Ex-Innate director charged with insider trading in the US
Health & Biotech
Health & Biotech
Ex-Innate Immunotherapeutics director and Republican congressman Christopher Collins has been charged in the US with insider trading in the ASX-listed company.
The indictment also charged Collins’s son Cameron and Stephen Zarsky, the father of Cameron Collins’s fiancée.
They are charged with securities fraud, wire fraud and as well as civil charges by the US Securities and Exchange Commission (SEC).
The charges all relate to alleged activity in the US, not in Australia where Sydney-based Innate (ASX:IIL) is dual-listed.
The charges relate to negative clinical trials in mid-2017 around a multiple sclerosis drug Innate was testing.
Mr Collins was on the Innate board at its IPO in 2013 and built a substantial position in the company, as did his family members.
The SEC alleges that Mr Collins learned of the bad trial results on the evening of June 22, 2017 in an email from Innate’s CEO to the board of directors.
It said the CEO had “extremely bad news” indicating that drug trial results “pretty clearly indicate ‘clinical failure’”.
The SEC alleges that Christopher Collins replied to the CEO’s email within minutes, expressing his surprise at the results, and then called and spoke to his son minutes later.
According to the SEC indictment, later that same evening Cameron drove to Mr Zarsky’s home and tipped him off about the results, and the next morning Cameron and Zarsky allegedly began selling their Innate shares, a total of nearly 1.4 million.
The indictment says that a few hours after the last of these sales, Innate publicly announced the negative results of the clinical trial and its stock price then plunged by more than 92 per cent.
Through their sales, Cameron Collins and Zarsky avoided losses of more than $US700,000.
The indictment also alleges that they contacted other friends and family members who also sold Innate shares in advance of the announcement.
Mr Collins, due to his position as a director, did not sell any shares.
The SEC says it’s settled charges against Lauren Zarsky, Cameron Collins’ girlfriend, and her mother Dorothy Zarsky, for trading on the basis of material, nonpublic information.
Mr Collins quit the Innate board in May and reduced his stake in the company from 17 per cent to 9 per cent.
Innate shares took off at the end of April, rising 300 per cent after buying privately-held Amplia Therapeutics and its oncology treatments.
Innate CEO Simon Wilkinson directed inquiries to a company statement, which says they have “cooperated fully” with information requests by the SEC and it is not under investigation.
“The company considers the ongoing investigation to be a private matter to Mr Collins,” the Innate statement said.
“The US media has inaccurately reported that Mr Collins and colleagues were the beneficiaries of share issuances in the company on privileged terms. Mr Collins (and colleagues) have only ever participated in shareholder-approved share placements or “rights issues” of shares in the company. As is typical for a rights issue in Australia, the issue price was at a discount to market and fully disclosed as such.”