Two friends and biotech colleagues with a passion for insider info - feds charge Merrimack staffer
According to the feds, Songjiang Wang and Schultz ‘Jason’ Chan were friends who shared a common passion for drug data and insider trading.
On Tuesday, though, Wang was arrested on charges that he and Chan had been swapping insider info on their two companies, Merrimack Pharmaceuticals $MACK and Akebia $AKBA, both based in Cambridge, MA.
Chan was charged last June with insider trading by the SEC, which outlined a scheme in which he tipped off his wife and an unnamed friend — Wang, who had loaned Chan $80,000 — about some positive data that was about to be reported by Akebia. They allegedly made a $288,000 profit on that deal, which happened just days after Chan started working at Akebia as director of biostatistics.
But according to a criminal complaint filed by Special Agent David Cirilli this week, the two friends were working a two-way deal. While Chan fed insider info on Akebia’s trial data to Wang, the director of statistical programming at Merrimack, Wang was handing over the scoop on Merrimack drugs.
According to the complaint, Wang handed over insider data on three occasions. “In advance of each of the Pharm Co. 1 (Merrimack) November 26 (2013, when Merrimack announced positive data on two Phase II studies for MM-121) Announcement, the Pharm Co. 1 December 13 (2013, positive Phase I data on MM-302) Announcement, and the Pharm Co. May 1 (2014, with positive Phase III Onivyde data) Announcement, Wang provided Chan with material nonpublic information about the studies discussed in those announcements.
At one point, the two friends allegedly texted insider info to each other.
According to Reuters, Wang was released on $750,000 bond. Merrimack had this to say:
Merrimack is aware of this isolated matter involving a single, non-executive level employee, and the Company is cooperating with the appropriate authorities. This individual is no longer an employee of Merrimack. Merrimack takes compliance seriously and is committed to the highest standards of ethical conduct as we work to develop treatments for cancer patients around the world.
Insider trading in biotech, where stock prices can gyrate rapidly on drug data, has been a rich source of new investigations by the feds. There have been a string of cases over the last few years as prosecutors uncovered similar schemes like this.