulin causing cancer; Nektar Therapeutics (Nasdaq: NKTR) and Pfizer's (NYSE: PFE) inhaled insulin, Exubera, was linked to lung cancer, although the link was closer to the strength of a paperclip than a steel chain.

Given the lack of concrete information, it's hard to know exactly what investors should do. Long-term investors may want to just ride it out; the news could be better or worse, but it seems prudent to sell based on facts, especially considering that the damage to the stock price may already be done.

If you were considering an investment in the French company, waiting for this to clear up might be the best move. Valuing the unknown is difficult and there are plenty of other choices out there.

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