Caught with insider trading, former Five Prime investigator makes case for light sentence
Former Five Prime trial investigator Daniel Catenacci stared down a maximum 25-year prison sentence when he pleaded guilty to securities fraud three months ago. Now he’s making the case that he shouldn’t go to prison at all.
Catenacci’s attorneys requested a sentence of time served plus two years probation, as recommended by the US Probation Office, according to court documents filed last Wednesday.
The defense team argued that Catenacci, a former University of Chicago associate professor and oncology director, “deeply regrets his conduct,” and that a non-custodial sentence is “in the public’s best interest” so that Catenacci can continue his “lifesaving services as an oncologist.”
“Dr. Catenacci is a first-time offender who immediately accepted responsibility for his conduct, cooperated with the government, and has already satisfied his forfeiture obligation,” court documents read.
The case traces back to November 2020, when Catenacci purchased 8,743 shares of Five Prime’s stock after seeing insider data for the company’s experimental gastrointestinal cancer drug bemarituzumab. Catenacci claims he didn’t finish reading an email from Five Prime’s CMO, which explicitly stated that he wasn’t allowed to trade based on the non-public interim Phase II results.
“His understanding, upon reading the subject line and the opening sentence, was that he was not to communicate to others the non-public information he had received from Five Prime,” court documents state.
Once Five Prime announced the results, Catenacci sold his shares, profiting about $134,000 within 24 hours, according to the sentencing memorandum.
When the FBI showed up at Catenacci’s door half a year later, he confessed and “immediately wrote a personal check to the United States Marshals Service and handed it to the FBI Special Agents to return the profits from his trading.”
Amgen snapped up bemarituzumab last March when it acquired Five Prime for $1.9 billion, and a month later, the FDA granted the drug breakthrough designation.
Catenacci initially sought to enter an “Alford plea,” a common tactic in which a defendant enters a guilty plea but maintains their innocence. The oncologist continues to assert that he was unaware at the time that he violated any laws, and the most recent court filing concedes that he’s a self-taught trader with no formal training in securities. However, the court denied that motion and Catenacci entered a full guilty plea back in April.
At the time, he faced a maximum sentence of 25 years in prison, a fine or both.
“This was not a premeditated crime. There was no conspiracy or malice aforethought to exploit the market. Dr. Catenacci received surprise good news about the results of the clinical trial that he took part in, made a bad decision to buy stock in the company, and then sold it, all within a period of about 24 hours,” attorneys said in the sentencing memorandum.
Cantenacci’s attorneys declined to comment at this time. Sentencing is scheduled for Aug. 3.