Former Celator accountant, three others charged with insider trading
- The Securities and Exchange Commission has charged a former accountant at Celator Pharmaceuticals Inc. and three others with insider trading ahead of market-moving news for the since-acquired New Jersey-based biopharma.
- According to a complaint filed in federal court, Evan Kita allegedly tipped off two friends of private information regarding positive results for Celator's experimental cancer drug Vyxeos, which eventually triggered a 400% boost to the company's stock when it was made public.
- Kite also tipped off his friends about Jazz Pharmaceuticals' interest in acquiring Celator ahead of an eventual takeover by Jazz in May 2016. The U.S. Attorney's Office for the District of New Jersey filed parallel criminal charges against the four men alleging violation of antifraud laws.
Fifteen months ago, Jazz Pharmaceuticals snapped up Celator Pharmaceuticals for $1.5 billion, picking up the then close-to-market leukemia drug Vyxeos (daunorubicin/cytarabine).
Yet Celator shareholders weren't the only ones profiting. Tapping inside knowledge of the company, former Celator accountant Evan R. Kita allegedly struck a deal with two friends, sharing private information in exchange for a share of trading profits.
Those profits were likely to be substantial. Over the course of 2016, Celator shares rose from $1.81 a piece to eventually trade above $30 per share following news of the Jazz takeover.
''The investing public relies on accountants and other gatekeepers to safeguard confidential information, not use it for personal profit,'' said Kelly L. Gibson, associate director of the SEC's Philadelphia Regional Office. ''When gatekeepers violate that public trust as Kita allegedly did, the SEC is committed to holding them accountable.''
Perhaps due to the frequency of market-moving events in biotech, insider trading cases are not uncommon. The SEC has recently investigated a case tied to Ariad Pharmaceuticals, Inc., now owned by Takeda Pharmaceutical Company, and settled charges with a former Food and Drug Administraiton official working with hedge fund managers.
Insider trading at Celator aside, Jazz is currently riding high on winning approval of Vyxeos last month for the treatment of acute myeloid leukemia. The company also recently inked an agreement this week to co-develop and co-commercialize three antibody-drug conjugate (ADC) programs with ImmunoGen.
- Securities and Exchange Commission Press release
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