Dive Brief:
- Two former senior employees at Cambridge, MA-based Ariad Pharmaceuticals face insider trading charges from the Securities and Exchange Commission, having allegedly profited off of nonpublic information about the biotech's main cancer drug.
- As the SEC tells it, Maureen Curran, ex-senior director of Ariad pharmacovigilance and risk management, sold Ariad stock in December 2012 after attending meetings with the Food and Drug Administration that discussed a decision to add a safety warning on the drug's product label.
- Selling ahead of the news helped Curran dodge nearly $10,000 in losses. Another former employee in the same department, Susan Dubuc, tipped relatives to sell before Ariad announced a pause in all clinical trials of Iclusig (ponatinib), a leukemia drug. Those family members avoided about $3,000 in losses.
Dive Insight:
By the very nature of the industry, biotech is full of market-shifting events. The fortunes of an up-and-coming biotech may rest solely on the promise of its lead clinical candidate or platform, making positive or negative announcements highly consequential to the success or failure of the company.
Over the past year, for example, former employees at Merrimack Pharmaceuticals and Puma Biotechnology have been arrested or charged with similarly styled insider trading.
In the case of Puma, the former senior director of regulatory affairs allegedly made $1.1 million in illegal profits by buying up company stock and call options on nonpublic information about the company's breast cancer drug neratinib.
Insider trading isn't just a temptation for biotech employees, either. Last summer, two hedge fund managers and a former FDA official purportedly ran an insider-trading scheme based on the ex-regulator's connections. That official, Gordon Johnston, settled with the SEC in November and paid $108,000 in disgorgement for his role in the trading.
The SEC's case involving Ariad also includes charges brought against the spouse of a third former Ariad staffer, who supposedly made illegal trades on three occasions. By buying and selling ahead of announcements, the employee's husband pocketed just over $102,000.
The securities regulator is seeking permanent injunctions, disgorgement of illicit profits and civil penalties against this third individual, Harold Altvater. The other two charged, Curran and Dubuc, have already agreed to enter into final judgments and pay disgorgement, interest and fines, the SEC said.