An ex­pen­sive watch, shell com­pa­nies and fake in­voic­es: How two Is­raeli traders tapped in­to a $100M glob­al biotech in­sid­er trad­ing ring

It ap­pears that we have reached the end of the saga about the glob­al in­sid­er trad­ing ring that col­lec­tive­ly reaped $100 mil­lion from plac­ing “time­ly, prof­itable” trades in biotech stocks like Ari­ad, Phar­ma­cyclics and Re­cep­tos.

Tomer Fein­gold and Dov Mal­nik — Is­raeli traders liv­ing in Switzer­land — were the last out of eight to be charged as the SEC un­rav­eled the scheme, which ran from 2013 through 2017. To­geth­er, ac­cord­ing to a state­ment in March, the pair had pock­et­ed more than $4 mil­lion.

Their in­dict­ment, which was un­sealed Thurs­day, of­fered an­oth­er look at the web of con­nec­tions, and how in­for­ma­tion and pay­ments trav­eled on it.

Fein­gold and Mal­nik first got in on the net­work in the sum­mer of 2013 when they met some­one iden­ti­fied as co-con­spir­a­tor 4, or CC-4 — whose at­trib­ut­es matched the de­scrip­tion for a Gene­va-based trad­er by the name of Marc De­mane-De­bih who had been ar­rest­ed in Ser­bia, plead­ed guilty and is work­ing with au­thor­i­ties (De­mane-De­bih said he per­son­al­ly got $70 mil­lion from all the in­sid­er trad­ing). He talked about “nu­mer­ous sources” of ma­te­r­i­al se­cret in­for­ma­tion that he could share with them if they strike a deal.

In re­turn, FEIN­GOLD and MAL­NIK agreed to com­pen­sate CC-4 by buy­ing ad­di­tion­al se­cu­ri­ties on CC-4’s be­half and trans­mit­ting the prof­its from those trades to CC-4. This trad­ing by- FEIN­GOLD, MAL­NIK, and CC-4 in­clud­ed the pur­chase and sale of U.S.-ex­change trad­ed se­cu­ri­ties as well as over­seas se­cu­ri­ties of the rel­e­vant tar­get com­pa­nies that trad­ed on for­eign ex­changes.

CC-4 went on to feed them in­sid­er news he ob­tained via oth­er peo­ple. The first was up­dates about Ari­ad from some­one who had a clos­er per­son­al friend­ship with a board mem­ber and his close rel­a­tive. Per pre­vi­ous dis­clo­sure, that some­one would be George Nikas, a busi­ness­man who owned a Greek restau­rant chain in New York and got tipped off by Tele­maque Lavi­das, the son of Ari­ad board di­rec­tor Athanase Lavi­das.

Then came in­for­ma­tion about up­com­ing ac­qui­si­tions stolen from “In­vest­ment Bank A” by CC-2, who was work­ing in the Lon­don of­fice. She was in a ro­man­tic re­la­tion­ship and liv­ing with CC-1 and the cou­ple would pass con­fi­den­tial tips to CC-3, their close friend, who re­paid them with over $1 mil­lion worth of “cash, ho­tel rooms and din­ners, lux­u­ry watch­es and ex­pen­sive clothes.”

Again, the trio had been named in pre­vi­ous re­ports as Da­ri­na Wind­sor (who was work­ing at Cen­ter­view), Ben­jamin Tay­lor and Joseph El-Khouri.

Start­ing in 2015, CC-4 got a new con­tact at “In­vest­ment Bank B” — like­ly Bryan Co­hen of Gold­man Sachs — who al­so shared in­sid­er in­for­ma­tion in ex­change for cash.

Through it all, Fein­gold, Mal­nik and CC-4 tried to cov­er their tracks by com­mu­ni­cat­ing on en­crypt­ed mes­sag­ing ap­pli­ca­tions and “burn­er” cell­phones. Fein­gold and Mal­nik went as far as set­ting up off-shore shell com­pa­nies to car­ry out trad­ing and bank trans­fers.

At one point, when their banks be­gan to flag the wire in­struc­tions and ques­tion why they were send­ing mon­ey to an ac­count con­trolled by CC-4, they arranged with CC-4 to “is­sue fake in­voic­es for con­sult­ing ser­vices to FEIN­GOLD and MAL­NIK’ s var­i­ous off­shore en­ti­ties.” Those “ser­vices” called for pay­ments of $700,000 and $1,350,000 in two sep­a­rate in­stances.

Cash wasn’t the on­ly cur­ren­cy that went around in this loose­ly con­nect­ed group. From the in­dict­ment:

In or about 2013, MAL­NIK bought an ex­pen­sive watch for CC-4 in ex­change for CC-4 hav­ing pro­vid­ed MAL­NIK with MN­PI , which watch was de­liv­ered to an as­so­ciate of CC-4 in Man­hat­tan, New York.

In­side Track: Be­hind the Scenes of a Ma­jor Biotech SPAC

Dr. David Hung and Michelle Doig are no strangers to the SPAC phenomenon. As Founder and CEO of Nuvation Bio, a biotech company tackling some of the greatest unmet needs in oncology, Dr. Hung recently took the company public in one of this year’s biggest SPAC related deals. And as Partner at Omega Funds, Doig not only led and syndicated Nuvation Bio’s Series A, but is now also President of the newly formed, Omega-sponsored, Omega Alpha SPAC (Nasdaq: OMEG; oversubscribed $138m IPO priced January 6, 2021).

Barry Greene, Sage CEO

UP­DAT­ED: Sage's sec­ond chance at de­pres­sion hits the PhI­II pri­ma­ry, but ques­tions re­main over dura­bil­i­ty, side ef­fects

Looking to make a comeback after a big Phase III flop, Sage Therapeutics revealed data they believe could change the entire depression treatment landscape, given the vast array of failures in the field. But some results are spooking investors, sending Sage $SAGE shares down early Tuesday.

First, the primary: Sage and Biogen reported Phase III data for once-daily zuranolone Tuesday morning, saying the experimental drug hit its primary endpoint by spurring a statistically significant change from baseline in the 17-item Hamilton Rating Scale for Depression total score. After 15 days, patients in the drug arm saw an average change of -14.1 points, compared to -12.3 on placebo.

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Harith Rajagopalan (Fractyl)

Af­ter a decade in the Type 2 di­a­betes game, Fractyl Lab­o­ra­to­ries recharges with a fresh $100M and a new name

Harith Rajagopalan compared the way Type 2 diabetes is managed to sticking your fingers in a dam that’s leaking from a number of places.

You can take drugs to lower your blood sugar, cholesterol, or blood pressure, but you’re not addressing what he says is the core issue — the metabolic abnormality that causes the disease.

“We’re so busy plugging the holes in the dam, we don’t have time to see that the whole infrastructure is at risk,” he said. “That infrastructure is a full-body systemic metabolic abnormality called metabolic syndrome, that we’re ignoring while we’re so busy trying to treat all of the individual symptoms of the condition.”

Bio­gen sig­nals a big PhI­II fail­ure as the lead gene ther­a­py in their $800M Night­star buy­out goes down in flames

That $800 million buyout of Nightstar has turned into a bust for Biogen as the lead therapy in the deal failed a pivotal study, signaling a severe setback for the biotech’s ambitions in gene therapies.

The big biotech put out the word after the market closed on Monday that the gene therapy they picked up in the deal for a degenerative blindness called choroideremia failed the Phase III study, just a month after their #2 drug in the deal also flopped in a mid-stage study.

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Hal Barron, GSK R&D chief (Endpoints News)

Hal Bar­ron gam­bles $625M cash on high-wire TIG­IT act, throw­ing Glax­o­SmithK­line in­to heat­ed race and com­plet­ing next-gen I/O trin­i­ty

Count Hal Barron and GlaxoSmithKline in for the TIGIT fight.

The stakes are as high as the risks: While a growing pack of Big Pharma rivals is lending credence to the hypothesis that TIGIT will be the next big immune checkpoint and cancer drug target, the first clinical trials have shown response rates that can be described as modest at best. But Barron’s bet is on the whole “axis” that the receptor sits on, with an eye on testing its new anti-TIGIT antibody not just in combo with PD-1 but also in triplets.

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Michel Sade­lain puts his name and new cell en­gi­neer­ing tech be­hind 'ag­nos­tic' CAR-T start­up chas­ing epi­ge­net­ic anti­gens

It felt natural for Alain Maiore and Sebastian Amigorena to bring in Michel Sadelain as a co-founder of Mnemo Therapeutics. A CAR-T pioneer, Sadelain had been involved as an advisor since the early days — enthusiastic about Amigorena’s work in a genetic knockout that could enhance T cell memory and a new class of potential targets he’s discovered — and could introduce some well-known technologies to the toolbox. So they got the initial cash from Sofinnova Partners to plant roots in Paris and New York in early 2019; within a few months, they began to see more clearly just what the antigen discovery platform might unlock.

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Stephen Hahn (AP Images)

UP­DAT­ED: Ex-FDA com­mish Stephen Hahn joins Flag­ship, a ven­ture group that spawned Covid-19 vac­cine mak­er Mod­er­na

That revolving door between the FDA and industry is spinning even faster than usual.

Former FDA commissioner Stephen Hahn is joining Flagship Pioneering, the venture outfit that founded Moderna — which raced its way to an FDA EUA for a Covid-19 vaccine that is making billions of dollars– as the new CMO of its Preemptive Medicine and Health Security initiative.

Flagship confirmed the hire — first reported in The Washington Post — in a statement out late Monday.

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Patrizia Cavazzoni, CDER

FDA’s Cavaz­zoni calls for ad­comms to ‘get back to the sub­stance’

While her comments were recorded prior to the FDA’s recent approval of Biogen’s controversial Alzheimer’s drug, CDER Director Patrizia Cavazzoni presciently called for substantial reforms to the advisory committee process at the agency.

Short on examples of the adcomms she was referring to, Cavazzoni said at a BIO event aired on Monday that some recent committees show “how they can be swayed by emotion in the face of hard facts,” but they need to “get back to the fundamentals, which is listening to thoughtful input from experts in response to thoughtful questions that we ask them.”

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Paul Burton, incoming Moderna CMO (J&J/file photo)

Look­ing be­yond the pan­dem­ic, Mod­er­na ap­points J&J vet­er­an Paul Bur­ton as new CMO

Moderna is turning to one of its Covid-19 vaccine competitors to fill its open CMO slot, but this time, it’s not the vaccine experience they’re after.

Paul Burton, who’s spent 16 years at J&J, most recently as chief global medical affairs officer of Janssen, will take over as Moderna CMO on July 6.

With an eye toward a future beyond the pandemic, the mRNA biotech went with Burton, who earned his MD and PhD degrees in London, as he offers experience on a range of therapeutic areas, as well as work as a cardiothoracic surgeon and leading tech projects with Apple.

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